January/February 2012
THE OFFICIAL PUBLICATION FOR MEMBERS OF THE CANA DIAN PAYROLL ASSOCIATION
An Employer’s
Guide to Important
Legislative &
Employment Law
Developments in
2011 & into 2012
Risky Business:
It’s Not Just
What You
Do—It’s How
You Do It
Measuring
your Human
Resources
Image: Your
Competitive
Edge
How to Handle
Salary
Overpayments
Postmaster: Send change
of address notification and
undeliverable copies to
The Canadian Payroll
Association, 1600-250
Bloor Street East, Toronto,
ON M4W 1E6
PM 40011138
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President’s Message
Patrick Culhane, FCMA, President
Table of contents
How to Handle Salary Overpayments
10
Risky Business: It’s Not Just What
You Do—It’s How You Do It
14
An Employer’s Guide to Important
Legislative & Employment Law
Developments in 2011 & into 2012
18
Measuring your Human Resources
22
Performance Level
Image: Your Competitive Edge
24
High
LOW
President’s Message . . . . . . . . . .
3
Chairman’s Message. . . . . . . . . .
5
. . . . . . . . . . . . . 6
VIPP. . . . . . . . . . . . . . . . . . . . .
7
Honour Roll. . . . . . . . . . . . . . . .
8
Health & Wellness . . . . . . . . . . 27
Questions & Answers. . . . . . . . 28
Dialogue January/February 2012
Did You Know?
www.payroll.ca
columns
H appy New Year. I hope you enjoyed the holidays and
your year-end administration is going smoothly. Many of
you took advantage of the CPA’s year-end seminars—over
190 were offered across Canada and in the U.S. for 2011.
Thank you to all the speakers, staff, subject matter experts
and strategic alliances who contributed to their success.
As we move forward to 2012, I am proud to advise you
that the CPA is doing well in these uncertain economic
times. We have a very supportive membership, a knowledgeable Board of Directors, a dedicated staff, and a strong financial position.
Since the CPA was created in 1978, we have strived to provide the member
services that you require to keep your organization compliant with payroll
legislation. Our communications play an integral role, providing you with valuable information and resources.
In last year’s Members Census, members told us their overwhelming choice of
communication is electronic, and we have responded. Recently, the CPA created a
Subscription Self-Service Option to enable you to choose which CPA communications you receive and, in the case of DIALOGUE, the format you prefer. You can
find this new option on our website, www.payroll.ca. Click on “My Profile” at
the top right (login required). As a member, you will continue to receive core
services such as legislative updates and association governance emails.
We are also adding more member services on our website. Five new Payroll
Guidelines were developed in 2011 and posted on the website. We have also
added the top 10 Payroll InfoLine questions with answers on the CPA’s website
to enable you to get answers yourself.
Having a dedicated staff enables the CPA to deliver the products and services
that you and your employer need to remain compliant and knowledgeable. In
2011, the staff grew and changed as follows:
■■ In Compliance Programs and Services: Janet Spence, CPM, joined as the
Manager; Gaetano Gagliardi, CPM (bilingual), and Jodie-Ann Green, CPM, were
hired as Payroll Consultants; and Glenda Patten was hired as Administrative
Assistant.
■■ In Membership: Fadwa Afifi was promoted to Manager, Membership
Administration, overseeing member services and retention; Syeda Fathima
became Team Lead, Member Services; and Emilie Malkiewich joined as Member
Relations Representative.
■■ In Communications and Regional Programs: Lynne Currie, PCP, was promoted
to Senior Coordinator; and Michelle Sanscartier was hired as Quebec
Regional Coordinator.
■■ In Finance: Vince Truong, B.Comm, CGA, was hired as the Manager, responsible for managing the accounting, general management, IT, HR and payroll
functions and staff.
Enclosed with this magazine, you will find the CPA’s 30th Annual Conference
and Trade Show Registration Brochure. This year’s Conference—Capitalizing
on Payroll Professionalism—runs from Monday, July 2, to Thursday, July 5, in
Ottawa. We hope you will come early to Ottawa and join us in celebrating
Canada Day in the nation’s capital! n
Payroll & Privacy . . . . . . . . . . . 30
3
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dialogue
chairman’s Message
Dianne Winsor, CPM, Chairman
is published six times a year by
The Canadian Payroll Association.
Postmaster:
Send change of address notifications
and undeliverable copies to:
1600 - 250 Bloor Street East
Toronto, ON M4W 1E6
Phone: 416-487-3380
Fax: 416-487-3384
www.payroll.ca
Publications Mail Agreement Number:
40011138
BOARD OF DIRECTORS
CHAIRMAN
Dianne Winsor, CPM
Fortis Properties
PRESIDENT
Patrick Culhane, B.Comm, FCMA, CAE
The Canadian Payroll Association
VICE-CHAIRMAN
Caroline Bernard, PCP, CHRP
Wolverine World Wide
TREASURER
Charmaine Marsden, CPM, CMA
Regional Municipality of Halton
PAST CHAIRMAN
Cindy Forget, CPM
C.L. Forget Payroll Consulting
Sharon Conboy, CPM
Kwantlen University College
Marie Lyne Dion, CPM
Société de transport de Montréal
Carmen Grayson, CPM
Superior Payroll Services
Catherine Johnstone
Rogers Communications Inc.
Dialogue January/February 2012
This communication provides general information
about selected issues concerning payroll legislative
and compliance issues and/or employment and
taxation laws. It is not legal advice and should not be
relied upon as a substitute for review of your specific
situation with legal counsel. Every effort has been
made to provide accurate information; however, we
advise you to seek legal counsel and advice (from a
qualified lawyer) regarding your specific situation.
Legal obligations will vary according to the facts
and circumstances, as well as the jurisdiction.
www.payroll.ca
Edna Stack, PCP
Workers’ Compensation
Board of Alberta
I am excited about the start of a new year and I hope
you are too! There’s something magical about a clean
calendar, a new accounting year, and a fresh start in
2012—even if you have to spend the first couple months
wrapping up your 2011 payroll!
The CPA has planned another year filled with excellent
education, professional development and networking programs to enable you stay on top of legislative changes and
new developments. These services provide high-quality
content and are a great opportunity to meet with colleagues to share experiences and best practices. I encourage you to participate in as many local and
regional activities as you can, and attend the CPA’s National Conference &
Trade Show in Ottawa, from Monday, July 2, to Thursday, July 5!
The CPA has been providing payroll leadership through advocacy and
education for over 33 years, and members count on us for professional payroll
knowledge. Payroll InfoLine, the CPA’s members-only email and telephone
payroll hotline, is our most popular member service, responding to over
32,000 questions per year.
For career-oriented development, we continue to offer our certification programs online and through post-secondary institutions across the country. The
Payroll Compliance Practitioner (PCP) is the foundation for a career in payroll.
It provides candidates with the legislative content required to keep an organization compliant throughout the annual payroll cycle, effectively communicate
payroll information to all stakeholders, and understand the accounting function
as it relates to payroll.
The Certified Payroll Manager (CPM) builds on compliance knowledge and
develops payroll management skills. Based on current market research, the
course content was revised and enhanced this year to better prepare a professional to manage a payroll department.
During this revision process, we found there were very few payroll management articles and case studies available. We are defining the payroll management body of knowledge and would like to expand our content. If you have a
case study or scenario you would like to contribute, please contact Steven Van
Alstine, Vice-President of Certification at Steven.VanAlstine@payroll.ca.
New students enrolling in the CPM program must have at least two years of
experience being responsible for an organization’s payroll function, including
being accountable to management for the accuracy of employees’ pay and all
government statutory remittances (or equivalent experience), obtained in the
past five years. Each student must submit the Payroll Experience Prerequisite
Application and receive approval from the CPA prior to enrolling in the
Introduction to Payroll Management course. This prerequisite ensures students
have the practical payroll experience required to be successful in a payroll
management program.
Holding a certification demonstrates your competence and commitment
to your employer and elevates the profile of payroll as a key stakeholder in
strategic business decisions. If you are interested in taking on a new challenge
and achieving the PCP or CPM certification, you can find more information on
our website, www.payroll.ca, under Certification.
Whatever payroll opportunities and challenges the New Year has in store,
you can count on your CPA network to be there to provide the support
you need! n
5
did you know?
Robert Half’s 2012 Salary Guide
According to Robert Half’s recently released 2012 Salary
Guide: Accounting & Finance, demand for payroll professionals is
increasing, as are the salary ranges—up at least 2% from 2011.
?
Salary Range
Payroll Administrator
$37,500 – $47,000
Payroll Coordinator
$43,000 – $55,750
Payroll Supervisor
$55,750 – $68,500
Payroll Manager
$67,500 – $93,000
To download the guide, visit Robert Half ’s website at
www.roberthalffinance.com/SalaryGuideDownload. You
will also find a tool to calculate typical accounting and financial salaries in your area.
Source: Robert Half Finance
Retaining Top Talent
In a recent survey of organizations with over 20 employees, Robert Half International found that keeping high performers was a top concern. To combat the growing threat of losing
loyal employees, companies are introducing perks to attract and
retain their most indispensable team members, with the most
common being as follows (multiple responses allowed):
?
www.payroll.ca
Dialogue January/February 2012
6
■■ Subsidized
training/education: 29%
■■ Flexible working hours or telecommuting: 24%
■■ Mentoring programs: 24%
■■ Matching gift programs: 13%
■■ Free or subsidized lunch or snacks: 11%
■■ On-site perks such as childcare, dry cleaning, fitness centre
and cafeteria: 11%
■■ Subsidized transportation: 10%
■■ Subsidized gym memberships: 9%
■■ Sabbaticals: 8%
■■ Housing or relocation assistance: 7%
cient money to pay them when they retire, according to a recent
survey. Only 5% recall hearing about underfunding problems
or deficits in DB plans, and only 4% were aware that DB plans
are becoming rarer and being phased out.
Nearly three-quarters of plan members (74%) say it is their
primary vehicle for retirement savings. On average, they expect
55.7% of their retirement income to come from their DB plan,
17.2% from government sources, such as Canada Pension Plan
(CPP) or Old Age Security (OAS), and 12.6% from registered
savings plans.
Source: Grant Thornton in Canada & RBC Dexia Investor Services
Coffee Keeps (Financial) Professionals Going
With year-end in full swing, are you relying on coffee
to help you pull through? You would not be alone—nearly half
of workers (46%) say they are less productive without coffee
found a recent U.S. survey. Of that number, the majority (61%)
drink two or more cups a day. In addition, younger workers
(aged 18 to 24) claim that coffee has helped their career by
providing networking opportunities.
?
Which professionals need coffee the most?
1. Scientist/lab technician
2. Marketing/public relations professional
3. Education administrator
4. Editor/writer
5. Healthcare administrator
6. Physician
7. Food preparer
8. Professor
9. Social worker
10. Financial professional
11. Personal caretaker
12. H
uman resources/
benefits coordinator
Source: Robert Half International
13. Nurse
Members Overly Confident in
Defined Benefit Pension Plans
The majority of Canadians (83%) defined benefit (DB) plan
members believe their organization’s DB plan will have suffi-
14. G overnment
professional
?
15. Skilled tradesperson
Source: CareerBuilder & Dunkin’ Donuts
people
Meet a CPA “VIPP”
A Very Important
Payroll Professional
Gail Lee Hoy
Payroll & Benefits Administrator
Gail Lee Hoy is a payroll professional with over 25 years of experience. She is passionate about payroll and committed to doing her
best, which is what inspired a colleague to nominate her as a CPA
VIPP. DIALOGUE spoke with her about how she came into payroll
and her experiences over these many years.
DIALOGUE: How did you begin your career in payroll?
Gail Lee: When I left school (many years ago!), I took a tempor-
Mississauga, ON
successful when year-end balances and closes without any problems.
It is very rewarding when pay dates come and go without any calls
from employees—that means they were paid correctly and understood their pay statements. However, even if an employee calls, it feels
good when that employee goes away satisfied with my answer. All
employees are entitled to know what is happening with their pay and
should be comfortable contacting payroll any time with their queries.
DIALOGUE: When did you get involved with the CPA?
Gail Lee: I got involved with the CPA in the late 1980s when
I began attending seminars and courses on various changes in
government legislations related to payroll, and I continue to do so
today. I have also attended the CPA’s Annual Conference & Trade
Show many times over the years because I find it very informative
and useful in building my network.
DIALOGUE: What skills do you think most important
for payroll?
Gail Lee: In payroll, it is very important to be accurate and
detail orientated, and to take the initiative. You must have good
communication skills, and be able to maintain confidentiality and
use discretion, diplomacy and tact. You must also keep up to date
with new legislation.
Attending payroll seminars and courses will help develop with
all of the above and will help you continuously upgrade your skills.
Education is the stepping stone to success.
change, listen to suggestions, and be proactive. Try your best to
attend CPA seminars and take payroll courses. Most importantly,
be happy with what you are doing. n
DIALOGUE: What do you find most rewarding about
being in payroll?
Gail Lee: Payroll is very challenging, and I enjoy challenges. I also
Do you know a VIPP who has an interesting job or special payroll talent?
enjoy being able to process payrolls accurately and on time. I feel
our dynamic and active members.
Email their name to dialogue@payroll.ca for consideration in future issues,
Dialogue January/February 2012
DIALOGUE: What key advice would you offer those
in payroll?
Gail Lee: Payroll is a fantastic and changing world. Adapt to
www.payroll.ca
ary job as a Cost Accounting Clerk. When I changed companies,
I remained in Finance, working in Accounts Payable, Budget and
Financial Reporting.
In 1985, I was working for a drug manufacturing and distributing company, and the Director of Finance offered me the position of
Payroll Administrator. I did not know anything about payroll, but
he was confident I could do the job and offered to send me on some
training courses. I took the job and I am still in payroll to this day.
This first payroll position was what I call a “one-person payroll
department” because I was literally the only one working in payroll. I was responsible for new hires, termination, benefits, pension,
journal entries, reconciliations, budget—anything and everything
connected to payroll.
The company grew and so did Payroll, from a department of one to
a department of five, with me as Payroll Supervisor, reporting directly
to the Vice-President of Finance. The people who were hired had no
knowledge of payroll, just finance background. I trained them, and
they have since moved on to manage payrolls in other companies.
Since that company, I have worked at various companies over the
years but always in payroll. My experiences range from amalgamating payroll departments to closing payrolls, creating payrolls and
benefits for new companies, interfacing payroll with the Finance/
General Ledger to automate journal entries.
At my current company, Geodis Global Solutions Canada, I am
back to being a one-person payroll department. In fact, I created the
payroll, as it was a new company with employees from an existing
company. I am responsible for two biweekly payrolls, but I process
payroll every week because they have alternate pay dates. It is like I
have weekly payrolls for two companies.
Geodis Global Solutions Canada Inc.
where we will continue to profile and share insights and experiences of
7
Honour rolL
Congratulations on achieving professional excellence!
The Canadian Payroll Association (CPA) wishes to recognize the professionals who recently achieved the
Association’s certifications of Certified Payroll Manager (CPM) and Payroll Compliance Practitioner (PCP).
certified payroll
manager
Marty Gwizdala, ON
Rong Lin, ON
Padmini Sukumar, ON
Ruby Thapar, BC
Ellen Toews, ON
Radha Vengadesa, ON
Linda Werthmann, AB
Lifang ( Jessie) Zhang, AB
Marcus Aderemi, ON
Vijaya Bright, ON
Helen Friesen-Kilosky, AB
Carole Lajoie, ON
Shafiuddin Ahmed, ON
Jose Brito, ON
Jézabel Gauthier, QC
Betcy Lam, BC
Blanca Alfaro, ON
Isabelle Brunet, QC
Elizabeth Gardinier, ON
Maria Lamas, AB
Janet Ambridge, ON
Paulette Bunbury, ON
Victoria Go Ho, ON
Ernesto A. Jr. Lapitan,
Yodit Araya, ON
Raymond Campbell, ON
Jing Gong, ON
Kashif Latif, ON
Maria Luisa Arcilla, BC
David Alexander Cann, BC
Pauline Gosselin, ON
Sam Lau, BC
Dzemka Avdic, BC
Ellen Xiang Cao, BC
Owen Graham, ON
Charles Emilien Le
Jongkyung Baek, ON
Genevieve Castillo, ON
Clifford Green, QC
Angelic Bagsic, MB
Cathy Wai-Ling Chan, ON
Rachael Griffith, AB
Stephen Bailey, ON
Koshik Chand, BC
Yan Hong (Grace) Gu, AB
Januka Balachandran, ON
Niklesh Chand, BC
Shabana Hakeem, ON
Evelyn Barkhouse, NS
Liting Chen, ON
Kate Hardwick, ON
Trudy Barriault-DeBow, NB
Renee Cheng, ON
Erica Haydukewich, AB
Isabel Barrios, BC
Ying Cheng, ON
Eryn Hillier, AB
Snjezana Bartolac, ON
Cherry Wen Cheng, ON
Erin Houthuyzen, ON
Scott Beattie, MB
Wendy Wing Yin Chiu, BC
Yasmin Hujjatullah, ON
Jen Bellefontaine, NS
Carlene De Souza, ON
Marady Ing, BC
Annie Bernard, ON
Suzanne Deans, ON
Jennifer Jackson, ON
Jodie Bieber, SK
Krzysztof Dobrzynski, ON
Stephanie James, BC
Smitha Biju, ON
Jaqulien Dorus, ON
Nicola Jamieson, ON
Terri Bimm, ON
Valérie Duclos-Lemieux, QC
Sanganette Jarrett, ON
Kimberly Black, AB
Sarah Dudleigh, ON
Asela Jayawickrama, ON
Lisa MacPherson, AB
Abena Boateng, AB
Aysha Ebrahim, ON
Shama Joynt, AB
Jocelyne Madore, QC
Tami Bodnaryk, MB
Hyam Elferro, AB
Gail Junior, BC
Ramona Maharaj, ON
Dave Bopara, ON
Cendy Elliott, NL
Choundhari
Lori-Ann March, AB
Kristina Borris, NB
Jennifer Estey, ON
Kalyanasundaram, ON
Dorothy Boyce, ON
Melody Evans, BC
Fariborz Kheiroddin, QC
Maria Mascarenhas, ON
Kimberly Boyd, ON
Susan Eyre, BC
Dawn Kilvert, NS
Marilou Matadling, AB
Shana Boyd, BC
Christina Fagan, AB
Faye Knox, ON
Janet Matheson, BC
Cathy Brandow, ON
Diane Falardeau, QC
Shirley Ko, BC
Véronique Mayeu, QC
Thomas Breen, ON
Deirdre Fitzgerald, NS
Fung Wan Lai, QC
Louise Maynard, QC
payroll compliance
practitioner
www.payroll.ca
Dialogue January/February 2012
8
Breton, QC
Yeoleum Lee, BC
Grace-Ann Lee, ON
Laura Legere, NB
Tabita Virginia Leuca, QC
Jacquelyne Lewicki, AB
Siew Peck Lim, ON
Patricia Little, BC
Chen (Carol) Liu, BC
Yi Liu, ON
Guang Hua Long, BC
Sandorne Lugosi, ON
Pearl MacLeod, BC
Jennifer Marko, AB
Liat Sherman, ON
Arlene Sibley, NS
Annu Singh, ON
Gudrun Smith, ON
Lindsay Speer, ON
Ruth Summers, SK
Jing Zhao Sun, BC
Fang Fang (Alice)
Sun, ON
Bonnie Sutherland, ON
Gloria Tacorda, BC
Teresita Tanieca, ON
Laurell Taylor, AB
Boris Tchavdarov, ON
Gurdawar Teja, ON
Selamawit Temanu, AB
Nancy Thyer, NS
Charles Van Vierssen
Trip, AB
Jacquie Truscott, BC
Rosemary Urban, ON
Rohinton
Vadiwalla, ON
Elize Van Der Gun, AB
Leslea Chèvonne
Vinet, BC
Le Anh Vuong, ON
Tanya Wagner, AB
Zhen Wang, BC
Maggie Wang, AB
Gerry Watson, BC
Chuan Wei, BC
www.payroll.ca
Danielle Wiebe, BC
Margaret
Wilkinson, BC
Kristine Williams, AB
Molly Willis, BC
Nancy Wilman, NS
Nanette Wilson, BC
Nicole Winsor, NB
Yun Xu, ON
Amanda Yela, BC
Li Yi, ON
Dialogue January/February 2012
Michelle Megale Bilalakis, BC
Nenad Mirkovic, ON
Patrick Mitrow, ON
Coleen Moen, BC
Akrasha MohammedJogie, ON
Sean Moloughney, ON
Ryan Moncur, ON
Clairann Morgan, ON
Clarise Morris, BC
Robyn Morrison, AB
Sharon Muller, SK
Reem Naddar, ON
Elaine Ngai, ON
Natalia Nikitina, BC
Barbera Olson, AB
Jag Pangli, BC
Niketa Patel, ON
Rani Patrick, AB
Yun Hua Peng, ON
Elena Ponomarenko, ON
Susan Pottle, SK
Stephan Privé, QC
Irina Puzanova, ON
Kim Ramsden, ON
Kashmira Raza, ON
Arpad Ribai, ON
Claudia Riveros, BC
Meri-Beth
Rodriguez, ON
Valentina Roger, QC
Love Rola, PH
Viktoria Rulyova, ON
Angela Russillo, ON
Marsha Salaberri, ON
Doris Salloum, QC
Sahar Saloor, AB
Selwa Samy, ON
Maria Sanchez, AB
Louise Santerre, BC
Darlene Saubak, AB
Sharon Scott, ON
Cristina Semerean, BC
Carol Senkbeil, BC
Janet Sheppard, NL
Wei (Belle) Zhao, BC
Inesa Zhukova, BC
9
How to Handle
www.payroll.ca
Dialogue January/February 2012
10
Salary
Overpayments
By Rachel De Grâce, CPM, CEB & Joseph McNamara
An employee may receive salary payments
that they are later asked to reimburse to the
employer. The correct method used to record
this repayment of salaries will depend on the
reason for the reimbursement and the year
in which the employee repaid the amount.
The reason will generally fall into one of the following two
categories:
earnings (Box 26) and EI insurable earnings (Box 24) should
not include the amount of the salary repayment.
■■ “Administrative
Example:
In March 2012, a calculation error was identified where an
employee was overpaid $100 gross per month since September,
2011, for a total of $600. The employee agrees to repay $50
per bi-weekly pay period until the total $600 has been repaid.
The employee should be asked to reimburse the gross amount
of $400 for the overpayment from 2011 ($100 x 4 months), but
the employee should be asked for the net value of the $200 overpayment from 2012 since CPP, EI and income tax can be reduced
from the current year’s remittances.
Amend the 2011 T4 slip to reduce the total employment income, as well as the CPP pensionable and EI insurable earnings,
by $400. Do not adjust the amount of CPP, EI, and income tax
deducted. The employee will not be able to claim a deduction
from income in the 2012 tax year for the repayment, but can
amend her 2011 return.
errors” as referred to by the Canada Revenue
Agency (CRA) / “Employment income paid by mistake” as referred to by Revenu Québec (RQ)
■■ “Employee did not perform duties” (CRA) / “repayment of salary or wages” (RQ)
Below you will find guidance on how to handle these salary
overpayments to ensure your organization remains compliant.
ADMINISTRATIVE ERRORS/EMPLOYMENT INCOME PAID BY MISTAKE
If, by mistake, a payment or an overpayment is made to an
employee not entitled to receive it, these amounts will not be
considered salary, wages or an advance. Do not include the
amount in the employee’s pensionable, insurable or taxable
income for the year it is received. If, after issuing a T4 or RL-1
slip, it is determined that a payment was made by mistake, issue
an amended T4/RL-1 slip for that year to exclude this amount.
CRA Source Deductions for Salary Reimbursements
Made in the Same Year as the Error
To fix an overpayment, the employee may repay the net amount
(gross pay less source deductions) as long as it is possible to
reduce the next payroll remittance to the CRA by the CPP,
EI or income tax remitted in error (including the employer’s
share of CPP and EI) before the last remittance for the year
has been made.
If it is not possible to reduce the next payroll remittance to the
CRA for that year because the error was made in a previous
tax year, the employee should repay the gross amount of the
overpayment. In these situations, the CPP, EI and income tax
deductions must be included on the employee’s original T4
slip, but the employee’s total income (Box 14), CPP pensionable
■■ If
the employee indicates that they will not repay the amount.
■■ If the employee indicates that they will repay the amount but
they do not.
■■ If there was knowledge or collusion.
If the employer forgoes their right to the overpayment, this
amount should be included in employment income in the year
of forgiveness.
RQ Treatment of Source Deductions for
Employment Income Paid by Mistake
If the employee repays the employer after the RL-1 has been
filed, the employer will be required to produce an amended
RL-1 form for the year in which the error occurred. The overpayment should not be included in employment income (Box
A), pensionable earnings (Box G), or insurable earnings (Box I).
The employee should be asked to reimburse the gross amount
since RQ does not allow employers to reduce QPP contributions,
QPIP premiums or Quebec income tax for either the current or
prior years. The employee will receive a reimbursement for the
over-contributions for QPP, QPIP and Quebec income tax after
filing their personal tax return for the year. (The employer may
make a written application to the RQ within a four-year period
for the employer over-contributions of QPP and QPIP.)
Dialogue January/February 2012
CRA Source Deductions for Salary
Reimbursements Made in a Different Tax
Year from when the Error was Made
Exceptions
The overpayment should be included on a T4 slip in the year
of the overpayment in the following situations:
www.payroll.ca
Example:
In February 2012, because of a calculation error, an employee
was overpaid $250 net after being overdeducted $25 in income
tax, $15 in CPP and $10 in EI. He agrees to repay the $250 in
March 2012 when the error is discovered.
Reduce the employee’s pensionable, insurable and taxable
earnings by the total gross overpayment, and reduce the employee’s year-to-date CPP, EI and income tax by the amount that
was overdeducted. The employer’s next CRA remittance should
be reduced by the total CPP, EI and income tax remitted in error, including the employer’s share of CPP and EI.
Note: The employer can ask for a refund of the employer’s share
of CPP contributions or EI premiums that were deducted in error
in a previous year by completing Form PD24, Application for a
Refund of Overdeducted CPP Contributions or EI Premiums.
11
Outstanding Amounts May Trigger a Taxable Benefit
If the employee was overpaid in error, the employer may need to
assess a taxable benefit, particularly if the error resulted in a significant single overpayment, or if the overpayment was long-standing.
In these cases, the employer must either charge the employee interest at the prescribed rate or assess a no-interest taxable benefit
on the outstanding amount, similar to a no or low-interest loan.
Example:
In January 2012, because of a calculation error, an employee was
overpaid $300. The employee agrees to repay $50 per bi-weekly
pay period until the total $300 has been repaid. Each pay period,
the employer should assess a no-interest taxable benefit on the
remaining unpaid amount since January or charge the employee
interest using the prescribed interest rate for the quarter.
EMPLOYEE DID NOT PERFORM DUTIES/
REIMBURSEMENT OF WAGES
If an employer is reimbursed, in the same or a later year, for
salary or wages paid when the employee did not perform their
duties, the reimbursement is considered to be a repayment of
salary and wages. Examples include:
■■ an
employee was advanced vacation leave credits but ended
employment before actually earning the credits
■■ an employee was paid a signing bonus but did not work for
the time agreed to in the employment contract
■■ an
employee was ill and continued to be paid by the employer but then later received payments from a wage-loss replacement plan
Source deductions cannot be amended in these circumstances, and the employee should be asked to reimburse the
gross amount of the overpayment. This repayment of salary may
be claimed as a deduction on the employee’s income tax return.
The CRA instructs employers to provide the employee with a
letter confirming the tax year the overpayment was reported as
income as well as the date, the reason and the amount repaid.
In Quebec, if an employer received a reimbursement of wages
earned in the current year, the amount of the reimbursement
must not be included in Box A of the RL-1.
If an employer received a reimbursement of wages earned by
the employee in a previous year, Box A of the RL-1 slip must
not be reduced. Instead, the employer will be required to enter
A-3 in a blank box on the redesigned RL-1 slip, followed by the
amount of the repayment of salary. (For the taxation year 2011,
the employer can still enter the following note in the empty
space in the centre of the RL-1 slip “Box A: Repayment of salary
or wages,” followed by the amount.) The employee may claim a
deduction on their income tax return when the reimbursement
pertains to salary or wages paid in a previous taxation year.
Note: The employer portions of C/QPP, EI and QPIP are not
refundable.
The following table summarizes the correct method of dealing with a salary
overpayment, depending on the scenario, as per the CRA and the RQ.
www.payroll.ca
Dialogue January/February 2012
12
Repayment
Type
Amount
to Repay
(CRA)
Amount
to Repay
(RQ)
Overpayment
Should Not
Be Included
in T4 Boxes:
Overpayment Should Not
Be Included in RL-1 Boxes:
Refund of
Employer
CPP & EI
Refund of
Employer
QPP & QPIP
Payroll error
- repaid in
current year
Net
Gross
14, 16, 18,
22, 24, 26
Boxes A,G,I
Yes, adjust
next
remittance
Yes, request
refund in
writing
from RQ
Payroll error
- repaid in
following year
Gross
Gross
14,24,26
Boxes A,G,I
Yes, request
refund using
PD24
Yes, request
refund in
writing
from RQ
Gross
Do not amend
T4; provide a
letter to the
employee
detailing overpayment and
reimbursement.
Reduce Box A of the RL-1
if repayment received in the
current year. For previous
years, enter footnote at
the centre of RL-1 slip Box
A: Repayment of salary
or wages” or Code A-3
(followed by the amount).
No
No
Repayment of
salary when
employee did
not perform
duties
Gross
EMPLOYMENT/LABOUR STANDARDS ISSUES
While the CRA and RQ deal with the fiscal treatment of salary
overpayments, whether or not an employer can make adjustments
to an employee’s pay to recoup overpayments of wages is normally
addressed in employment/labour standards legislation. (The collective agreement should be referred to for unionized employees.)
Note: Although not all jurisdictions require written
authorizations from employees prior to deducting overpayments of wages, it would be considered a good standard
of payroll practice to develop policies and procedures that
include written authorizations.
The following table illustrates the various administrative and legislative positions
across Canada dealing with overpayments of regular wages and vacation pay.
Overpayment of Vacation Pay
Federal (Canada
Labour Code,
Part III)
Employer may deduct overpayment of wages. s.254.1 (2)(d)
Employer may deduct overpayment of wages s.254.1(2)
(d) as this money was not earned by the employee.
Alberta
Written permission is needed including specific dollar amount.
Notice is to be given to the employee before any reduction is
made. s.12,13
Written permission is needed including specific dollar
amount or it is considered a gift. Notice is to be given
to the employee before any reduction is made. s.12, 13
British Columbia
Employer may not deduct overpayment of wages
without written consent from the employee. s.21,22
An employer may reduce an employee's annual vacation or vacation pay because, at the written request
of the employee, the employer allowed the employee
to take an annual vacation in advance. s.59(2)
Manitoba
Employers may take deductions from pay cheques to balance
an earlier wage overpayment or to recover a cash advance.
Corrections must be made as soon as the employer knows
of them. Failing to deal with the mistake immediately
could be considered agreeing to a new wage. Reg.19.7
Under new legislation coming into effect on the date of
registration (TBD), deductions without the employee’s
authorization will be limited to amounts as per The
Garnishment Act (no more than 30% of net pay, with
employee receiving at least $250/month if single and at
least $350/month if employee has 1 or more dependents).
Employer should have a written and signed policy that
vacation pay paid in advance will be deducted from the
final pay. Under new legislation coming into effect on
the date of registration (TBD), deductions without the
employee’s authorization will be limited to amounts as
per The Garnishment Act (no more than 30% of net pay,
with employee receiving at least $250/month if single
and at least $350/month if employee has 1 or more
dependents).
New Brunswick
Administrative position: an employer may deduct
an overpayment made in error within 1 year.
Employer should have a written and signed policy that
vacation pay will be deducted from the final pay.
Newfoundland
and Labrador
Employer may deduct overpayment of wages. s.36(3)
Employer may deduct overpayment of wages. s.36 (3)
Northwest
Territories/
Nunavut
Employer may not deduct overpayment of wages
without written consent from the employee.
Employer should have a written and signed policy that
vacation pay will be deducted from the final pay.
Nova Scotia
Administrative position: the employer may
deduct overpayment of wages but the employee’s
pay cannot be less than the minimum wage.
Employer may deduct overpayment if a written policy
exists; otherwise, the employee has the right to complain
to the Minister of Labour and Workforce Development.
Ontario
Administrative position: if payment was made in
error, overpayment can be deducted from future wages.
With written permission or signed agreement prior
to advance payment.
Prince Edward
Island
Administrative position: employer may deduct overpayment in a reasonable time frame such as the next pay
or few pays thereafter. Under new legislation (date not
yet confirmed), the employer may deduct overpayment
of wages if authorized in writing by the employee.
An employer can deduct overpayment of vacation
pay paid as a result of a previous advance of
vacation pay to the employee. Reg.1(e)
Quebec
Administrative position: if an employer can prove that they
have overpaid an employee, then the employer can take
the money back without the employee’s permission.
An employee and employer can have an agreement in
writing to allow the employer to deduct the overpayment
if the employee chooses to pay back the employer.
Saskatchewan
Administrative position: employer may deduct
overpayment in a reasonable time frame such
as the next pay or few pays thereafter.
Employer should have a written signed policy
that vacation paid in advance will be deducted if
termination occurs before it is earned. s.76
Yukon
Employer may not deduct overpayment of wages
without written consent from the employee.
Employer may not deduct overpayment of vacation
pay without written consent from the employee.
Rachel De Grâce, CPM, CEB, is the Compliance Services Developer and Joseph McNamara is the Research Analyst for the CPA.
For more information and questions, members can contact the CPA’s Payroll InfoLine at infoline@payroll.ca.
Dialogue January/February 2012
Overpayment of Regular Wages
www.payroll.ca
Jurisdiction
13
y
k
s
i
R
:
s
s
e
n
Busi
It’s Not Jus
t
What You D
o —It’s
How You Do
It
www.payroll.ca
Dialogue January/February 2012
14
By Ryan Crocker,
Communications
Specialist, Ceridia
n Canada
When influential business writer,
thinker and consultant Peter Drucker
famously said, “Efficiency is
doing things right; effectiveness
is doing the right things,” he
wasn’t referring specifically to risk
mitigation—but Daniel O’Rourke
says Drucker may as well have been.
O’Rourke is Director of Operational
Excellence for Ceridian Canada Ltd,
a Certified Lean Six Sigma Master
Black Belt, and Senior Member of the
American Society for Quality (ASQ). As
a senior member of Ceridian’s Business
Excellence team, he is responsible for
leading Lean and Six Sigma initiatives,
training, and continuous improvements
across Ceridian’s business lines and
functional areas.
He believes doing things right to improve processes is as critical to reducing
risk as doing the right things by introducing structural safeguards. He warns
organizations need to focus on how they
operate now more than ever if they want
to avoid the costly consequences of legislative and regulatory non-compliance.
He outlines some key principles organizations can do to reduce the risks related
to processes for payroll solutions.
■■ Efficient
and effective payroll processes are just as critical to risk mitigation as structural safeguards, such
as secure buildings or encryption
technology.
■■ Avoid
payroll processes that include
functions with distinct objectives,
replacing them with objectives that
are interdependent.
processes should include a
continuous improvement component based on actual needs.
It’s not as much work as it seems on the
surface. Organizations need to structure
their continuous improvement initiatives
around their actual business needs, not
from a textbook on what they “should”
do. Too often, there is a tendency to get
married to a methodology and the tools
and administration of that methodology gradually starts to become the focus
rather than the results themselves. From
a business perspective, nothing could be
further from what you need.
Every organization needs to constantly
improve or, for sure, your competition
will take that position for you. In terms
of risk, if you are not constantly improving, your risk management will only become more expensive and less effective.
The challenge for leadership is to take
the appropriate level of ownership of that
improvement need and ensure that the
efforts put in around it never stray from
the goals the business needs to achieve.
Ultimately, improvement programs
should be practical, not academic.
In terms of payroll systems, recognize
the impact of data gathering at the preliminary discovery stages and how even
minor gaps in content or even format render that activity largely useless for areas
dependent on it upstream. Something as
simple as the way data is organized can
cause massive rework loops further on up
the value chain. In addition to the cost of
addressing that rework, this also creates
risk as the original subject matter experts
may no longer be available to provide the
content needed. This can sub-optimize
final outputs or miss critical criteria.
Many organizations have this type of
issue simply because there is a lack of
awareness of what the next areas in the
value chain actually need and in what
format they need it to arrive in and when
in order to be successful. At each stage,
the responsible area is simply taking care
of their tasks, and they just don’t have the
visibility to the next group’s requirements
in any great detail.
Dialogue January/February 2012
Payroll processes should reduce the time
and complexity from solution to service, and remove the grey spaces where
client needs can be lost. Simply put, they
should remove the approach of having
functional islands with distinct objectives, and replace them with objectives
that are interdependent. This should be
supported by a process where the critical
control points have been identified up
front, to remove or reduce the probability
of any risk of failure as the product or
service moves through your systems.
The resulting experience is a more
flexible delivery, faster results and turnaround times, and a more secure process
that is designed beginning with the client,
keeping their concerns and needs visible
throughout the value chain.
■■ Payroll
www.payroll.ca
Risk comes in many forms. You can risk
the value delivery to your internal or
external clients, risk profitability, risk
data security, risk timelines.... The list
is virtually endless.
The common element is that risk adds
up to lost value: lost time, lost dollars,
lost clients, lost reputation, and, most
importantly, a loss of trust in the system
and how your client’s view the services
you provide.
Structural safeguards must be seen
as the last gate of protection. If they are
cumbersome and filled with red tape to
use, it is almost guaranteed they will be
circumvented. This renders them less
than useless.
Ideally, you should design your processes to protect yourself and your clients’ data from corruption or loss. This
is not as difficult as it sounds, though it
does require that the business or process
is thought of in a systems perspective
rather than just as points of singular risk
along the value chain. We need to look at
the process from the lens of “Where am
I most at risk? What elements need to be
controlled to mitigate that risk from an
upstream perspective? What are the interconnections that need to be controlled to
ensure risk exposure is minimized?”
In many ways this is similar to how the
food we consume is protected at critical
process points from a risk of contamination or other health concerns. In the food
industry, the methodology for this is referred to as Hazard Awareness and Critical
Control Point (HACCP), and similar thinking can be applied to virtually any process
or value chain regardless of industry or
business conditions. Here we are looking
at risk from several perspectives including
time, quality, and delivery.
15
should look at the
''’Organizations
whole system, how each part interacts
''’
and how clients are affected.
A key change is to close those gaps
and create bridges of visibility where key
critical inputs are required.
■■ To
improve payroll processes and
reduce risk, organizations should
look at the whole system, how each
part interacts and how clients are
affected.
Common in any organization are the
grey areas that exist between functional
groups. By this, I mean where an organization has any item or service that moves
through their organization or engages
internal partners, there is the risk that
the client needs can be lost or diluted
between those hand-offs. They drop into
the grey areas. This is not because of
people doing anything wrong, but rather
the visibility of those client needs is lost
between the functional units themselves.
There is rarely an end-to-end view.
These factors can put a number of
things at risk, including data security,
www.payroll.ca
Dialogue January/February 2012
16
quality, costs, and profitability.
Without looking at how each part
interacts with the next, asking “What do
I need to receive to be successful here at
each step?” and examining that question
from the perspective of your clients’ ultimate needs, you will inevitably end up
with holes in your processes and operations. They will be sub-optimized, overly complex and expensive at best—and at
worst, they will directly lead to some form
of client or business failure.
For organizations that are ready to
tackle their risky processes, there are
three critical steps to follow:
■■ Increase
visibility across functional
areas. Every time you create islands of
activity in your business you create opportunity for client and business
critical items to disappear in the areas
between those islands and introduce
any number of risks as a result.
■■ Look
at your product or service process from an end-to-end perspective.
Ask, “What does each step in this process require to be successful...and is it
being delivered to that process step in
that manner today?” Any gaps you
identify are areas where risk is present.
■■ Create
interdependent metrics. If you
have independent, area specific measures
of success criteria related to a product or
service stream with interdependent inputs/outputs, you create the potential for
sub-optimized conditions. n
Ceridian Canada is a payroll/HR solutions
provider that helps clients optimize their
workforce, reduce costs and save time by
finding, paying, deploying, developing and
engaging their talent. With 40 years of experience, proven expertise and recognized
service excellence, Ceridian is a trusted
partner to 40,000 Canadian customers.
Its Integrated Fulfillment Program encompasses all the principles outlined above.
www.ceridian.ca
Ryan Crocker is a member of Ceridian
Canada’s Marketing and Communications
team. An award-winning former journalist, he works as a writer and consultant in both internal and external
communications. He can be reached at
ryan_crocker@ceridian.ca.
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Dialogue January/February 2012
18
An Employer’s Guide
Important Legislative & Employment
Law Developments in 2011 & into 2012
By Yosie Saint-Cyr, LL.B., Human Resources and Compliance Managing Editor,
HRinfodesk—Canadian Payroll and Employment Law News
Here is a brief overview of the wide range
of developments that occurred in the
realm of employment law in 2011. Is your
workplace prepared for the following important legislative and employment law
developments in 2012?
Accessibility for Ontarians
with disabilities
Social Networking
Workplace Violence
& Harassment
We are just beginning to find out how the
violence and harassment prevention provisions under Occupational Health and
Safety legislation and regulations across
Canada are being applied. Employers
need to keep abreast of these legal developments as they unfold. In 2011, the
courts established several important legal
principles that serve as lessons for employers, including:
■■ The utterance of a threat of violence—
for the purpose of intimidation—constitutes an act of violence; this is true
regardless of whether or not:
The person issuing the threat has
any intention to follow through on
the threat.
The person issuing the threat has the
ability to follow through.
The person receiving the threat
feels afraid.
■■ A worker who hears another worker
issuing a threat must report the incident.
■■ Employers cannot ignore, dismiss or
trivialize reported threats and other
violent incidents.
■■ Reported incidents must be thoroughly
investigated and addressed.
■■ When considering how to discipline an
employee for uttering a threat, an employer must place extra weight on the
seriousness of this sort of misconduct,
assess the likelihood that the misconduct could or would be repeated if the
worker remained in the workplace, and
act in a manner that gives due consideration to the safety of other workers.
■■ Employers must ensure that disciplinary
decisions are based on actual evidence
gained from a thorough investigation.
■■ Complaints should not be based on
hearsay, or what other employees experience; they must be based on what
the actual complainant experienced
first-hand.
•
•
•
Dialogue January/February 2012
The use of social media (and social networking) websites continues to overlap
with workplace activities as employees
access and post on the “social web” from
their workplaces and about their work.
One clear principle coming out of 2011:
■■ Communications over the Internet and
social networking, whether at work or
home, are not private activities considering that numerous people may have
access to this information.
■■ Employees who use these media to
comment on their employers, co-workers or clients are fair game for discipline
up to termination.
Discipline up to termination is warranted where an employee’s use of the
Internet, blogs and social media sites
prevents him or her from performing duties satisfactorily, working effectively with
colleagues, and adhering to an employer’s
confidentiality policies. Discipline up to
termination is also warranted when the
use of social media results in the harassment or defamation of management or
fellow employees, or undermines management’s ability to direct its workforce.
www.payroll.ca
The Accessibility for Ontarians with
Disabilities Act (AODA) drastically rewrote accessibility laws in Ontario. The
AODA provides for the creation of accessibility standards enforced by regulations. The regulations mandate organizations with at least one employee to
take specific steps (i.e., policies, practices
and procedures) to increase accessibility
for people with disabilities. This means
removing barriers that may hinder the
person’s full and effective participation in
society on an equal basis. A disability is
broadly defined to include permanent or
temporary physical, mental, intellectual
or sensory impairment.
Five accessibility standards are in
the process of being implemented (with
various effective dates) under two sets of
regulations:
■■ The Customer Service Standard under
the Accessibility Standards for Customer
Service Regulation (Ontario Regulation
429/07), which became effective
January 1, 2012.
■■ The Information and Communication,
Employment and Transportation Acce
ssibility Standards under the Integrat
ed Accessibility Standards Regulations
(Ontario Regulation 191/11), for which
the compliance timelines vary (based on
the category and size of organizations).
As Ontario sees the AODA requirements phased in between now and 2025,
organizations across Canada will be
watching. Can we expect to see AODAtype provisions adopted in other provinces? On June 16, 2011, the Manitoba
government passed Bill 47, The Accessibility
Advisory Council Act and Amendments to
The Government Purchases Act, which cre-
ates greater accessibility standards for
people with disabilities who face barriers
in everyday life. One of the council’s first
tasks will be further development of the
legislation that will set out accessibility
standards. The council has 12 months
from the date the Bill became law to do
just that. Recommendations are expected
in the summer of 2012.
The Newfoundland and Labrador
government has also decided to launch a
consultation to develop a strategy for the
inclusion of persons with disabilities. The
consultation will focus on how best to remove existing barriers and prevent new
ones, and how to address these issues.
Accessibility standards are a possible
solution. New Brunswick has proposed
the Barrier-Free Design Building Code
Regulation under the Community Planning
Act; that would make new commercial
buildings more accessible for persons
who suffer from physical disabilities.
19
“
Employers have serious legal obligations
that require practical guidance to
maximize compliance, mitigate legal
risk and achieve business objectives.
”
■■ In
some cases, termination of the employee will be a reasonable and measured response.
In addition, the Saskatchewan Court
of Queen’s Bench has confirmed that employees will be barred from commencing
an action outside of the scheme of the
Workers’ Compensation Act, with respect
to allegations of harassment against employers when it occurs in the course of
employment.
Drug & Alcohol Testing
www.payroll.ca
Dialogue January/February 2012
20
Setting up an effective, legally compliant drug and alcohol testing program
can be one of the toughest challenges
organizations face. The risk of legal liability, including employee lawsuits, continued to grow in 2011. On July 7, the
New Brunswick Court of Appeal handed
down a decision regarding an employer’s
alcohol testing policy. In Irving Pulp and
Paper Limited v. Communications, Energy
and Paperworkers Union of Canada, the
Court found that the random alcohol
testing policy in the case was reasonable.
Once an employer has demonstrated that
their workplace is inherently dangerous,
and that the testing is for alcohol-related
impairment and done by breathalyser,
random alcohol testing will be justified.
With respect to random drug testing,
the Toronto Transit Commission has
adopted a policy to expand its testing
program to all active employees in safetysensitive positions. The TTC anticipates
that it will randomly test 10 percent of its
6,000 employees in such safety-sensitive
jobs in a given year. The union is challenging the practice, and it is likely that
the issue will travel through the courts for
years. Nonetheless, the TTC has taken a
strong stand, which suggests it is ready
to defend the controversial practice. This
does leave the issue of drug testing unresolved, but the trend in the case law
certainly seems to be more lenient in allowing for random testing. It is possible
that requirements regarding drug testing
will also soon be relaxed.
Employment Standards
& Health & Safety
All jurisdictions in Canada are restructuring and beefing up their employment
standards and health and safety systems
and enforcement processes to raise the
level of compliance. These initiatives will
probably increase the number of complaints or violation orders in 2012.
In addition, most jurisdictions have
seen other employment standards and
health and safety developments over
the past 12 months: new or enhanced
job-protected leaves, new self-help
complaint processes, special rules for
temporary help agencies, clarification of
the right to temporarily lay off employees, increased minimum wage entitlements, new return-to-work obligations,
increased mandatory health and safety
training, new codes of practice, and
much more. Employers must keep up to
date with their obligations under these
broad pieces of legislation.
Furthermore, 2011 saw a further increase in the number of claims against
employers for allegedly retaliating against
employees who inquire about their rights,
or who make a claim against the employer. One reason: the onus is on the organization to prove that retaliation did not
occur, and most of the time they can’t. In
these cases, careful documentation is key.
In general, the test to be used when deter-
mining whether an employer has retaliated against an employee is composed of
two parts to be determined on a balance
of probabilities:
1. Is there a link between the alleged
conduct and the filing of the complaint (or any other action for which
retaliation is not permitted)?
2. Was the alleged conduct, at least in
part, a deliberate response by the
employer?
As 2012 begins, it is more critical than
ever for organizations to be aware of the
implications of retaliating against employees and reduce potential risk. The
court’s discussion of retaliation provides
an important reminder to employers to
take care when dealing with employees
who inquire about or attempt to enforce
their rights under human rights, employment standards, health and safety and
other employment-related law. n
Conclusion
Dialogue January/February 2012
Expanded legal commentaries on the above
topics and citations for the mentioned cases
can be found on HRinfodesk.com and First
Reference Talks. As a publisher of human
resources print and electronic publications,
First Reference strives to provide Canadian
businesses with the most straightforward, authoritative and cost-effective resources. For
more information, go to the First Reference
website at www.firstreference.com.
www.payroll.ca
Every one of these issues has caused
hours of discussion over 2011, and
they’ll continue to garner attention in
2012. Every business in Canada should
be aware of what these things might
mean for them and how they might
play out in the future. Employers have
serious legal obligations that require
practical guidance to maximize compliance, mitigate legal risk and achieve
business objectives. n
21
Performance Level
Measuring your
Human Resources
By Duff McCutcheon, HRPA
High
www.payroll.ca
Dialogue January/February 2012
22
If your organization was investing in a new piece of equipment, a key part of the business plan would include metrics
to measure ROI and performance. You can’t manage what
you can’t measure, and having reliable numbers to monitor
performance is critical to spotting trends, problems and
opportunities, as well as providing a framework to make
evidence-based business decisions.
Uncovering Human
Resources Issues
An organization’s human resources—its people—are no exception. Payroll is typically a business’s largest expense, yet
few organizations implement appropriate metrics to measure
performance in this area, and to benchmark against peers
and competitors in similar industries and sectors in terms of
productivity, compensation, recruitment, retention, turnover,
workforce demographics and HR department efficiency.
This is largely because, in Canada, there has been little HR
metric benchmarking available up to now. However, new HR
LOW
benchmarking resources are being introduced, such as the HR
Metrics Service, a collaborative venture by Ontario’s Human
Resources Professionals Association (HRPA) and several provincial HR associations, and other similar benchmarking providers. Now, more and more Canadian organizations are able
to use HR metrics to measure the performance of their people
investments and to benchmark against peers and competitors.
Consider this example: A British Columbia credit union discovered high turnover among its younger staff after it began
monitoring retention and turnover rates.
While the metrics showed overall turnover was acceptable, high turnover among workers aged 25 to 35 indicated
that young people did not view the credit union as a long-term
career choice and exposed problems in the organization’s flow
of management talent.
The credit union corrected the problem by concentrating
on what they offer young people and engaging them with
learning and development opportunities. They’ve also begun
identifying people with management potential earlier so there’s
a quicker connection with the fact that they can enjoy a longterm career with the institution.
Payroll-Specific Metrics
There are more than 90 HR metrics organizations can measure and benchmark against, including productivity, retention, workforce demographics and compensation. However,
the metrics most relevant to payroll professionals are Labour
Cost per Full-time Equivalent (FTE), Labour Cost Revenue Per
Cent, Labour Cost Expense Per Cent and Benefits as Percentage
of Total Compensation.
■■ Labour Cost per FTE refers to the average labour cost to the
organization for each Full-Time Equivalent (FTE). It is used
to better understand the impact that labour costs have on total
expenditures, and to monitor how these costs change overtime. It’s also used to monitor increases in overall labour costs
(not just salary) through combining, payroll, benefit and
other taxable compensation-related expenses.
■■ Labour Cost Revenue Per Cent examines total labour costs
as a percentage of organizational revenue, or, how much you
spend on salary and benefits as a percentage of the revenue
generated. The metric result can be translated as the amount
of investment in your employees required to generate each
dollar of revenue.
■■ Labour Cost Expense Per Cent looks at the total labour costs
as a percentage of total expenses. This metrics tells you the
percentage of your total operating expenses that are spent on
compensating your employees. Labour cost can be a significant operating expense, in particular in an organization that
relies on human capital to generate value.
■■ Benefits as Percentage of Total Compensation gives you
a picture of whether you’re being generous in your benefits
or whether your benefits are costing you more than others.
It’s a way to keep a scale on whether what you spend on
healthcare and perks is appropriate relative to other organizations. It also gives you a sense of whether your benefits
spending is increasing relative to your compensation spend.
“Your profitability is contingent on bringing in more money
than you spend,” says Lisa Irish, manager, HR Metrics Service.
“For most organizations, the majority of expenses are in labour
costs, so if you’re able to get a picture of what this looks like,
and compare with other firms, then making adjustments to
control labour costs can increase profitability.”
New Challenges Require
Robust HR Data
As a recent Conference Board of Canada report, Valuing Your
Talent: HR Trends and Metrics, points out, looming human
capital shortages—notably retiring boomers and key skills
shortages over the next decade—means employers must make
difficult decisions about how best to invest scarce resources
in people. To make those decisions, organizations need hard
data about the quality and capacity of their people, as well as
about the practices and initiatives that build talent.
HR metrics provides this information and paints a much fuller picture into the health of your operations. n
Duff McCutcheon is communications specialist at the Human
Resources Professionals Association (HRPA). For more information
about the HR Metrics Service, visit www.hrmetricsservice.org.
Absenteeism Costs Continue to Rise
Dialogue January/February 2012
Director of Research & Learning at the British Columbia
Human Resources Management Association (BC HRMA).
“Far from being a prediction about what is coming, the data
suggests that this is now a reality. Organizations who do not
have a strategy and process in place to effectively promote
good health and support high levels of work commitment
will increasingly find themselves spending time and money
managing absences. The amount of money involved is significant. Based on the median labour costs recorded in the
HR Metrics Service database, organizations with absences
at the median are spending more than $1,000 per Full Time
Equivalent (FTE) a year more on non-productive time than
their counterparts in the top 10 per cent. The difference
between the top 10 per cent and the worst 10 per cent is
even greater at around $3,000 per FTE.”
www.payroll.ca
The annual direct cost of absences has increased from
$1500 per Full Time Equivalent (FTE) in 2009 to $1800
per FTE in 2010 and will likely continue climbing, according to an HR Metrics Service Q2 2011 quarterly report.
Across a workforce of 500 full-time employees, this
translates into $900,000 per year, and projections for 2011
suggest that this figure will increase by 7%
HR Metrics analysts say the increase in absenteeism can
be attributed to a range of factors including an aging workforce, lower levels of employee commitment and employee
burnout. It brings a significant increase in additional organizational costs through lost productivity, additional labour
costs for overtime, and increased workload to track and deal
with attendance.
“Much has been talked about the ageing workforce
and the health needs of the generation Y,” says Ian Cook,
23
Your
Competitive Edge
www.payroll.ca
By Lynne Mackay, Image Consultant
Dialogue January/February 2012
I
t’s easy to think about what you wear as part of your daily routine, an almost unconscious choice. However, it is important to remember that clothes form part of your
appearance and how people will evaluate you. Within 10 seconds of meeting someone,
your subconscious has already noted certain characteristics, such as body type, hair
colour, facial expressions, tone of voice—and clothing choices. If these initial perceptions
are negative, we tend to attribute secondary characteristics that are equally negative,
such as unprofessional, lacking attention to detail, unknowledgeable, etc.
24
Rectangle: Bust and hips are about the same size,
creating an overall straight silhouette
Your style aim is to create the illusion of curves. Broaden
your shoulders with collared shirts and structured jackets,
and cinch your waistline to create definition.
Beyond body type considerations, every professional should
have the basic wardrobe items. Invest in good quality items,
as they should last for at least five years.
■■ Suit jacket
■■ Pair of tailored dress pants
(also, for women, straight or A-line skirt)
■■ White, collared shirt
■■ Blazer or item jacket
■■ Pair of patterned pants
■■ Sweater or cardigan
■■ Overcoat to cover all hem lengths
Aside from these timeless pieces, it’s never a bad idea to have
a few trendy items. When a person wears dated clothing, they
risk sending the message that they are not likely up to date
on a professional level as well. To maintain an impression
of professional currency be sure to have a few items that are
fashionable or in the popular colours of the season.
The critical skills in the workplace today remain a combination of academic skills, teamwork skills and personal management skills. Image awareness is only one element that affects
personal management, but it can play an important role in how
you present yourself. Dressing the part can help you influence
others, have people treat you better, and gain trust for special
assignments, but more importantly, it helps you build your selfconfidence and pride. As the saying goes, “If you look good,
you feel good, and if you feel good, you do good.” n
Lynne Mackay delivers individual consultations, keynote presentations, workshops and conferences that enhance a company’s
human resources credibility, including personal image, networking
and business etiquette/professional behaviour programs. With her
30-year background in personal appearance and image development, Lynne has worked with Fortune 500 companies across North
America and has counselled top executives in many well-known
corporations. Her in-house seminars are dynamic and effective,
providing valuable practical insights that can be applied by all who
attend. Mackay Byrne Group Inc.: www.mbg.ca
Dialogue January/February 2012
Triangle: Smaller midsection with most of one’s weight
in the thighs, derriere and legs
To flatter this shape, draw attention to the top half of
your body. Extend the shoulder line to balance with
hips. Look for fabrics that have weight and flow away
from body (e.g., tweed).
Round: Larger bust with most of one’s weight in the
stomach, derriere and upper thighs
Shoulders, hips and thighs are narrower, and should
therefore be the focus to flatter this shape. To create the
illusion of a longer and slimmer upper body, draw attention
upwards towards your shoulders and face. Look for styles
that are elongating and have a slimming effect on the torso.
www.payroll.ca
Although we’re not consciously choosing to “ judge a book
by its cover,” we do have a tendency to evaluate a person’s
character based on appearance. The style of clothing someone
chooses to wear can make them come across as being more
sincere, reliable and trusting, or more daring, provocative
and unreliable.
Appearances can even influence judgments of a person’s
competence even when the task at hand is unrelated to appearance. As a payroll specialist who wants to be taken seriously
and seen as a competent, know that your dress will influence
how others assess you and your abilities, and dress accordingly.
Even though a suit or similar formal attire may not be required
or expected in many of your organizations, your clothing
choices still play an important part in the way people think of
you: intelligent, knowledgeable and professional.
Our appearance also affects the way we see ourselves. We
usually feel better about ourselves when we make an effort
to look our best. Image plays an important role in creating
a positive outlook and in enhancing personal motivation. A
change in hairstyle, an addition to your wardrobe, or being
in better physical condition can help create a more positive,
professional image.
Polling questions during the CPA’s recent webinar,
“Projecting a Winning Image: The Psychology of Perception,”
indicated the number one negative aspect of a person’s image
was clothing that is too tight. So making the right retail choice
is the starting point in creating a professional image that speaks
well of you. Before you purchase clothing, ask yourself—or
a friend: Does it fit properly? Is it comfortable? Is it the right
thing to wear this season? Is this appropriate for the kind of job
I have? Is it suitable for my body type?
Accentuating your strengths and downplaying your weaknesses is the key to dressing properly for your body type. Here
are some suggestions for the three most basic types: triangle,
rectangle, and round.
25
C O M M I S S I O N D E S N O R M E S D U T R AVA I L
Visit www.cnt.gouv.qc.ca
It exceeds all standards!
A site about Quebec’s labour standards, open to all:
Employees, employers, information relayers and partners in
action
Direct access to the labour standards
Several tools
SERVICE DES RENSEIGNEMENTS
514 873-7061
Montréal area
1 800 265-1414
Elsewhere in Quebec, toll free
Start the New Year with New Skills
TaxabLe benefiTs
and aLLowances
Learn the payroll implications for a
full range of taxable and non-taxable
benefits and allowances.
● February 16 - Winnipeg , MB
February 16 - Calgary, AB
● March 21 - Pointe-Claire, QC
● March 29 - Regina, SK
● April 13 - Mississauga, ON
●
April 19 - Kitchener, ON
● April 27 - Burlington, ON
●
Learning PayroLL i
A complete introduction to the
payroll function, processing and
reporting requirements, and the
payroll practitioner’s key role in
government statutory withholding,
collection and remittance.
February 29 - Toronto, ON
● March 15 - Vancouver, BC
● March 22 - Calgary, AB
● March 28 - Ottawa, ON
●
●
March 29 - London, ON
Visit www.payroll.ca/go/?dia for details, including locations, curriculum,
costs and online registration. For more information, contact 1-888-729-7652.
Learning PayroLL ii
For payroll professionals who
have a basic understanding of
the payroll function and want to
explore more complex processes
and government requirements.
March 1 - Toronto, ON
● March 16 - Vancouver, BC
●
March 23 - Calgary, AB
● March 29 - Ottawa, ON
●
●
March 30 - London, ON
HEALTH & Wellness
by Lynne Currie, PCP
Make Time .
for Yourself
As a payroll professional, you are always
taking care of other people, making sure
they get paid and answering any questions. In your personal life, you may also
play the caretaker role to certain friends
and family members. Often, you are so
busy that it seems nearly impossible to
find time for yourself and scheduling a
timeout might seem like a luxury.
However, setting aside time to relax
and rejuvenate is not selfish—it’s essential. When you take care of yourself, you
are happier, more productive and better
equipped to deal with any issues that
may develop.
Here are some tips on how to find that
missing “me” time, so you can be then
face your responsibilities with renewed
energy and enthusiasm!
■■ Leave work on time. Especially at this
At least once a month, schedule a meal
out with friends, a scary movie date,
a weekend getaway or even just
a hot bath. Pick something you always want to do but never
find time for, book it
well in advance, and
cation class that you would find fun.
Communities and institutions offer a
wide range of topics, such as photography, foreign languages, yoga, writing
and dancing. Pick something that will
let you get away from it all and reconnect with yourself.
■■ Make
your commute about you.
Getting to and from work can be stressful. If you can, commuting via public
transit gives you some free time to plan
your day, read, write or just relax. If
you must drive, make the most of your
time by listening to an audio book or
your favourite type of music, or use
that quiet time to review where you are
in life and what you are grateful for,
and set goals for your future.
■■ Plan
to wait. If you have a good deal
of “waiting” time in your life, change it
to personal time. Bring along the book
you never find time to read, the stretching routine you can’t seem to fit in, or
the knitting project you always mean
to get to. In fact, take it a step further
and create waiting time by arriving 15
minutes early to appointments so you
have some alone time to think, write or
do whatever you would like.
natural pauses. Do not go directly from one task to the next. Instead,
take a conscious pause—it can be as
short as a minute—to feel a sense of
accomplishment and reaffirm what is
truly important to you. For that brief
period, disconnect from what you are
doing and savour a moment of inner
peace and quiet. Then take a deep
breath and direct your attention to the
next task.
Resist the urge to make this personal
time productive time. Don’t spend it filling out paperwork or folding laundry.
Life should not be just about crossing
off items on your “To Do” list; it should
be full on moments to enjoy.
If you feel tired, overwhelmed and
that you are constantly putting others’
needs before yours, schedule some “me”
time and make it a priority. By taking
care of yourself now, you will have more
physical and mental energy to help your
family and friends in the future. n
Lynne Currie, PCP, is a health and wellness consultant, and managing editor
of DIALOGUE. She enjoys sharing her
passions of nutrition and active living to
help others improve their overall wellness
through a healthy diet and lifestyle. She can
be reached at Lynne.Currie@payroll.ca.
Dialogue January/February 2012
■■ Make an appointment with yourself.
■■ Sign up for a class. Take an adult edu-
■■ Use
www.payroll.ca
time of year, you may be working long
hours trying to wrap things up and stay
on top of your job, but you will burn
out if you push yourself too much. At
least once a week, make it a point to
leave exactly on time. And remember
to leave work at work so you enjoy this
extra time.
make it a vital appointment in your
calendar so it actually happens!
27
Questions & Answers
From the Payroll InfoLine
The questions featured in this column
were submitted to the CPA’s Payroll
InfoLine via telephone or email.
Question: I have an employee who is over 65 and not currently receiving Canada Pension Plan (CPP) benefits. He has
submitted a CPT30 form to payroll requesting that we stop
deducting CPP contributions from his pay. Can you confirm if
this is allowed, as my understanding was that this was only
an option to individuals in receipt of CPP pension benefits?
Answer: Under the new rules for administering CPP contributions that come into effect January 1, 2012, only employees who
meet all of the eligibility criteria listed below may file a CPT30
election to stop CPP contributions:
■■ Employee is at least 65 but under 70;
■■ Employee is in receipt of CPP or QPP retirement benefits; and
■■ Employee has not filed a revocation of a prior election with
their employer during the current calendar year.
If the employee does not meet all of these eligibility criteria,
you must deduct CPP contributions from pensionable earnings.
Please refer to the CPA’s Canada Pension Plan Changes Guidelines,
available on our website, www.payroll.ca, for complete details
on the new administration of CPP contributions, including various examples and illustrative tables. CPA members can also refer
to the interactive CPP Decision Tool.
www.payroll.ca
Dialogue January/February 2012
28
Question: Do the Canada Revenue Agency (CRA) and Revenu
Québec now require employers to report pensionable and
insurable earnings (C/QPP, EI and QPIP) on the T4 and RL-1
forms for the 2011 reporting year? In the past, we were only
required to report the QPIP insurable earnings amounts in
Box I of the RL-1 form. We have Quebec employees and would
like to ensure we are reporting the pensionable and insurable
amounts correctly.
Answer: Effective for the 2011 reporting year, both the CRA
and Revenu Québec have decided that pensionable and insurable earnings must be populated with amounts, from $0 up
to the applicable maximum pensionable or insurable earnings
amounts (see table below for examples):
■■ The 2011 yearly maximum pensionable earnings (YMPE) for
C/QPP are $48,300.00. Pensionable earnings are reported in
Box 26 of the T4 and Box G of the RL-1.
■■ The 2011 EI maximum insurable earnings (MIE) for EI are
$44,200.00. EI insurable earnings for EI are reported in Box
24 of the T4 only.
■■ The 2011 maximum insurable earnings for QPIP are
$64,000.00. QPIP insurable earnings are reported in Box 56
of the T4 for Quebec employees and Box I of the RL-1.
(Although Boxes 24 and 26 of the T4 slip must always be
populated, Box 56 can still be left blank if the QPIP insurable
earnings are either equal to the employment income reported
in Box 14 or over the maximum for the year.)
uuuuu
The following table illustrates examples of three different employees in 2011.
(If not a Quebec employee, Box 56 would remain blank and the RL-1 slip would not be needed.)
Employee’s
pensionable and
insurable earnings
T4 Box 24
T4 Box 26
T4 Box 56
RL-1 Box G
RL-1 Box I
$65,000
44,200
48,300
64,000
48,300
64,000
$55,000
44,200
48,300
55,000
48,300
55,000
$30,000
30,000
30,000
30,000
30,000
30,000
Question: What are payroll’s responsibilities regarding the
new Volunteer Firefighter Tax Credit (VFTC)?
Answer: The VFTC was announced in the 2011 Federal
Budget and is effective January 1, 2011. Volunteer firefighters who serve at least 200 hours per year at one or more fire
departments are eligible for the VFTC. Services that make
up those 200 hours include responding to and being on call
for firefighting and other emergencies, attending meetings at
the fire department, and taking courses in preventing and
putting out fires.
For payroll, the income exemption related to volunteer firefighter duties is to be identified on the T4 slip, regardless of
whether the volunteer firefighter intends to claim the exemption or the new tax credit. Enter the amount of the exempt
payment (up to $1,000) paid to qualifying volunteer firefighters using the new code 87. Any remaining taxable amounts are
reported in Box 14 of the T4 slip.
Any further decisions about claiming either the exemption
or the new VFTC then becomes the individual’s responsibility
when filing the personal income tax return.
Establishing the credit’s value depends on the type of plan
that the employer maintains. The PA is the total of an employee’s pension credits from all pension plans (employers may
have more than one type).
An individual’s PA in a year reduces his/her RRSP limit for
the following year. As a basic rule of thumb, the larger the dollar amounts of the PA, the smaller the employee’s eligible space
for a RRSP contribution becomes.
The PA limits and calculation methods differ from plan to
plan. The following table outlines the formula for each type
of pension plan:
TYPE OF PLAN
PA FORMULA
Defined
Contribution/
Money Purchase
Employer contributions +
employee contributions
+ reallocated forfeitures
+ additional voluntary
contributions (AVCs)
Defined Benefit
9 x Benefit
Entitlement - $600
DPSP
Employer contributions +
reallocated forfeitures
Combination Plan
Total of pension credits
from each concerned
component
Group RRSP
No PA calculation (employee
will receive RRSP receipts
from plan provider)
uuuuu
Question: Can you explain how pension contribution room
relates to the calculation of the Pension Adjustment (PA)?
www.payroll.ca
Dialogue January/February 2012
Answer: Individual Canadians can shelter no more than 18%
of earned income for the preceding calendar year up to a determined dollar maximum. This overall limit applies not only
to registered retirement savings plans (RRSPs)—either on a
personal contribution basis or through an employer—but also
to employer-sponsored registered pension plans (RPPs) and
deferred profit-sharing plans (DPSPs). Employers are required
to calculate and report a PA if the organization administers
an RPP or DPSP.
When an employer provides a RPP or DPSP, a pension credit
is created for each plan member. In simple terms, the credit
represents the value of the benefit earned or accrued during
the taxation year.
29
payroll & privacy
by John Wunderlich
This is the first of six articles that will deal with the different aspects of managing personally identifiable information
through its life cycle. This article focuses on the policy and
procedure framework necessary to be able to talk about,
manage, and measure personally identifiable information,
beginning with when your organization first acquires it to
when your organization can safely dispose of it.
Disposal
Personal
Information.
Life Cycle
An Information Life Cycle Approach:
It’s Not Always about You
www.payroll.ca
Dialogue January/February 2012
30
Sometimes it is worthwhile to step back and look at what you
are doing and why. This is especially true when there are risks
involved— as is the case with the collection, use, disclosure,
retention, and disposal of personally identifiable information.
Just because last year’s approach sufficiently minimized risks
does not mean it continues to do so.
The New Year is a good time to start thinking about this. After
the yearly tax filing deadlines are past, it is a good time to map out
where you are going with your information policies and procedures.
Information life cycle management (ILM) is a comprehensive
approach to managing the flow of an information system’s data
and associated metadata from start to finish. This approach is not
just about hardware or storage procedures; it tries to capture, and
sometimes automate, the process of moving information through
an organization’s information systems.
Information, or data, management is becoming increasingly
important as compliance-related issues proliferate. Privacy is just
one area of this issue. If your organization does not already have
an ILM project in place, now would be a good time to start. What
does that mean for payroll professionals?
The life cycle of payroll/HR data from a privacy perspective
can be simplified in the following chart: information coming into
the organization (collection), sharing of the information within
and outside of the organization (use), storing of the information
while at the organization (retention), and destroying the information once no longer needed (disposal).
Collection
Retention
Use
To get ready to manage the information through its life cycle,
you need to ensure you have the policies and procedures in
place to implement what you need to do. The following is a
list of some of the most essential tools.
Policies
■■ Employee
Privacy Policy: This policy should state clearly
what data is collected from employees and for what purposes.
This ensures that “collection” and “use” are documented properly. From an ILM perspective, the policy should also provide
guidance on when and to whom data may be disclosed, and
set out the general rules for retention.
■■ Data
Security Policy: The security policy is the complement
to the privacy policy. It should set out the requirements for
ensuring that data disposal is documented, and how retention
limits may be implemented.
■■ Data
Retention Schedules: Each organization should establish what requirements for data retention apply to it. At minimum, this should define what data is required to be kept to
meet Canada Revenue Agency requirements, and there may be
additional industry or professional standards. From a privacy
point of view, the actual length of retention is the minimum
time necessary to exhaust all reasonable business uses and applicable regulatory requirements for retention.
■■ Third
Party Requirements Policy: There should be a policy,
or at least standard language, for organizations to which data is
disclosed to follow. This does not apply to government agencies
that obtain data under statutory authority.
Publications
from The CPA
■■ Data
Disposal Policy: At the end of the retention period for
personally identifiable information, it must be disposed of. This
policy provides guidance to ensure that all copies of data are
identified and disposed of in a timely manner.
Request for Questions & Feedback
Over the course of 2012, I will devote one column to each of
the following topics:
■■ Collection:
What information can you gather and why?
What can you do with the information you have and why?
■■ Disclosure: With whom can you share information and why?
■■ Disposal: How can you safely dispose of information?
■■ Metrics: What kind of information do you want to use to measure your successes?
■■ Use:
Notice: This column reflects solely the opinions of the author. Individuals
are encouraged to seek qualified legal advice on points of law or matters
of interpretation.
To order your copy ($44.95 each plus
tax & shipping), visit www.payroll.ca.
Dialogue January/February 2012
John Wunderlich is an information privacy and security consultant,
based in Toronto. For more information, check out his intermittently
updated website at http://compliance.wunderlich.ca.
One of the biggest anxieties
for payroll professionals is
dealing with annual vacations.
This is particularly true if your
organization operates in more
than one jurisdiction. This
publication provides detailed
information and resources on
payroll-related issues surrounding vacation time and
pay in Canada.
www.payroll.ca
I would like to include practical advice that relates to how you
do business. To that end, please send me questions about privacy
and information life cycle or examples of when you did one
aspect of the life cycle particularly well. I am also interested in
hearing about challenges that you have faced.
Send you questions and feedback to john@wunderlich.ca.
Include “CPA Life Cycle” in the subject line.
With your input, I think we can make some interesting, relevant case studies to help all of us improve the way we meet our
privacy requirements. n
Payroll, by its very nature,
has always operated with
the realities of confidentiality
and privacy protection. This
updated publication looks at
how privacy laws apply to
payroll management and
discusses what should be
done and what would be
beneficial to do.
31
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