Winner of the 2020 Labour and Employment Law Section Student Essay Contest

  • September 14, 2020

The Floor of “Frugal Comfort”:  Eliminating Payment in Kind Deductions from Minimum Wage

Sara Tatelman, graduate from the University of Toronto Faculty of Law

Sara Tatelman recently graduated from the University of Toronto Faculty of Law and is currently articling at Koskie Minsky LLP. During law school, she served as a co-chair of the Labour and Employment Law Society and of Pro Bono Students Canada’s Union-Side Labour Law Project, led a working group on Indigenous rights at the David Asper Centre for Constitutional Rights, and volunteered as a caseworker at Advocates for Injured Workers legal clinic. Sara holds a B.A. in English and Classics from McGill University and a certificate in transnational law from the UniversitĂ© de Genève. She previously worked as a financial journalist.



Workers across Canada receive less than minimum wage because their employers deduct the cost of in-kind payments, such as room and board or even free yoga classes, which often benefit the employer, or at least cost them nothing. But minimum wage laws aim to enable workers to support themselves in their communities, which exercise classes or an on-site apartment that limits a worker’s privacy and autonomy cannot do. Canadian jurisdictions should therefore require minimum wage be paid in currency, with in-kind payments beyond that treated as employee benefits separate from salary.

This paper begins by reviewing the history of payment in kind and of minimum wage laws in the United Kingdom and Canada. It then set outs the current law regarding payment in kind internationally and in Canada. Next, it proposes alternatives to that law, and concludes by addressing potential downsides to such changes.

“You can’t pay a mortgage with Scene points,” Tanner Zipchen told the Toronto Star in February 2020. Zipchen had hosted Cineplex’s pre-movie show for four years, and for the first fifteen months, he was paid almost entirely in Scene points, Cineplex’s internal currency that can be traded for movie tickets.1 While Zipchen eventually negotiated wages and an employment contract from Cineplex, the practice of paying workers in goods or services other than currency — that is, paying them in kind — persists across industries and geographies. For instance, dozens of fitness studios across Canada participate in “energy exchanges”. These arrangements involve individuals working as receptionists, cleaners and sometimes even massage therapists and social media marketers for four to eight hours per week, in exchange for free exercise classes.2

On a much larger scale, many domestic and agricultural workers receive less than minimum wage because their employers deduct the cost of their room and board. These workers may not even have the opportunity to organize their own accommodation and receive full wages, and many have precarious immigration status and limited proficiency in Canada’s official languages. As a result, they are among the most vulnerable workers in the country, often unable to advocate for themselves.

Workers cannot support themselves on in-kind payments like free movies or yoga classes, especially in urban areas where the cost of living is skyrocketing. Even if in-kind payments are made in the form of food or shelter, which significantly reduces a worker’s expenses, he or she must accept reduced autonomy and choice in the market.

Payment in kind is not a new phenomenon. It can be traced back centuries to English industrialists paying workers with “scrip” — gift certificates to stores the same industrialists owned — and to the Canadian government buying MĂ©tis individuals’ land rights with scrip exchangeable for land or money. We must not forget that needing currency to survive in the world and to preserve a sense of dignity and autonomy are as much issues now as they were then. This paper will argue that Canadian jurisdictions should adjust their employment standards legislation to require minimum wage be paid in currency, with in-kind payments beyond that treated as employee benefits separate from salary, as is the current model in Quebec.

This paper will begin by reviewing the history of payment in kind and of minimum wage laws in the United Kingdom and Canada and, to a lesser degree, the United States and Australia. It will then examine the International Labour Organization’s conventions regarding payment in kind, and how countries around the world have legislated on the matter. Next, the paper will set out the current law regarding payment in kind in various Canadian jurisdictions. It will then propose alternatives to that law, and will conclude by addressing potential downsides to the changes.

There may be opposition to such changes, including arguments that workers receiving in-kind payments are not employees covered by employment standards legislation but are independent or dependent contractors. Such arguments are not strong. It is clear that both live-in domestic and agricultural workers are employees; their being partially paid in room and board only highlights the control their employers have over their working conditions and their economic dependency on the employer, which the Supreme Court of Canada has found to be hallmarks of employee status.3

Workers who receive no compensation in currency, such as Zipchen at Cineplex and energy exchangers at fitness studios, clearly have a different relationship with the companies they work for than do workers whose cash wages are reduced by employer-provided room and board. Yet their work is still akin to a traditional part-time job, not a worker-driven side hustle. Fitness studios often structure their energy exchange programs carefully: workers have the same shifts each week, perform the same duties each shift, and are asked to commit to working for at least several months. If they are working at reception, they will use the studio’s computer and check-in system; if they are cleaning, they will use the studio’s equipment and supplies.4 While energy exchangers rarely work exclusively for the studio — they often have unrelated full-time jobs — the studio has complete control over their work and takes on all business risk. In short, energy exchangers meet most elements of employee status, as recently set forth by the Ontario Labour Relations Board in New Jenny Nail.5 The rest of this paper will presume that workers paid in kind are employees protected by employment standards legislation.

While beyond the scope of this paper, gig economy workers and other independent contractors are also vulnerable to payments in kind rather than currency. For instance, some workers on Amazon’s online labour platform Mechanical Turk receive gift cards to instead of money.6 If workers who live outside the United States want to avoid exorbitant shipping fees, they have to sell their gift cards at a 10% loss. Similarly, Airbnb hosts who maintain “Superhost” status for four consecutive quarters receive $100 in Airbnb credit or a professional photoshoot of their rental unit.7 While gig workers are not employees and not guaranteed minimum wage, governments and workers’ advocates should keep an eye on platforms’ payment mechanisms to ensure that at the very least they are paid in currency, not with in-kind payments that support the platform itself. But a detailed discussion of these issues is best addressed in another paper.

I. History of payment in kind and the minimum wage

Until the mid-twentieth century, many employers in natural resources industries would pay their employees’ wages in a combination of cash and scrip or “truck”, an internal currency that could be exchanged for goods in the employer-owned or -allied general store. For instance, from the 1860s to the 1920s, the Beck Lumber Company in Penetanguishene, Ont. paid its employees half in Canadian dollars and half in “Beck tokens”.8 By the 1930s, 52% of U.S. employers in the mining, quarrying, lumber, railroad and manufacturing industries issued scrip on payday, according to 1935 report from a special committee of the United States National Recovery Administration.9

Such paying of wages in kind denied workers what little independence and pride their low wages might afford them. They could not budget or shop as they saw fit, or enjoy being treated as a valued customer. Instead, the worker “must go crouching to the Tommy shop [company store] for his daily morsel, where he is neither allowed to choose or cheapen, and is treated more like a beggar asking alms than a customer.”10

Company stores did offer some benefits to workers: employers could provide credit at more favourable rates than independent lenders, since they could better evaluate the risk each worker/borrower presented.11 Further, such stores were geographically close to workers’ homes, and therefore convenient to access.12

Other elements of paying employees in scrip were more problematic. Long intervals between pay periods and the practice of retaining wages for the length of one pay period meant workers might have no funds for their first four to six weeks on the job, and would have to seek credit. Employers often issued such credit in scrip. The value of the loan would be deducted from the worker’s first paycheque, and so a cycle would often begin in which the worker was forced to borrow, from his employer or another credit-granting shopkeeper, every month.13 For instance, in the 1840s, one iron manufacturer in Staffordshire provided inter-payday loans as cheques from a distant bank, on the unspoken requirement that the worker cash the cheque at the company store. For every pound sterling, the store would pay four shillings in cash and the rest in goods.14,15

Like providing loans in scrip, paying wages in scrip also “made it possible for some workers to be in a chronic state of indebtedness to the parent company and not to receive any cash for long periods of time”.16 Not receiving cash wages would curtail the worker’s ability to change employers or even to purchase items not sold in the company store, including essential medical services.17

The 1935 report mentioned above found that company stores across the United States offered goods of the same quality as independent stores, but at higher prices. The mark-up ranged from 2.1% in Virginia to 10.4% in Tennessee.18 Further, employers might allow workers to exchange their scrip for cash, but would take a 15-25% commission for doing so. Similarly, independent stores might accept scrip, but with a mark-up of 5-20%.19

Governments have long attempted to regulate payment in kind. In the United Kingdom, Parliament first prohibited payment of wages in goods in 1465, and by 1820, had legislated against it on at least 24 occasions. These acts were replaced with the Truck Act of 1831, which made it illegal to pay servants and artificers in numerous industries anything but “coin of the realm”.20 Workers paid in truck could bring their case before two magistrates, who were authorized to award full wages and to fine employers up to £100. Yet the 1831 act excluded broad swathes of workers — all those working in domestic labour, agriculture, railways and Ireland — and still permitted deductions for medical care, lodging, fuel and equipment. In 1887, a new Truck Act was passed, which covered all manual workers throughout Britain. Finally, the Truck Act of 1896 clarified permitted deductions, which included tools, light, heat and even standing room, as long as the employer provided a written contract or notice, did not charge more than it paid, and provided employees with written particulars for every deduction.21

Historian Christopher Frank argues these Truck Acts were fairly ineffective in the short term. Even if workers could afford the £5 to £25 it cost to bring their employer before the magistrates, few would risk doing so, for they could easily lose their jobs and be blacklisted by all other employers in the region. Further, magistrates were rarely willing to impose the toughest penalties on employers who kept paying in truck. Yet the push to abolish the truck system and the resulting laws brought about significant media attention and, eventually, attitudinal changes. Some employers voluntarily gave up paying wages in kind, and by the end of the 19th century, paying in truck was seen as a dishonourable business practice.22

In Canada, payment in kind has long been used by corporations and governments alike. When, shortly after Confederation, the new Canadian government sought to annex what is now Manitoba, it met with armed resistance from the Red River MĂ©tis. Canada eventually met with MĂ©tis delegates, and in 1870, passed the Manitoba Act, which provided 1.4 million acres of land to MĂ©tis children in exchange for their land rights. The government thrice attempted to tally the number of eligible MĂ©tis children, realizing they had underestimated each time. By 1885, when it became clear that the third count was still inaccurate, the government decided to let the land divisions stand, and issue scrip redeemable for 240 acres to each child for whom no land was available.23 Unlike treaties with First Nations, which set aside reserves for entire communities, Canada dealt with the MĂ©tis individually, and they were not guaranteed land near their friends and relatives. The government primarily offered land in southwest Manitoba; many families living hundreds of kilometres away could not relocate, and had to sell their scrip to land prospectors at a significant loss.24 Canada also issued money scrip, which could be exchanged for dollars. This was initially more popular because it could be easily redeemed, but families who held on to it for some time experienced devaluation when land prices rose but the value of their scrip remained frozen.25

On the other side of the country, the 1775 Palliser’s Act forbade employers in Newfoundland’s fisheries from paying more than half of wages in liquor, goods or money until the end of the fishing season. Employers also had to reserve forty shillings for each worker’s passage back to Europe, since at the time, most fishery workers were English or Irish and only came to Newfoundland for the season.26 But unlike the United Kingdom, the fishery wage laws allowed more and more payment in kind over the years. In 1824, Palliser’s Act was replaced with a new Judicature Act and a Fisheries Act which, among many other changes, permitted employers to advance three quarters of wages in goods during the fishing season.27

But by the end of the century, in 1889, Canada’s Royal Commission on the Relations of Labor and Capital recommended that payment of wages in scrip be prohibited: “Justice demands that the working people of the country should be paid in cash and in full, and whereas … a species of payment in truck exists, … your Commissioners are convinced that a law abolishing such payment would prove a great boon to those immediately the victims of it”.28

The United Kingdom and Canada have clearly moved away from the truck system. In addition to prohibiting payment in scrip, legislatures have passed minimum wage laws that attempt to ensure payment in cash and at a level that supports the cost of living. Such legislation first appeared in the United Kingdom in the 1890s, when it passed two Fair Wages Resolutions. The 1893 Resolution, which passed unanimously in the House of Commons, stated:

That in the opinion of this House, no person should, in Her Majesty’s Naval Establishments, be engaged at wages insufficient to maintain a proper maintenance, and that the conditions of labour as regards hours, wages, insurance against accidents, provision for old age, etc, should be such as to afford an example to employers throughout the country.29

The Resolution was regarded as applicable to all public employers, was eventually extended to government contractors, and remained in place until the 1980s.30

Similarly, in Australia, a 1907 decision of the Commonwealth Court of Conciliation and Arbitration found that to be fair, wages must be in line with the cost of living. Ex parte H.V. McKay arose because the Excise Tariff Act, 1906 exempted manufacturers from that tax if they paid a “fair and reasonable” wage to their employees. Justice Higgins found that such a wage would provide for “the normal needs of the average employee regarded as a human being living in a civilized community”, and was not dependent on the employer’s ability to pay.31 Higgins J. went on to note reasonable wages must allow employees to purchase proper food, water, shelter, rest, clothing and “a condition of frugal comfort estimated by current human standards”.32 After analyzing the budgets of eleven employees, Higgins J. found that a fair wage for an unskilled labourer at McKay’s company would be at least seven shillings per day.33

Canadian provinces began passing minimum wage legislation in 1917. By 1920, Alberta, British Columbia, Manitoba, Ontario and Saskatchewan had established minimum wage regulations for women workers in specific industries.34 Nearly all the provinces based their minimum wages on the cost of living. In British Columbia, conferences responsible for estimating the proper minimum wage for various industries were instructed that the wage should be “adequate to support the necessary cost of living.”35 Saskatchewan’s Minimum Wage Board was given the same direction.36 In Manitoba, the Minimum Wage Board was authorized to determine “what wages are adequate to supply the necessary cost of living to employees and to maintain them in health”.37

The provinces all set minimum wages specific to industries, geographies and either age or skill level. British Columbia set the minimum wage for adult women mercantile workers at $12.75 per week or 26 9/16 cents per hour. Minors received $7.50 per week, and apprentices $9 per week; both groups also received quarterly raises until they reached adult age or minimum wage.

In Manitoba and Ontario, the minimum wages depended heavily on geography. For laundry work in Winnipeg, workers would receive at least $11 per week, but their counterparts in Brandon would receive $9, and in Dauphin, just $8.50.38 In Toronto, experienced adult women working in confectionery and paper bag manufacturing had a minimum wage of at least $12.50 per week. In other Ontario cities with populations of at least 50,000, the weekly minimum wage dropped to $11.50. In cities with populations between 5,000 and 50,000, it dropped further to $11 per week. And in the rest of Ontario, the weekly wage for the same work was $10. There was therefore a 20% difference between the highest and lowest minimum wages within one industry and one province.39

When provinces introduced hourly minimum wages in the 1960s, some still distinguished between urban and rural centres. In January 1965, for instance, urban workers in Alberta earned at least $1.00 per hour, while their rural counterparts earned $0.95. The minimum wage only rose to $1.00 for rural workers in July 1966. Quebec did not implement one wage across the province until 1971, and Saskatchewan and Nova Scotia waited until 1972.40

Traditional economic theory suggests that raising the minimum wage will reduce employment rates, as the supply of low-paid workers will exceed the demand for them. While employers will often reduce their workforce through attrition rather than layoffs, they may also respond by reducing training opportunities or benefit packages, as certain Tim Hortons franchisees did when Ontario raised the minimum wage to $14 in 2018,41 or as Amazon did when it was pressured to increase its workers’ hourly pay to $15.42 Employers may also pass on the costs of higher wages to customers by increasing prices.43 However, consider economists David Card and Alan Krueger’s 1993 paper, which examined the employment rates in fast food restaurants before and after New Jersey raised its minimum wage from $4.25 to $5.05 on April 1, 1992. The study compared restaurants in New Jersey and neighbouring eastern Pennsylvania, where the minimum wage remained $4.25. It found that in New Jersey, the employment rate actually increased from 20.4% to 21%.44

The early Canadian regulations discussed above attempted to tie the minimum wage to the cost of living, whether through higher wages in expensive urban areas or lower wages to minors, who were less likely to have dependents. Lawmakers should remember this original aim of the minimum wage when considering permitted wage deductions today; they should also bear in mind Krueger and Card’s findings that raising wages does not always reduce employment rates. Workers should earn enough to “maintain themselves in health” and even live in “frugal comfort.” If that is all the minimum wage enables — and there is hard evidence it does not permit even this45 — workers who are even partially paid in non-currency goods and services will find such comfort near impossible to achieve.   

II. International Models Regulating Payment in Kind

The International Labour Organization’s (ILO) Protection of Wages Convention 95 (1949) permits in-kind benefits to constitute partial payment of wages if certain conditions are met: such payment is authorized by national laws, collective agreements or arbitration awards; it applies to industries in which in-kind payments are desirable; in-kind payments of illicit drugs and strong alcohol are not permitted; in-kind payments are for the personal use and benefit of the workers and their families; and the value attributed to them is fair and reasonable.46 Internationally, 90% of countries permit in-kind payment of wages to some degree. Of those, 7% limit in-kind payments to employees who are required to work in a remote place or who are transferred far from home. Another 12% restrict in-kind payments to certain sectors, such as agriculture and domestic work. On the other hand, Mexico prohibits in-kind payment to agriculture workers, and Bolivia and Quebec to domestic workers.

Almost all countries that permit in-kind payments find food and lodging to be acceptable forms thereof. Other permissible forms in in-kind payments mentioned in legislation include transportation, fuel and clothing, though in most countries, including Canada, the cost of uniforms and work-related clothing may not be deducted from wages. Further, many countries echo ILO Convention 95 and legislate that in-kind payments must be for the personal use of employees and their families, and may not include liquor or drugs.

Some countries require payments in the form of food and lodging to meet minimum standards, but these standards are often vague. In Niger and Benin, for instance, lodging must be “sufficient and decent”. However, Mali is much more specific, and includes requirements for windows, night lighting, and least 20 litres of potable drinking water per person per day.47

In terms of assessing the value of in-kind payments, several methods are at play internationally. Some countries set a maximum amount in local currency that can be counted towards wages, as is the case in Canadian jurisdictions. Others set a maximum percentage of wages that can be paid in kind; on average, this is 35.5%. Other models include valuing the in-kind benefits at or below market rates, at or below the cost to the employer, or even the value indicated by the employer (Luxembourg), determined by an unspecified expert (Colombia) or set by a judge (Ecuador).48

III. Current Canadian Practices

In Canadian jurisdictions, employers are generally forbidden from deducting from employees’ wages unless authorized by a statute, a court order, a collective agreement binding on the employee, or the employee’s personal written permission.49 Further, employment standards legislation often prohibits deductions, even if authorized by a collective agreement or the employee, for faulty work, damages caused by the employee, cash shortages or stolen property if a person other than the employee had access to it, or cash shortages resulting from customers’ failure to pay.

Canadian jurisdictions also permit certain deductions without employee authorization. In Alberta, for instance, employers may deduct from the minimum wage $3.35 per employer-provided meal or $4.41 per day of employer-provided lodging.50 Employers may deduct amounts for other goods and services supplied except for costs related to uniforms.51

In British Columbia, employers of domestic workers may not deduct more than $325 per month for room and board, but the regulations are silent on maximum deductions for other types of workers who might be offered room and board, such as agricultural workers, summer camp counsellors, and miners working at remote camps.52

In Ontario, employers may deduct $31.70 per week for a private room, $15.85 per week for a shared room, and $2.55 per meal to a maximum of $53.55 per week. If both room and board are provided, the employer may deduct $85.25; if the room is not private, this is reduced to $69.40.53 For domestic workers, a non-private room without board merits no deductions.54  

In Nova Scotia, employers may deduct $68.20 per week for room and board. However, if the employee “has no reasonable alternative opportunity to purchase the [meals and/or lodging]”, the employer may not deduct an amount that would result in the employee receiving less than minimum wage.55

Most provinces specify how wages must be paid: Canadian currency (which appears to be synonymous with cash), cheque, money order, or direct deposit to a financial institution of the employee’s choosing. The British Columbia Employment Standards Tribunal has often relied on this provision ­ — s. 20 of the B.C. Employment Standards Act (ESA) — to override contracts in which workers had agreed to be paid in kind.

In Skeena Valley Guru Nanak Brotherhood Society v. Director of Employment Standards, the Society argued that wages owed to one employee should be reduced because he had been given free room and board. The Adjudicator found two lines of case law on this issue: some held that room and board should be counted as wages when calculating severance pay and as a “top-up” to reach the minimum wage. However, these cases did not consider s. 20 of B.C.’s ESA, which requires wages be paid in currency. The Tribunal therefore declined to follow this line of cases, preferring a series of decisions that did consider s. 20 and therefore did not allow employers to deduct the value of payments in kind (including free clothing, free Subway sandwiches and free video rentals) from wages.56 However, some cases suggest that employees earning more than minimum wage may agree in writing to receive part of their wages as room and board; the agreement is a written assignment of wages to pay rent as a credit obligation.57

Ontario’s Employment Standards Act (ESA) states that employees must be paid by cash, cheque, direct deposit or any other prescribed means,58 though currently there are none.59 However, the ESA Interpretation Manual also states that payment in kind is permitted, as long as employers still pay the minimum wage in legal tender:

There is nothing to prevent an employment contract providing for additional non-wage forms of compensation, e.g., food, bus or subway tickets or merchandise to an agreed value, provided the employment standards (e.g., minimum wage standards) have been met. However, note that benefits such as transportation, food, bonuses or other assistance could not replace the required payment of wages by cash, by cheque or by direct deposit.60

The ESA Interpretation Manual relies on a 1978 decision by the Employment Standard Appeals Division of the Ontario Labour Relations Board. In Peter Muscat General Contracting v. Buttigieg, the employer owed the employee $1,100 in unpaid wages, vacation pay and overtime pay. The employer argued that he had purchased a significant amount of food for Buttigieg, which should be treated as wages paid and their value deducted from the amount owing. Referee Davis dismissed the employer’s appeal because “the legislation does not contemplate payment of wages in any form other than by cash or cheque”.61

Yet the law has changed in the last forty years, and unlike Quebec and Nova Scotia, Ontario has no official requirement that deductions cannot bring wages below minimum wage. Consider Bois v. Queensway Motel, a 2017 case in which a motel owed its manager unpaid wages. In addition to a set monthly salary, the manager was given use of an apartment valued at $925 per month. The motel argued the apartment’s value should be considered part of the wages paid to the manager, but the Board did not allow this because “there was no statute, no court order and no written authorization by which Queensway Motel was permitted to withhold or deduct monies otherwise payable to Ms. Bois to cover her rent and utilities as an occupant of the apartment”.62 That is, the Board prevented the deduction because it was unauthorized, not because it would have left the manager with less than minimum wage. The motel was, however, permitted to deduct the statutory maximum $37.10 per week.

Ontario’s ESA prohibits deductions only if the employee authorization was for a general deduction and did not include the exact amount, if the deduction was for faulty work, if the employer had cash or property lost or stolen and a person other than the employee had access to it, or if the wages were required to be returned and those wages were subject to an order under the Act.63 The Interpretation Manual statement that in-kind benefits cannot reduce wages below statutory minimums, while commendable, does not reflect the legislation.  

IV. Proposed Legislative Changes

Suivez le Québec

Legislatures can address the problem of payment in kind in several ways. One model is based on Quebec’s Act Respecting Labour Standards, which states “no benefit having pecuniary value may be taken into account in computing the minimum wage”.64 In its interpretation guide, Quebec’s Commission des normes, de l'Ă©quitĂ©, de la santĂ© et de la sĂ©curitĂ© du travail65 notes that for employees who earn more than minimum wage, employers can deduct a maximum of $54.93 for room and board each week,66 provided the deduction does not bring their wages below the statutory minimum. The Quebec act further prevents employers from charging for room and board provided to domestic workers, no matter their earnings.67

The guide also notes that when employees earn minimum wage, employers cannot charge them for the cost of the equipment needed for the job, but when an employee earns more than that, they may be required to purchase some equipment, as long as they still received as least minimum wage in currency.68 This is yet another provision that emphasizes the importance that Quebec places on its minimum wage: all workers deserve at least this level of compensation, and employers certainly cannot reduce it because they provided in-kind payment that may benefit themselves as much as or even more than the workers.

Because it best reflects the purpose of minimum wage legislation, other Canadian jurisdictions should adopt the Quebec model regarding payment in kind. Just because an employee agrees, perhaps in desperation, to receive payment in a non-currency form does not mean that such freedom of contract should prevail. Employment standards legislation is meant to set a floor on worker protections, including the minimum wage.

Requiring the minimum wage to be paid in currency is also straightforward to enforce. Employment standards officers would only need to look at paystubs to determine if the legislation was being violated. Adopting the Quebec model would not prevent employers from offering in-kind payment such as meals, lodging or transit passes on top of paying the minimum wage, especially if it were for the employer’s convenience. These benefits would likely be considered taxable income,69 but would not make a difference to employment standards.

Taking smaller steps

Some jurisdictions may be reluctant to adopt the Quebec model, as it could increase payroll costs for a wide variety of employers. While the wellbeing of vulnerable workers should outweigh these concerns, provinces may be more open to taking smaller steps and simply tightening up their current regulations around in-kind payments.

This alternative model would only allow payment in kind to reduce the minimum wage paid in currency if it is for goods necessary for the employee’s survival. Typically, that would be limited to food and lodging. Further, employees would not be able to agree to deductions for other goods or services, as they currently can under most jurisdictions’ employment standards legislation.70 The rationale behind this restriction is a practical, economic one. As discussed above, legislators aimed for minimum wage earners to support themselves in their community. Such a condition obviously requires food and shelter, and if these goods are provided by an employer, the employee can survive with less currency. But free movies and fitness classes do not reduce an employee’s cost of living, and providing them should not constitute a substitute for wages paid in dollars.

This model would retain several elements of the current system, including statutory deduction rates set in dollars, deductions permitted only if employees agree in writing (with an additional condition that the agreement is written in a language the employee understand well, since many new Canadian and migrant workers are amongst the most vulnerable), and requiring employers to provide records regarding wage payments and deductions.

But this model would also involve several other changes to advance worker protection. For one, it would not permit room and board deductions if living on site were a requirement of employment. This is based on the Massachusetts Domestic Workers Bill of Rights, which states “An employer shall not deduct from the wages of a domestic worker an amount for lodging if the employer requires that a domestic worker reside on the employer's premises or in a particular location”.71

The rationale is similar to that behind many provinces’ prohibitions on employers deducting from employees’ wages the costs of uniforms and other special work clothing.72 An employee in uniform is clearly for the benefit of the employer, and provinces recognize employees should not be financially penalized because of their employer’s demands. Room and board benefits employees more than uniforms do, but may come with significant disadvantages: less privacy, always being on call, and more difficulty in separating their work and personal lives. If an employer requires the worker live on site, it benefits from their “perpetual availability”.73

Further, living in an employer’s home, rather than in a corporate residence, can be uncomfortable for employees. A study of domestic workers in Italy found that their employers often implemented rules that made them feel lesser-than: traditional maid uniforms, requiring the worker to call her employer by her surname, while the employer called the worker by her first name or even “girl”, and giving her “gifts” of old clothing.74 A study of Mexican and Central American domestic workers in Los Angeles found that “most women are repelled by live-in jobs. The lack of privacy, the mandated separation from family and friends, the round the clock hours, the low pay and especially the constant loneliness prompt most Latina immigrants to seek other job arrangements”.75

An employee required to give up privacy and significant work-life balance for their employer’s convenience should not see their wages drop below the statutory minimum. Of course, an employee who requests or chooses a live-in option may be doing so for their own convenience: a reduced commute, fewer logistics to handle, and cheaper rent. In that case, room and board deductions may be fair.

Next, this graduated model would implement more quality control regarding in-kind payments. Some provinces currently require that lodging provided as in-kind payment must meet certain standards. In Ontario, for instance, it must be “reasonably furnished and reasonably fit for human habitation; supplied with clean bed linen and towels; and reasonably accessible to proper toilet and washbasin facilities”.76 While no Canadian jurisdiction has similar regulations for meals deemed to be in-kind payment, certain American states do. Until 2014, for instance, Connecticut valued employer-provided “full meals” at $2.55. It had to include “adequate portions” of at least one type of food from four of the following food groups: (1) fruit juice or soup; (2) fruit or vegetables; (3) bread, cereal or potatoes; (4) eggs, meat, fish or a recognized substitute; (5) beverage; (6) dessert.77 This meant that an employer could present unlimited orange juice, French fries, soda and ice cream as supper. Such a meal is not enough to sustain a worker throughout the day or keep them healthy throughout their career; such legislative models must not be imported into Canada.

New York State’s quality control regarding employer-provided meals helps ensure workers who sacrifice their wages at least get nutritious foods. Meals may count towards wages if it includes “adequate portions of a variety of wholesome, nutritious foods” and, for lunch and supper, food from all four of the following food groups: (1) fruits or vegetables; (2) cereals, bread or potatoes; (3) eggs, meat, fish or poultry; (4) milk, tea or coffee.78

One downside of adopting New York-style quality control regulations would be its difficulty in enforcement. Already, many employees who experience wage theft have trouble holding their employers to account.79 Documenting the contents of each meal adds another burden onto employees who may already find the complaints process frustrating, especially if they lack proficiency in English, French or technology. Instead, the enforcement process should be revamped and moved to a proactive inspection model, and proper meals could be part of that. Just as employers may be required to show Employment Standards Officers their records for payment of wages and hours of work, they could also be asked to document the meals they provide, possibly with photographs or receipts for the food they purchased.

This model of regulating in-kind payments would be mandatory for all industries, from domestic and agricultural workers who live in their employers’ homes and on their farms to miners and loggers whose employers build camps, dormitories, gyms and games rooms for them.80 Yet in practice, it would primarily affect domestic services and agriculture, as well as children’s summer camps and property management companies that hire superintendents for each building. That is because many natural resources employers already pay their workers well above minimum wage. According to Indeed, the average annual salary of a Canadian miner is slightly more than $80,000.81

V. Potential Pitfalls

Changing the legislation around in-kind payment through either the Quebec model or the graduated model comes with certain downsides. For one, workers who currently receive in-kind payments, the cash value of which is more than the worker would receive if paid minimum wage, would be worse off. For example, an Ontario worker who agreed to clean a yoga studio for five hours per week in exchange for an unlimited monthly class pass retailing for $300 would be worse off because at minimum wage, her cleaning work would only gross $280 per month. She would not be able to buy the monthly pass with the money she earned. Yet it is quite common for fitness studios to provide free classes to employees on top of their salary, since it does not cost the studio anything. In fact, having healthy workers who participate in class and share their enthusiasm on social media helps the company.82 But even if this small category of workers became worse off because of these changes, it pales in comparison to the benefits these changes would bring workers who are significantly more vulnerable than energy exchangers.

A more significant problem would be employers attempting to re-categorize workers paid in kind as volunteers receiving honoraria. While most Canadian employment standards legislation does not define “volunteer”, certain employment decisions are helpful. In Consumer Liability Discharge Corporation v. Molica, a recent college graduate offered to come into the company’s office and learn by observation without “any compensation of any kind”.83 Referee Davis found the new graduate was an employee and entitled to wages. He wrote:

One of the key factors … in determining whether there has been a true volunteering of services other than in the context of an employment relationship is the extent to which the person performing the services views the arrangement as being pursuant to his pursuit of a liv[e]lihood on one hand, and the extent to which the person receiving the services is conferred a benefit on the other hand. Another factor will be the circumstances of how the arrangement was initiated: and again, whether an economic imbalance between the two parties was a factor in structuring the arrangement.84

Similarly, in Station Street CafĂ© v. Ramsay, the employer argued that two workers had offered to run his cafĂ© for an unpaid two-week trial. If successful, he would pay them a joint salary of $300 per week. The workers argued they had agreed to be paid $300 weekly for the trial, and their salary would rise to $300 each afterwards. Referee Adamson found for the workers, noting that volunteers in any industry may work without pay if they so choose, but they remain under the protection of the Employment Standards Act. He considered s. 23 of the Act: “Every employer who permits any employee to perform work or supply any services in respect of which a minimum wage is established shall be deemed to have agreed to pay the employee at least the minimum wage established under this Act.”85 Referee Adamson therefore found that while the claimants may have offered to work for free, by letting them work in his restaurant, the employer accepted the responsibility of paying them minimum wage.86

More recently, in 2009, the Ontario Labour Relations Board reached a similar conclusion in Wimpy’s Diner, in which a restaurant often provided free meals to community members unable to pay. One community member, Travis MacAleese, was uncomfortable accepting free meals, and offered to work at the restaurant in exchange for them. He washed dishes, took out garbage, and unloaded deliveries, and had no set hours, and then made an application for back wages. Vice-Chair Waddingham considered s. 6(1) of Regulation 285/01 to the Employment Standards Act:

6. (1) Subject to subsection (2), work shall be deemed to be
performed by an employee for the employer,
(a) where work is,
(i) permitted or suffered to be done by the employer.87

Vice-Chair Waddingham found Mr. MacAleese was an employee: “Certainly Wimpy’s has allowed Mr. MacAleese to perform these duties. Indeed Wimpy’s benefited from Mr. MacAleese’s labour by having dishes cleaned, garbage cleared, recycling and stocking duties performed. The only thing which Mr. MacAleese received was one to two free meals per day, something that the staff in the back of the restaurant also received.”88

There is, therefore, some precedent that workers who volunteer their time are still employees and protected by employment standards legislation. Still, protective legislation would be useful as well, as is the case in the United States. Its Fair Labor Standards Act defines a volunteer as “an individual who performs hours of service for a public agency for civic, charitable, or humanitarian reasons, without promise, expectation or receipt of compensation for services rendered”.89 This definition prevents private, for-profit organizations from using volunteer labour at all. The provision is not perfect, as government agencies and non-profit organizations can still misclassify workers as volunteers, but at least the provision makes it more difficult for employers to exploit workers in this way.

VI. Concluding Remarks

The United Kingdom and Canada officially abolished the truck or scrip system, and instituted minimum wage laws reflecting the cost of living so that workers could support themselves in their communities. Yet vestiges of the truck system remain, as many Canadian jurisdictions allow payment in kind to bring wages under the statutory minimum. If legislatures are serious about the minimum wage allowing workers to “maintain themselves in health”, they should not permit employer-provided goods and services to result in workers receiving less than the minimum wage. The Quebec model, which prohibits this outright and is simpler to enforce, is ideal. But if such a change proves too difficult to pass immediately, legislatures should begin the process by only permitting deductions that bring wages under the statutory minimum if they are for room and board, and if the employee requests the meals or accommodation. Further, these employer-provided goods should meet certain quality control standards and should apply to all industries, though employers of agricultural and domestic workers would likely be most affected.

Either change might lead to an employee misclassification problem, in which companies argue workers who were previously paid in kind have transformed into volunteers receiving honoraria. Certain labour board decisions from Ontario suggest that employers who permit work to be done for the benefit of their business will have trouble winning this argument. Nevertheless, Canadian legislatures should consider restricting volunteering to public or non-profit organizations, as does American federal law. This would reduce the risk of such misclassification simply by reducing the number of employers who could make the volunteer claim.

Minimum wage legislation is in place because governments have decided that nearly all employees require a certain level of compensation to live in “frugal comfort” in their communities, yet studies have found current minimum wages do not allow for even this. Permitting employer-provided goods or services to reduce this amount strips minimum wage workers of the full amount of their already insufficient earnings, as well as their autonomy and independence. Legislatures must clamp down on such exceptions to the minimum wage to ensure the wellbeing and dignity of all workers in Canada.


1 Peter Nowak, “Tanner Zipchen speaks out on former Cineplex gig, says at first all he got were Scene points” (15 February 2020), online: Toronto Star <>.
2 For instance: “Callin’ All Energy Junkies” (2018), online: Chi Junky <>; “Energy Exchange” (2020), online: City Dance Corps <>; “Join the Team” (2020), online: Ride Cycle Club <>; “Energy Exchange Program” (2020), online: Iam Yoga <>.
3 McCormick v Fasken Martineau DuMoulin LLP, 2014 SCC 39 at para 23.
4 Chi Junky etc., supra note 2.
5 8959757 Canada Inc. operating as New Jenny Nail & Spa v Qiurong Cao Jane, 2016 CanLII 28478 (ON LRB) at para 8.
6 Alana Semuels, “The Internet is Enabling a New Kind of Poorly Paid Hell” (23 January 2018), online: The Atlantic <>; Amazon Mechanical Turk, “Frequently Asked Questions”, online: Amazon Mechanical Turk <>.
7 “How to Become an Airbnb Superhost” (2 December 2019), online: GuestReady <>.   
8 “The Logging Period” (2012), online: Friends of Awenda Park <>.
9 United States National Recovery Administration Committee on Company Scrip, “Industrial and Labor Conditions: Company Stores and the Scrip System” (1935) 41 Monthly Labor Review 45 at 49 [Committee Report].
10 Christopher Frank, “Workers, Unions and Payment in Kind: The Fight for Real Wages in Britain, 1820-1914” (New York: Routledge, 2020) at 5.
11 Elaine S. Tan, “Regulating Wages in Kind: Theory and Evidence from Britain” (2006) 22:2 Journal of Law, Economics, & Organization 442 at 454-5; Richard H. Timberlake, “Private Production of Scrip-Money in the Isolated Community” (1987) 19:4 Journal of Money, Credit and Banking 437 at 441.
12 Tan, supra note 11 at 450.
13 Committee Report, supra note 9 at 50.
14 Frank, supra note 10 at 2.
15 Before the decimilization of British currency in 1971, twenty shillings made up one pound sterling: Len Freeman, “How Britain converted to decimal currency” (5 February 2011), online: BBC <>.
16 Committee Report, supra note 9, at 50.
17 Sean T. Cadigan, Hope and deception in Conception Bay: merchant-settler relations in Newfoundland, 1785-1855 (Toronto: University of Toronto Press, 1995) at 108.
18 Committee Report, supra note 9 at 51.
19 Ibid at 52.
20 George W. Hilton, “The British Truck System in the Nineteenth Century” (1957) 65:3 Journal of Political Economy 237 at 237; Frank, supra note 10 at 9.
21 Frank, supra note 10 at 10.
22 Ibid at 28, 12.
23 Manitoba MĂ©tis Federation v. Canada, 2013 SCC 14, at paras 24-38.
24 Amanda Robinson, “MĂ©tis Scrip in Canada” (2 October 2019), online: The Canadian Encyclopedia <>.
25 “MĂ©tis Scrip: The Foundation for a New Beginning” (27 November 2011), online: Library and Archives Canada <>.
26 Cadigan, supra note 17 at 30.
27 Ibid at 97.
28 Greg Kealey, ed., Canada Investigates Industrialism: The Royal Commission on the Relations of Labor and Capital 1889 (Toronto: University of Toronto Press, 1973) at 33.
29 Keith Hancock, Australian Wage Policy: Infancy and Adolescence (Adelaide: University of Adelaide Press, 2013) at 58.
30 Ibid at 58
31 Ex parte HV McKay (1907) 2 CAR 1 at 1.
32 Ibid at 4.
33 Hancock, supra note 29 at 79.
34 Kathleen Derry and Paul H. Douglas, “The Minimum Wage in Canada” (1922), 30:2 Journal of Political Economy 155 at 155.
35 Ibid at 159.
36 Ibid at 175.
37 Ibid at 172.
38 Ibid at 173.
39 Ibid at 181.
40 “Historical minimum wage rates in Canada” (2020), online: Government of Canada <>.
41 Aaron Saltzman, “Tim Hortons heirs cut paid breaks and worker benefits after minimum wage hike, employees say” (3 January 2018), online: CBC <>.
42 “Amazon cutting benefits to fund pay rises, union says” (4 October 2018), online: BBC <>.
43 Anil Verma et al, “The Economic Impact of Minimum Wages” (27 January 2014), online: 2014 Minimum Wage Advisory Panel <>.
44 David Card and Alan B. Krueger, “Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania” (1993) 84:4 American Economic Review 772 at 776.
45 For instance, a 2014 study found that Nova Scotian parents who earn minimum wage cannot afford nutritious diets for their families: Felicia D. Newell, Patricia L. Williams and Cynthia G. Watt, “Is the minimum enough? Affordability of a nutritious diet for minimum wage earners in Nova Scotia (2002-2012)” (2014) 105:3 Journal of Public Health e158 at e162.
46 Richard Anker and Nicole Anker, “In Kind Benefits as Partial Payment of Wages: A review of laws around the world” (2017) Political Economy Research Institute at University of Massachusetts Amherst Working Paper No. 428 at 7.
47 Ibid at 14-18.
48 Ibid at 24-26.
49 For instance: Employment Standards Act, 2000, S.O. 2000, c. 41 s. 13 [Ontario ESA]; Employment Standards Code, R.S.A. 2000, c. E-9, s. 12 [Alberta ESA]; Employment Standards Act, R.S.B.C. 1996, c. 113, s. 21 [B.C. ESA].
50 Employment Standards Regulation, Alta Reg 14/1997, s. 12(1).
51 Ibid at s. 13.
52 Employment Standards Regulation, BC Reg 396/95, s. 14.
53 When Worked Deemed to be Performed, Exemptions and Special Rules, O Reg 285/01, s. 7 [Ontario ESA Regulation].
54 Ibid at s. 18(2).
55 General Labour Standards Code Regulations, N.S. Reg. 210/2018 at s. 8.
56 Skeena Valley Guru Nanak Brotherhood Society v Director of Employment Standards, BCEST #D361/00  at paras 33, 37.
57 Ibid at paras 26, 36.
58 Ontario ESA, supra note 49 at s. 11(2).
59Employment Standards Act Policy and Interpretation Manual” (24 January 2020), online: Ministry of Labour, Training and Skills Development <>.
60 Ibid.
61 Peter Muscat General Contracting v Buttigieg (7 September 1978), ESC 543 (Davis) at 3.
62 Barbra Bois and 2327451 Ontario Inc. o/a Queensway Motel and Director of Employment Standards, 2017 CanLII 70629 (ON LRB) at 128.
63 Ontario ESA, supra note 49 at s. 13(5).
64 Act respecting labour standards, CQLR c. N-1.1., s. 41 [Quebec Labour Standards Act].
65 Commission for Labour Standards, Workplace Equity and Occupational Health and Safety
66 Regulation respecting labour standards, c. N-1.1, r. 3, s. 6; Quebec Labour Standards Act, supra note 64 at s. 51.
67 Quebec Labour Standards Act, supra note 64 at s. 51.1
68 Ibid at s. 85.1
69 “Do you give your employee a benefit, an allowance or an expense reimbursement?” (2020), online: Revenue Canada <>.
70 For example: Ontario ESA, supra note 49 at s. 13(3); Employment Standards Regulation, R.M. 6/2007, s. 19(2)(1) [Manitoba Regulation].
71 Mass Gen Laws c 149, § 190(g)
72 For example: Manitoba Regulation, supra note 7,  s. 19(2)(3)
73 Adelle Blackett, Everyday Transgressions: Domestic Workers’ Transnational Challenge to International Labor Law (Ithaca, NY: Cornell University Press, 2019) at 65.
74 Ibid at 70-71.
75 Ibid at 66.
76 Ontario ESA Regulation, supra  note 53 at s. 5(2).
77 Conn Regs § 31-60-3 (2001)
78 NY Comp Codes R & Regs tit 12, § 142
79 Kiran Mirchandani and Sheldon Matthew Bromfield, “Roundabout wage theft: The limits of regulatory protections for Ontario workers in precarious jobs” (2019) 22 Journal of Labor and Society 661.  
80 “Experience the Best of Both Worlds” (2020), online: Glencore Mine Raglan <>.
81 “Underground Miner Salaries in Canada” (2020), online: Indeed <>.
82 “Guest Experience Team Member” (3 September 2019), online: Y Yoga <>.
83 Consumer Liability Discharge Corporation v Employment Standards Officer (Re Molica), ESC 1032 (Davis) at  2.
84 Ibid at 8.
85 A similar provision now appears in Ontario ESA Regulation, supra 53 at s. 1(1).
86 Glenn William Robinson o/a Station Street Café v Linda Ramsay and Gordon Ramsay, ESB 04432 (Adamson) at 5.
87 This provision now appears at Ontario ESA Regulation, supra 53 at s. 1(1).
88 0080-09-ES 1559792 Ontario Limited o/a Wimpy's Diner v. Travis MacAleese and Director of Employment Standards, 2009 CanLII 60605 (ON LRB) at para 15.
89 29 CFR § 553.101 (2020)