2
Feb, 2018
pay equity in canada

Pay Equity: Staying Complaint

Pay Equity is based on the value of work provided regardless of gender. The work often refers to of equal duties or comparable value to company.
In 1977 the Canadian Human Rights Act includes a section that makes it a discriminatory practice for an employer to “establish or maintain differences in wages between male and female employees employed in the same establishment who are performing work of equal value”.

A major component to ensure compliance in Pay Equity is to understand how to conduct Job Evaluations. The HR Council of Canada defines job evaluation as “the systematic process for accessing the relative worth of jobs within an organization”.

Laws:
– Ontario and Quebec employers with 10 of more employees must adhere to the pay equity compliance
– A Pay Equity Plan and report must be filed with the Ontario government each year
– Ontario Pay Equity Act established in 1987, Quebec Charter established in 1978 and Canadian Human Rights established in 1977 can be used as references

How to stay complaint:
– Group your job role/titles into classes that are similar in duties, responsibilities and qualifications
– Determine the job rates using the highest and lowest salaries in the group
– Conduct a job evaluation and analysis based on each employee in each job class
– Make your adjustments and document the changes

Resources:
HRPA Closing the Gender Wage Gap – a great article employers and HR professional should review

ADP fact sheet about Pay Equity in Ontario

Job Evaluation article posted by Hays Group provides useful resources to help you with this process.

16
Jan, 2018
contractor or employee canada

Hiring a: contractor or employee?

It is very important to determine this relationship prior to any hiring is done. There are a lot of expense savings in hiring a contractor (self-employed individual), however if its determined down the road this contractor is actually considered an employee by CRA you will have much more expenses, taxes and penalties to remit.

Here is what you need to know:

The contract
Is it a Contract of service (employment contract) or a Contract for services?

Who is in control?
Can you clearly identify when and where the work or services have to be done (employee)? Or can there be a negotiation and or compromise on both sides (contractor)?
Can the individual get someone else to perform the work (contractor) or the worker has to perform the work assigned (employee).

Reporting authority
Is there a chain of command where the individual reports work and is assigned work by a manager (employee) or the individual has access go straight to the top for any work or issues (contractor)

Training
Are you providing training to the individual (employee)? Or should the individual already be equipped or if needed seek training from another party (contract)

Work environment
Is there a designated area for the individual (employee)? Or can they work independently as long as the services is completed in the agreed timeframe (contractor).

Is someone overseeing the individuals work? (employee)

Can the individual refuse work? (contractor)

Equipment
Are you providing the tools and equipment for the work (employee)? Who owns the equipment?

Risk
Who is liable for any damages that may result in financial loss? The contracted individual should have his or her owns insurance for these situations.

CRA reporting and remittances
Are you deducting and submitting the employee and employer portions to CRA (employee)? Are you providing a T4 (employee)? Or the individual is responsible for submitting these on their own under their own business name. (contractor)

We found a great guide provided by Wage Point here. You’ll find all the details of each side of the employment and also how to handle special situations like transitioning contractors to employees.

Always contact an employment lawyer and CRA to help you avoid costly penalties and future audits down the road.

8
Jan, 2018
t2200-employee expenses

T2200: Expense Deductions for Virtual Employees

Do you have employees that work from home? If so, you must understand if you need to fill out or sign a T2200 form for anyone.
A general understanding is if the employee needs to allocate a work space at home in order for them to carry out their job duties, it is a strong possibility that they require a T2200 to be filled out. This helps the employee at tax time with expense deductions related to work.
Be prepared as you may get requests from employees who have been advised by their tax accountants at year end. Most cases, employees may bring a completed T2200 form and ask the HR team to sign it. You must be aware and review the terms of their employment and ensure the amounts filled out by the employee are reasonable.

Questions to ask yourself:
1. Does the employee generally work from home the majority of the time (more than 50%)?
2. Does the employment agreement indicate they must cover the cost of expenses related to working from home?
3. Does the employee hold meetings where client may visit their home?
4. Would working from home have the employee incur more cost on things like internet charges, phone fill, lighting, heating etc..?
5. Are they required to use their personal vehicle?

Not all expenses you can deduct. Internet is one of those, that most employee believe they are entitled to deduct based on their employment. CRA provides the list here of what can and cannot be used for an expense deduction.

References to take a look at:
A great questionnaire is found here from HR insider.
We also found a detailed walk thru to help determine and fill out the proper way from McMaster University here. We recommending looking at this one.
Detailed information on each expense type are listed here from great resource we found on the University of Alberta website.

Québec
The Quebec equivalent is TP-64.3-V – General Employment Conditions form. This can be found here.

Additional Resources:
Reasonable automobile kilometer rates from CRA here
CRA employment expense form guides here
Quebec employment expense guide here

3
Jan, 2018
taxes on bonus pay

Bonus Pay: How to properly calculated the taxes

It’s quite common for your payroll service provider to have problems with this tax. We have experience a number of reputable companies that did not have the engine built to calculate Bonus payments properly. It is your responsibility to ensure the bonus calculations are accurate to the best of your abilities.

Result of incorrect taxing on bonuses:
– employee being unhappy when filing taxes. They end of paying more instead of getting a refund.
– employers responsible for paying the CPP and EI company portions
– employers responsible for paying the all the taxes for the bonus because the employee has left and you cannot recoup the amounts.
– CRA PIER audit can be triggered which cases more headaches
– possible further audits going years back if suspected of not handling bonuses properly which amounts to much more time and money spent

A general rule to understand: CRA considers these payments as being an increase to your pay rate. Taxes are calculated on your pay rates.

Another key note: This special tax calculation is also use for irregular payments like retro pay. Review these other payment types here.

Calculating CPP on Bonuses:
The difference in calculating CPP on bonuses than a regular payment is the CPP basic exemption. You do not take the basic exemption of $3500/year (as of 2018) in consideration. Therefore take the taxable amount of the bonus (Pensionable amount) by the CPP contribution rate (4.95% as of 2018). Also provide the employer matching amount.

If the employee is exempt or has reached his maximum contribution for the year, you can ignore calculating CPP.

Calculating EI on Bonuses:
Calculating EI is exactly the same. Multiply the EI rate by the taxable amount of the bonus (Insurable Earnings). Also provide the employer contribution amount.

If the employee is exempt of has reach his maximum for the year, you can ignore calculating EI.

Calculating Income Taxes on Bonuses:

Total taxable income is less or equal to $5000
If the total the taxable income and the bonus year to date is $5,000 or less use 15% tax (10% in Quebec) for the bonus payment.

Total taxable income is greater than $5000
There are 2 bonus tax methods listed (one-time bonus or more than one bonus), however understand the concept is the same. Whether is one bonus or 52 bonuses a year, you have to include all bonus amounts year-to-date when calculating the taxes.

The employee regularly gets $1500 salary per cheque. An now you’re paying the employee $1000 bonus.

Let’s say you are bi-weekly pay with 26 pay periods a year. Take the amount of the bonus divided by the number of periods in the year = $38.46 ($1000 / 26) This now is added to the regular salary amount = $1538.46.

Calculate the taxes on $1538.46 = $211.58 (assuming using claim code 1 with no pre-tax deductions, or taxable benefits in Ontario)

Calculate the taxes on the regular salary amount $1500 (you can refer to last pay run) = $204.38 (assuming using claim code 1 with no pre-tax deductions, or taxable benefits in Ontario)

Subtract the difference = $7.20 (211.58 – 204.38)

Annualize the taxes per year: $7.20 multiple by 26 pay period = $187.20

Regular Taxes = $204.38, Bonus Taxes = $187.20 Total Taxes Paid = $391.58

CRA provides good information here on how to calculate bonus taxes

27
Dec, 2017
payroll year end 2017

Year End Checklist: Closing 2017 and preparing for your first pay of the New Year

As we are ready to celebrate the year it was and welcome the next chapter, we as payroll people have to ensure our year end is as clean as possible.

Below is an internal checklist to consider for your year-end payroll process:

– Attend training and read up on Year End Processes from your payroll service provider
– Be aware of crucial team member time offs and availability during the holidays
– Adjust for any payroll processing days that fall on Statutory Holidays
– Last payments for 2017. Before the calendar days run out, any payments that need to be included on this year’s T4s need to be completed
– Auditing and Previewing your Year End Reporting before finalizing (T4s, Tax Remittances, Discrepancies Reports etc..)
– Adjustments for any mistakes or accruals
– Reviewing year end deadlines with your payroll service provider
– Completing your year-end process with your payroll service provider
– Communications to employees the delivery of T4s
– Review the 2018 payroll calendar to make sure any pay dates don’t conflict with Banking Holidays
– Update Provincial Health Taxes rates, exemption amounts in your payroll system if applicable
– Update Workers Compensation rates in your payroll system if applicable
– Update any Reduced EI, CSST rates in your payroll system if applicable
– Update any payroll or benefit rates for 2018 in your payroll system if applicable
– Coordinate with your payroll service provider on the 2018 tax updates to the system
– Distribute and/or communicate to employees any updates to Federal and Provincial TD1s for 2018
– Send Reminders to employees about updating their address, emergency contacts, dependent/beneficiary contacts
– Be prepared to review and audit the first pay for 2018 ahead of your normal processing time because of any system issues or updates above that must be correct prior to the first pay completion

As the subject matter expert in your organization you must always keep track with the latest in legislative and compliance updates. In addition, it is important to connect with your HRIS and Canadian payroll service provider about year-end trainings, support hours and availability around the holidays to make sure you are ready for the first payroll of the new year.

24
Dec, 2017

Bill 17: Alberta Employment Standards Updates for January 2018

Bill 17 as known as The fair and family-friendly workplace act will come into effect January 1, 2018. Here is what you should know as an Alberta Employer:

Leave Eligibility
– Now employees are eligible for any leave after 90 days of employment. Prior law was 1 year.

New Leave types
– Death or disappearance of child leave
– Critical illness of child leave
– Long-term illness and injury leave
– Domestic violence leave
– Personal and family responsibility leave
– Bereavement leave updates
– Leave for citizenship ceremony
– For details around time off and whether paid or unpaid periods please review the Alberta Employment Standards Website.

Breaks
– Employees must receive a 30 min break after 5 hours of work. This break can be paid or unpaid.
– If both the employer and employee agree, this can be taken in two 15 min break periods

Employees with Disabilities
– Permits are no longer valid that allow employees with disabilities to be paid less than minimum wages

Overtime
– Banked overtime is now banked at the overtime rate of time and a half (1.5) instead of straight time
– Banked time can now be kept for 6 months instead of 3.

Holiday Pay
– No minimum requirement of 30 days worked prior to the holiday.
– Holiday pay is calculated at 5% of wages from the last 4 weeks.

Vacation taken
– Vacation can be taken in half days increments rather than a full day only

Alberta employers, HR professionals, union leaders and employee managers should become familiar with these changes that will have an impact immediately. These changes must be incorporated into your policies and union agreements if they do not already account for the minimum standards. Particularly, understanding the new leave types and the extended periods employees can be away for. In addition, its always a good idea to reach out to your HRIS and payroll service provider to see what plans they have to help you account for these legislative employee standard changes and how to use them.

For details of all changes please visit the employee standards website of Alberta here.

18
Dec, 2017
bill 148 esa ontario changes

Bill 148: The impact to your business starting January 2018

Bill 148 will have significant changes to your business effective on January 1st, 2018. You should be aware of these changes as well as be in a position to help assist your HR department and employee managers with any questions that might come up from your work force. You should also engage your HRIS / Payroll Service partners on how to prepare and incorporate these changes for the new year.

The reforms to the Employment Standards Act (ESA) applies to Ontario. Some key highlights are below:
Minimum wage increase

  • $14.00 per hour in January 2018
  • $15.00 per hour in January 2019

Stat Holiday Pay

  • Changes to the way holiday pay is calculated
    • Holiday pay is equal to the total wages earned in the prior period before the holiday / number of worked days during the pay period with the holiday (current period)
  • You must provide documented or written agreement to the employee if you require them to work on the holiday. Additional details include the day the employee will take as a substitute, communication date and agreement.

Vacation

  • Employees now with 5 or more years of service must receive at a minimum 3 weeks’ vacation. Equivalent of 6% of employee’s wages.

Leave of Absence

  • There are new categories in effect that provides additional time off listed below:
    • Death of a child – up to 104 weeks
    • Crime-related disappearance of a child – up to 104 weeks
    • Domestic or Sexual Violence of employee or child – up to 10 days paid, additional 15 weeks unpaid
    • Maternity or miscarriage or stillbirth – up to 12 weeks (prior was 6 weeks)
    • Parental – 35 up to 61 weeks (for a parent who has taken maternity already), 37 up to 63 for other
    • Family Medical – 8 up to 27 weeks
    • Personal Emergency – 2 days paid, up to 10 days in total

Scheduling

  • The Employee is entitled for a minimum of 3 hours regular pay for any Schedule shift cancellations or sent home early for any circumstances beyond your control such as storms, outages etc…
  • On call employees must be paid a minimum of 3 hours regular pay regardless if they have worked or not
  • If you cancel a shift and only provide the employee less than 48 hours (4 days) of notice before the start of the shift you must pay 3 hours regular pay
  • The employee can decline work if you have requested them to work 96 hours (8 days) before the shift start

Detailed Records

  • You now have to track the dates and times employees:
    • Work
    • Was schedule to work
    • On call
    • Scheduled shift cancellations

 
In summary, with Bill 148, the Ontario government is looking help promote a better work life balance. Changes will give employees better flexibility, however, might have some negative impacts at the company level. As an Ontario business, you should evaluate these changes and how to incorporate them in day-to-day operations.
 
Details and debates on Bill 148 are available on the Legislative Assembly of Ontario website here.