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Chapter 6
Payroll Fundamentals 1
| Term | Definition |
|---|---|
| Employee-Employer relationship | exists if: 1. Employee retains the right to be called to work 2. Employee has an expectation of work to be performed 3. Employee continues to receive RPP benefits 4. Employee participates in benefits available when employed |
| An employer providing | only health and dental coverage, termination has occurred. To be sure, obtain a ruling from CRA. |
| Termination of employment | can be employer or employee initiated. Reasons for termination are: 1. Shortage of work 2. Poor performance 3. Misconduct |
| Employment/labour standards in each jurisdiction | legislate what a terminated employee must receive: 1: Amount of working notice or wages in lieu 2. Types of earnings considered vacationable 2. Percentage or fraction of vacationable earnings 3. Severance pay must be given to a terminated employee |
| Employer initiates termination | they are required to provide a written notice or pay wages in lieu. |
| Termination payment types | 1. Wages in lieu of notice 2. Vacation pay 3. Severance pay |
| Wages in lieu of notice | Included in income, subject to all deductions (except QC). QC considers this payment as retiring allowance. |
| Wages in lieu of notice and Vacation Pay (deductions) | C/QPP = if paid separately, straight percentage method applies EI/QPIP = straight percentage method always applies Income taxes = bonus tax method NWT/NU = annual tax rate applies |
| Vacation pay | Included in income, subject to all deductions. 1. Non-Quebec = 2/wks. @ 4% after 1 yr. and 3/wks. @ 6% after 5 yrs. 2. QC = 2/wks. @ 4% after 1 yr. and 3/wks. @ 6% after 3 yrs. |
| Vacation pay earnings included (Other jurisdictions) | 1. Wages, salary, call-in-pay, shift pay, retroactive pay, commissions 2. Work-related bonuses 3. Previously paid vacation pay |
| Vacation pay earnings included (ONT) | 1. Wages, salary, call-in-pay, shift pay, retroactive pay, commissions 2. Overtime pay 3. Work-related bonuses 4. Wages in lieu of notice 5. Statutory holiday pay 6. Board and lodging cash taxable benefit |
| Vacation pay earnings included (QC) | 1. Wages, salary, call-in-pay, shift pay, retroactive pay, commissions 2. Overtime pay 3. Work-related bonuses 4. Wages in lieu 5. Statutory holiday pay 6. Sick pay 7. Previously paid vacation pay 8. Vacation pay owing at termination |
| Severance pay | Not included in income. Subject to Income taxes and payroll. In QC, subject to EI /QPIP also. |
| CLC, Part III & ONT's Employment Standards Act, 2000 | requires severance pay based on length of service and a ONT employers payroll, in addition to notice of termination . |
| CLC, Part III | employees with 12 mon. of service are entitled to the greater of: 1. Two days wages at regular rate for each yr. of employment (no OT) or 2. Five days wages at regular rate (no OT) or 3. Wages vary, avg. earnings for last 4 complete wks. (no OT) |
| ONT's Employment Standards Act, 2000 | employee qualifies for severance pay if: 1. Worked 5 or more yrs. 2. Employers payroll is at least $2.5 million or 3. Employer terminated 50 or more people in 6 mon. period because of business closure |
| ONT's Employment Standards Act, 2000 (continued) | employers payroll is measured as greater of: 1. Total wages of all employees, 4 wks. ending with last day of last pay period prior to termination, multiplied by 13 2. Total wages of all employees, last or 2nd to last yr. prior to termination |
| Severance pay (ONT) | calculated as: One wks. regular wages for each yr. of service + Part yrs. of service. Max payment = 26 wks. regular wages. |
| Severance pay (entitled) | 1. Regular employee 2. Termination due to strike or lock-out not causing economic hardship 3. Terminated due to one exercising seniority rights 4. On termination, retire and accept a reduced pension |
| Severance pay (not entitled) | 1. Refuse alternate employment 2. Refuse to exercise seniority rights 3. Retire with unreduced pension 4. Engaged in on-site or any construction industry 5. Terminated for just cause 6. Refuse to call-in to work 7. Employment contract |
| Retiring allowances | term in the federal Income Tax Act that refers to an amount paid to officers or employees once employment has been served. |
| Retiring allowances (defined) | as an amount paid in either recognition of long service or loss of office or employment. |
| Retiring allowances (included) | 1. Unused sick pay 2. Severance payments (CLC and ONT) 3. Excess wages in lieu 4. Amounts when office of employment is terminated 5. Payments in recognition of long service 6. Loss of office compensation 7. Gratuitous payments |
| Retiring allowances (not included) | 1. Legislated wages in lieu (except in QC) 2. Vacation pay 3. Accumulated Overtime 4. Death benefit 5. Bonus or incentive pay 6. Commissions 7. Any payment made where employee-employer relationship exists |
| Retiring allowances | Not included in income. Subject to income taxes and payroll taxes (Except QC). Calculated using the lump-sum tax rate. QC subject to EI/QPIP also. |
| Retiring allowances paid | employees may transfer an eligible portion directly into a RRSP or RPP with no income tax deductions. Amounts not transferred, subject to income taxes using lump-sum tax rates. |
| Retiring allowances (eligible portion) | $2,000.00 for each yr., or part yr., prior to 1996 + $1,500.00 for each yr., or part yr., prior to 1989 - did not belong to DPSP - did belong to RPP, fund, or DPSP, but not fully vested for the pre-1989 yrs. |
Created by:
Moorebaier
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