Understanding Wage Garnishment in Ontario: Rules, Limits, and How to Protect Your Paycheque

Wage garnishment can feel intimidating, especially if you’re already under financial stress. In Ontario, it’s a legal process that lets a creditor collect part of your pay directly from your employer to repay a debt. This article explains how wage garnishment works in Ontario, the limits and protections in place, the difference between court-ordered garnishments and Canada Revenue Agency (CRA) actions, and practical steps to reduce or stop garnishment responsibly.

Understanding Wage Garnishment in Ontario

Wage garnishment in Ontario is most often the result of a court order after a creditor wins a judgment against you. Employers are then legally required to deduct a portion of your pay and send it to the court, which forwards the funds to the creditor. While the process is serious, Ontario law provides limits designed to preserve enough income for living expenses, and there are ways to challenge, reduce, or stop garnishment.

For a broader overview of provincial procedures, see this guide to the Ontario garnishment process.

What is Wage Garnishment?

Wage garnishment is when a portion of your earnings—salary, commissions, bonuses, and similar pay—is withheld by your employer to repay a debt. In Ontario, most garnishments are initiated through the court system. Common debts that may lead to garnishment include:

• Credit card balances and personal loans
• Past-due utility or service accounts
• Judgment debts from lawsuits
• Child or spousal support (family law matters)
• Tax debt (CRA uses different powers; more on that below)

Important: Some types of income are restricted or protected from garnishment, and support obligations have their own priority rules. For details on benefits, see government benefits and garnishment in Canada.

How Wage Garnishment Works in Ontario

Most wage garnishments follow a court process. Here’s the typical path from unpaid debt to garnishment:

Step-by-Step Process

1. Court judgment: A creditor sues and obtains a judgment confirming the debt you owe.
2. Notice of garnishment: The creditor files a garnishment with the court. The notice is served on your employer (or other third party holding funds).
3. Employer deductions: Your employer must deduct the court-specified amount from your pay and remit it to the court.
4. Payments continue: Deductions continue until the debt is paid, the order expires, or the court varies or lifts the order.

Looking for procedural detail from the other side? Read the step-by-step guide to garnishing wages in Ontario.

Legal Limits on Garnishment in Ontario

Ontario law caps ordinary wage garnishments to protect essential income. While exact calculations depend on the nature of your pay and the court order, the standard limits are:

• Most debts: Up to 20% of your net wages (after statutory deductions).
• Child or spousal support: Up to 50% of wages, reflecting the priority of support obligations.

Example: Calculating a Garnished Amount

Suppose your net pay is $1,200 biweekly and the court sets garnishment at 20%. Your employer would deduct $240 per pay period until the debt is satisfied or the order is changed.

Priority and Multiple Garnishments

• Support orders typically take priority over other debts.
• If multiple creditors attempt garnishment, the court may determine the order of priority and how much each creditor receives.
• Some garnishments target bank accounts rather than wages—see the section on bank account garnishment below.

Which Debts Can Be Garnished?

In Ontario, creditors may seek garnishment for a wide range of obligations after they get a judgment. Notable categories include:

• Consumer debts: Credit cards, lines of credit, payday loans, instalment loans, and utility arrears
• Civil judgments: Court awards for damages or unpaid obligations
• Support payments: Child and spousal support typically have higher garnishment limits
• Tax debts: CRA uses federal collection powers and does not require a court order; see below

Protected Income and Benefits

Certain sources of income are protected or treated differently under federal and provincial law. For a practical overview, see Can your government benefits be garnished?

Employee Rights: What Workers Should Know

Facing a wage garnishment can be stressful, but Ontario law provides important protections:

• No termination for garnishment: Employers cannot fire, discipline, or discriminate against you solely because your wages are garnished.
• Confidentiality: Employers must treat garnishment information sensitively and only share it as required by law.
• Appeals and variations: If a garnishment causes hardship, you may ask the court to vary the order. Legal advice can help you assess options.

Employer Obligations: What Employers Should Know

When served with a valid garnishment, Ontario employers have strict duties:

• Timely deductions: Withhold the court-specified amount from each paycheque and remit to the court.
• Accurate calculations: Apply garnishment to the correct portion of net wages and respect legal limits.
• Record-keeping and confidentiality: Maintain proper records and protect employee privacy.

Payroll handling and privacy

HR and payroll teams should limit access to garnishment details to staff who need it to process payments. Clear internal procedures help ensure compliance without exposing sensitive employee information.

CRA Garnishment vs. Court-Ordered Garnishment

The CRA has broader collection powers than ordinary creditors. Key differences:

• No court order required: CRA can issue a Requirement to Pay to your employer or financial institution under federal law.
• Scope and percentage: CRA can set the amount based on your situation and may target wages and bank accounts.
• Offsets: CRA can also offset tax refunds and certain benefits to recover tax debt.

For official information on CRA collections, visit the Canada Revenue Agency website. To understand CRA wage actions in practical terms, see Can CRA garnish wages? and CRA and ODSP garnishment rules.

How to Stop or Reduce Wage Garnishment

Depending on your situation, there are several ways to reduce, pause, or end garnishment:

• Negotiate with the creditor: Request a voluntary payment plan or reduced lump sum. Document agreements in writing.
• Ask the court to vary the order: If the garnishment causes undue hardship, you can apply to change the amount.
• Resolve the debt: Paying the balance or settling the debt will end garnishment for that creditor.
• Consumer proposal: Filing a consumer proposal with a Licensed Insolvency Trustee triggers a stay of proceedings that can stop most wage garnishments. Learn how a consumer proposal stops wage garnishment.
• Bankruptcy: Bankruptcy also triggers a stay of proceedings, stopping most garnishments. Consider the pros and cons carefully.

If you’re trying to get ahead of a potential garnishment, restructuring debts may help. See Debt consolidation in Canada for benefits, risks, and a step-by-step approach.

Bank Account Garnishment in Ontario

Creditors can also garnish funds in your bank account (often called a “third-party” or “bank” garnishment). This is separate from wage garnishment and can affect money you’ve already deposited. If you receive a notice of bank account garnishment, act quickly to understand exemptions and options. For context on how these orders work, review bank account garnishment in Ontario.

Practical Examples and Common Scenarios

• Example 1: Ordinary debt — You lose a lawsuit over an unpaid loan. The creditor obtains a judgment and garnishes 20% of your net biweekly pay. You negotiate a settlement to lower the deductions and end the order early.
• Example 2: Support order — A family court sets child support. Up to 50% of your wages may be garnished. You work with the court to adjust support if your income changes materially.
• Example 3: CRA requirement to pay — CRA issues a requirement to pay to your employer for tax arrears. You contact CRA, set up a payment arrangement, and request a reduced garnishment amount based on documented hardship.
• Example 4: Bank account garnishment — A creditor garnishes your chequing account after judgment. You consult legal advice on potential exemptions and consider filing a consumer proposal to trigger a stay of proceedings.

Helpful Guidance from Government Sources

For trusted information on consumer rights, debt collection, and managing debt, consult:

• Financial Consumer Agency of Canada — guidance on dealing with debt and collectors
• Statistics Canada — data and trends on consumer insolvency and household finances
• Canada Revenue Agency — official information on CRA collections and payment arrangements

Conclusion

Wage garnishment in Ontario is a structured legal process with important limits and protections. Understanding the difference between court-ordered garnishments and CRA actions, knowing your rights as an employee, and following employer compliance rules help keep the process fair and predictable. If garnishment creates hardship, you have options—from negotiating with creditors and seeking court variations to filing a consumer proposal or bankruptcy. Solid information and timely advice can help you protect essential income while responsibly resolving debt.