Legislative Changes that Impact Canadian Payroll
Below, we will dive into the latest Federal and Provincial Legislation changes from 2019 that may impact your 2020 Canadian payroll processing.
For a list of provincial and territorial changes, click here.
Bill C-97, Budget Implementation Act passes legislation on salary overpayments
On June 21, 2019, Bill C-97, Budget Implementation Act, 2019, passed legislation on salary overpayments.
Employers can proceed with the new rules, except for the CPP (until consent with the provinces has been achieved). The new rules indicate that:
- Employers can immediately enable employees to reimburse any salary overpayments due to system, administrative or clerical errors made after 2015, (i.e., “before the end of the third year after the calendar year in which the excess amount is deducted or withheld”) net of any EI and federal income tax withheld, but not CPP as this requires consent from the provinces and territories.
- Employers can also immediately apply the proposed legislation to Quebec income tax, QPIP, as well as QPP (since this does not require consent from other provinces).
For more information about this legislation, see:
Upcoming Federal Changes to Employee Stock Options
On June 17, 2019, federal Finance Minister Bill Morneau tabled a Notice of Ways and Means Motion that contains proposed changes to the tax treatment of employee stock options that were initially announced in March 19, 2019, Federal Budget. The Notice of Ways and Means of Motion outlines the various provisions that will be contained in the new structure for our stock options.
The key components include the following:
The $200,000 limit on stock options
The proposed changes include a new $200,000 limit on the amount of stock options that may be vested for an employee in a year to continue to be eligible for the deduction.
The $200,000 limit will apply to stock options granted by the employer and any other corporation or mutual fund trust that is related to the employer. As a result, if an employee receives options from more than one employer in the same corporate structure, they will not be entitled to receive a deduction on $200,000 worth of options from each corporation in a year. Shares that vest (become the employee's property) in any calendar year are based upon the value of the shares at the time the shares are granted; which means the price of the shares quoted in the agreement for which the employee can purchase the shares. This also means that the price of those shares can be no less than the FMV of the shares on the date of the agreement to qualify initially under the current rules.
Effective date January 1, 2020
The changes will apply to all stock options granted on or after January 1, 2020. Options granted (regardless of vesting or exercise) up to and including December 31, 2019, will be subject to the current legislation.
Canadian-controlled private corporations (CCPCs) and other types
Options granted by CCPCs are not impacted by these changes. Other share types that are not entitled to a deduction will not be affected these changes either. They include:
- Stock bonus plans (Restricted Share Units, Differed Share Units or other similar description)
- Employee share purchase plans, where an employee receives shares at a reduced price
The employer may be able to claim a deduction on the portion of the benefit that does not qualify for the 50% stock option deduction as a result of the $200,000 limit. This corporate deduction will only be available if the stock options would have otherwise qualified for the 50% deduction. The ability to claim a deduction will not apply to employers that are CCPCs or companies that meet prescribed conditions (i.e., “start-ups,” “emerging” and “scale-up” Canadian businesses once these terms are defined).
Definitions for Organizational Terminology
Definitions for organizational terminology such as “large,”“long-established,” “mature firms” “start-ups,” “emerging” and “scale-up” as Canadian businesses are not defined in the Notice of Ways and Means Motion.
The Government is seeking stakeholder input on characteristics of companies that should be considered start-up, emerging, and scale-up companies for purposes of the prescribed conditions. The Government would also be interested in stakeholder views on the administrative and compliance implications associated with putting such characteristics into legislation.
Stakeholders are invited to submit comments concerning the prescribed conditions for the consideration of the Department of Finance by September 16, 2019, to fin.ESO-OAAE.firstname.lastname@example.org
To learn more about the proposed changes to employee stock options, check out these sources:
Canada Labour Code Changes Effective September 1, 2019
On December 14, 2017, Bill C-63 an Act to implement certain provisions of the Budget tabled in Parliament on March 22, 2017, and other measures received Royal Assent.
On October 29, 2018, the federal government introduced Bill C-860 A second Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018. The bill received Royal Assent on December 13, 2018.
Although Bills C-63 and C-86 were tabled and received Royal Assent, the effective dates for most of these changes have only recently come into force. The effective date for most of these changes will be September 1, 2019. To find out which changes will not come into effect on September 1, 2019, scroll down here (scroll to bottom of post).
Additionally, amendments to specific Canada Labour Standards Regulations will also come into force on September 1, 2019.Some of the regulatory amendments (which are included in the link above) include the following:
- Modified work schedules and maximum hours of work
- Overtime pay or time off
- Annual vacations
- Regular rate of wages
- Multi-employer employment
- Bereavement leave
- Record keeping
These changes will impact employers who are federally regulated under the Canada Labour Code Part III.
Bills C-63 and C-86 include several changes to the Canada Labour Code (CLC) and include the following:
Canada Labour Code Part III Bill C-63Overtime pay or time off
- Time off must be taken within three months or must be paid out
- If an employee is terminated, overtime must be paid out within 30 days
- An employee is not to refuse overtime unless they have a family responsibility or there are unforeseen circumstances such as danger or threat to life
- An employer cannot dismiss an employee for refusing to work overtime
If an employer changes or adds a work period or shift during which an employee is due to work, the employer shall give the employee written notice of the change or addition at least 24 hours before the shift begins.
Flexible Work Arrangements
An employee who has completed six consecutive months of continuous employment with an employer may request, in writing, a change in their condition of employment pertaining to hours of work, schedule, and location of work.
Vacation may be rescheduled
An employee may reschedule their vacation time to take a legislative leave.
An employer may, in respect of one or more employees subject to a collective agreement, substitute any other day for a general holiday if the substitution is agreed to in writing by the employer and the trade union or employees if there is no collective agreement.
New Leaves Introduced
Family Responsibility Leave
Every employee who has completed three consecutive months of continuous employment with an employer is entitled to a leave of absence of up to three days every calendar year.The leave is to carry out the employee's responsibilities related to:
- the health or care of any of their family members; or
- the education of any of their family members who are less than 18 years of age.
The leave of absence may be taken in one or more periods. The employer may require that each period of leave be of not less than one day's duration.
The employer may, in writing, and no later than 15 days after an employee's return to work, request that the employee provide documentation to support the reasons for the leave. The employee must provide that documentation only if it is reasonably practicable for them to obtain and provide it.
Leave for Victims of Family Violence
Every employee who is a victim of family violence or who is the parent of a child who is a victim of family violence is entitled to and shall be granted a leave of absence from employment of up to 10 days in every calendar year, to enable the employee to seek medical attention or services in respect of such violence. Bill C-86 introduced that 5 of these days would be paid.
An employee is not entitled to a leave of absence concerning any act of family violence if the employee is charged with an offense related to that act or if it is probable, considering the circumstances, that the employee committed that act.Division of leaveThe leave of absence may be taken in one or more periods. The employer may require that each period of leave be of not less than one day’s duration.
Leave for Traditional Aboriginal Practices
Every employee who is an Aboriginal person and who has completed three consecutive months of continuous employment with an employer is entitled to a leave of absence from work of up to five days in every calendar year, to enable the employee to engage in traditional Aboriginal practices such as hunting, fishing or harvesting.
Division of leave
The leave of absence may be taken in one or more periods. The employer may require that each period of leave be not less than one day’s duration.
Every employee is entitled to and shall be granted, in the event of the death of a member of their immediate family, a leave of absence from work of up to fivedays. This leave may be taken during beginning on the day on which the death occurs and ends six weeks after the latest of the days on which any funeral, burial or memorial service of that immediate family member occurs.
If the employee has completed three consecutive months of continuous employment with the employer, the employee is entitled to the first three days of the leave with pay at their regular rate of wages for their normal hours of work, and such pay shall, for all purposes, be considered to be wages.
Elimination of Length of Service Requirements for Certain Existing Leaves
The minimum length of service that an employee must complete to qualify for will be eliminated for the following leaves:
- Medical leave
- Maternity leave
- Parental leave
- Leave related to the critical illness of a family member and;
- Leave related to death or disappearance of a child
It will, therefore, be possible for an employee to qualify for any of these leaves from the first day of employment.
Canada Labour Code Part III Bill C-86
Bill C-86 includes several measures that impact payroll directly and indirectly and include the following:
Vacation time and pay
An employee will be entitled to the following:
- 4% vacation pay and two weeks entitlement after one year
- 6% vacation pay and three weeks entitlement after five years (previously six years)
- 8% vacation pay and four weeks entitlement after ten years (new)
The minimum length of service (30 days) requirement for general holiday pay has been eliminated.
Every employee shall be granted an unpaid break of at least 30 minutes during every period of five consecutive hours of work. If the employer requires the employee to be at their disposal during the break period, the employee must be paid for the break.
Every employee is entitled to and shall be granted a rest period of at least eight consecutive hours between each shift.
The employer shall provide an employee with their work schedule in writing at least 96 hours before the start of the employee’s first work period or shift under that schedule.
Employers must provide written notice to employees of their work schedule at least 96 hours before the start of the first work period, subject to certain exceptions. Employees have the right to refuse to work any periods or shifts that start within 96 hours of the time the schedule is provided to them, subject to certain exceptions.
Right to refuse work
An employee may refuse to work any work period or shift in their schedule that starts within 96 hours from the time that the schedule is provided to them.An employee shall not refuse to work in an emergency.
Every employee is entitled to and shall be granted an unpaid leave of absence from employment to attend court to:
- Act as a witness in a proceeding
- Serve as a juror in a proceeding; or
- Participate in a jury selection process.
Every employee is entitled to and shall be granted a medical leave of absence from work of up to 17 weeks as a result of:
- personal illness or injury;
- organ or tissue donation; or
- medical appointments during working hours
Employees will be entitled to five days of personal leave. Employees no longer need to work three months to be entitled to leave; however, if employees have three months of continuous service, the first three days of leave will be paid.
Regular Rate of Wages for Purposes of General Holidays, Personal Leave, Leave for Victims of Family Violence and Bereavement Leave
The regular rate of wages of an employee whose hours of work differ from day to day or who is paid on a basis other than time shall be:
- the average of the employee’s daily earnings, exclusive of overtime hours, for the 20 days the employee has worked immediately preceding the first day of the period of paid leave;
The minimum length of service requirements for reserve force member leaves will also be reduced from six to three months. The legislation also sets a 24-month cap to the total amount of leave that may be taken in any 60-month period.
Transfer of Ownership
Legislation pertaining to the Canada Labour Code will ensure employee rights are maintained in the event of a merger, acquisition or change of ownership
Other proposed changes
The proposed changes also address:
Medical and Nursing Breaks
Subject to the regulations, employees are entitled to unpaid breaks necessary for medical reasons. Employees who are nursing are entitled to unpaid breaks to allow them to nurse or express breast milk.
The following changes will come into effect on yet-to-be-announced dates in 2020 or later.
Termination (effective date to be confirmed)
Currently, the notice period or pay in lieu of notice under the Canada Labour Code is two weeks no matter the number of years of service. This would change to the following:
Group Terminations (effective date to be determined)
For group terminations, employers must provide 16 weeks notice of termination and establish a joint planning committee when they intend to terminate the employment of 50 or more employees in a particular industrial establishment within a four-week period.
Equal Wages (effective date to be confirmed)
The Code will be amended to prohibit an employer from paying a lower rate of wages to one employee than another due to a difference in their employment status (e.g., because one of them is a part-time, casual, temporary or seasonal employee), if both employees:
- Work in the same industrial establishment;
- Perform substantially the same kind of work;
- Perform work that requires mainly the same skill, effort, and responsibility; and
- Perform work under similar working conditions.
Minimum Age of Employment (effective date to be confirmed)
An amendment to the Code will raise the minimum age of employment in hazardous occupations from 17 years to 18 years of age. There is regulatory authority to specify the occupations in which persons under the age of 18, or any class of persons under that age, may be employed and to fix the conditions of that employment.
Temporary Help Agencies (effective date to be confirmed)
A new division will be added to the CLC to set out requirements for federally regulated temporary help agencies in relation to employees that they assign to perform work for clients.Temporary help agencies will be prohibited from:
- Charging a fee to someone for becoming their employee;
- Charging a fee to an employee for assigning or attempting to assign him or her to perform work for a client;
- Charging a fee to an employee for any assignment or job preparation services (e.g., assistance with a resume or job interview preparation);
- Charging a fee to an employee who becomes employed directly by a client;
- Charging a fee to a client for hiring an employee, unless six months or less have elapsed since the day of the employee’s first assignment with that client; and
- Preventing or attempting to prevent an employee from becoming employed directly by a client.
Information Related to Employment (effective date to be determined)
Employers will be required to provide employees, within the first 30 days of their employment with a written employment statement as well as materials that the Minister makes available and that contain information respecting employers' and employees' rights and obligations.
Alberta Employment Standards Changes to general Holidays
On May 27, 2019, the government of Alberta introduced Bill 2: An Act to Make Alberta Open for Business to revert to the previous qualifiers for general holidays that come into effect on September 1, 2019.
General Holiday Pay calculation will not change
Employees will continue to be paid 5% of the average daily wage which is calculated at 5% of the employee's wages, general holiday pay and vacation pay earned in the 4 weeks immediately preceding the general holiday pay.Employers may locate this information at the website for Alberta Employment Standards.
Flexible Averaging Agreements Amendment Regulatory Changes in Alberta
On July 18, 2019, by order in council 126/2019, the Alberta government made amendments to the Employment Standards Regulation (AR 14/97) under the Employment Standards Code to remove flexible averaging agreements and implement transitional provisions in force September 1, 2019.
The Lieutenant Governor in Council has repealed provisions of the Employment Standards Regulation relating to flexible averaging agreements. Therefore, effective September 1, 2019, flexible averaging agreements are no longer a permissible method to regulate hours worked in excess of eight hours per day.
Flexible averaging agreements that are already in effect remain valid until the earlier of:
- The date the flexible averaging agreement is canceled
- In the case of a flexible averaging agreement made as part of a collective agreement, the date a subsequent collective agreement is entered into; and
- Two years after the date section 13.49(1) comes into force.
The parties to a flexible averaging agreement may also agree that wholly or partly instead of overtime pay, the employer will provide, and the employee will take time off with pay.
Employers should review their policies to ensure that they comply with the new legislation before September 1, 2019.
Hours of work averaging agreements under the Employment Standards Code and Employment Standards Regulation will remain valid and in force, with no amendments made to those provisions.
Alberta Budget (October 24, 2019)
The Honourable Finance Minister Travis Toews, tabled the Alberta Budget for 2019 in the Legislature on October 24, 2019.
Although the budget did not include any changes to personal income tax rates, there were changes to personal tax credits and brackets.
Personal tax credits to be paused
The government will temporarily pause indexation of non-refundable tax credits and tax bracket thresholds to the Alberta Consumer Price Index. This change will be in effect for 2020.Tuition and education tax credit to be eliminated
Alberta will eliminate the education and tuition tax credits beginning with the 2020 taxation year.
Alberta to review legislation including legislation impacting payroll
The ministry will undertake a review of key pieces of legislation and regulation and program delivery to reduce regulatory burden and ensure it supports businesses and encourages economic growth. Some of their key objectives are as follows:
- Assess current minimum wage impacts to the economy and encourage youth employment by establishing a youth minimum wage.
- Implement the Open for Business Act to provide flexibility around holiday pay and banked overtime and to simplify the labour relations process.
- Review and amend labour legislation and regulation to ensure it supports the needs of job creators while protecting worker rights and enabling a thriving economy.
- The Minimum Wage Expert Panel will assess the province’s minimum wage and whether hospitality industry workers who serve alcohol would benefit from a wage differential allowing them to work more hours.
- Work proactively with employers and workers to promote compliance with employment standards and engage in timely complaint resolution and effective enforcement.
More information on the Alberta Provincial Budget may be obtained from the Alberta Government’s website.
BC Employer Health Tax Information Update
The Employer Health Tax Frequently Asked Questions has been expanded to include how the employer health tax applies to First Nations employers and employees.
Medical Services Plan (MSP) premiums will end January 1, 2020.
Enrolment in MSP remains mandatory for all British Columbia residents despite the fact that premiums will end at the end of the year. Payroll can continue to communicate with employees and encourage them to enroll if they have not done so by submitting an application at gov.bc.ca/MSP/applyforhealthcare.
Employers and employees need to be made aware that the elimination of MSP premiums does not forgive the paying outstanding premiums owed. MSP premium debts from before January 1, 2020 will remain payable. For information about paying outstanding MSP premiums, visit gov.bc.ca/MSP/paypremiums.
MSP beneficiaries must keep their MSP account information current. Any change in address or family structure, requires notification to Health Insurance BC (HIBC) within 10 days.
Visit addresschange.gov.bc.ca or gov.bc.ca/managingyourMSPaccount.
Nunavut Introduces Bill 26 an Act to Amend the Income Tax Act to Increase the Basic Personal Amount
The government of Nunavut introduced Bill 26, An Act to Amend the Income Tax Act on May 28, 2019, to increase the basic personal amount and the spousal amount for individuals.
The increase will be to $16,000 for 2019. This amount will change on Nunavut's 2019 provincial TD1. However, employees will benefit from the increased tax credit when they file a personal income tax return for 2019.
Prince Edward Island
Prince Edward Island Budget (June 25, 2019)
On June 25, 2019, the Hon. Darlene Compton, Minister of Finance, tabled the province’s 2019-2020 Budget.
The Budget contained one payroll-related change.
Basic personal amount to increase over two years
The Basic Personal Amount currently at $9,160 will be increased to $10,000 in 2020.More information on the Prince Edward Island Provincial Budget can be obtained at the web site for the Government of Prince-Edward Island.
Minimum wage to increase
Prince Edward Island’s minimum wage will increase by 60 cents from $12.25 to $12.85 per hour on April 1, 2020.
QPIP Rates to Decrease in 2020
The Quebec government announced (French only) that the premium rate for the Québec Parental Insurance Plan (QPIP) will be decreasing by 6 percent on January 1, 2020.
The new contribution rates will correspond to the following percentages of insurable earnings:
- 0.494 percent for employees;
- 0.692 percent for employers; and
- 0.878 percent for the self-employed
The QPIP insurable maximum for 2020 has yet to be announced. The CPA will advise employers once this information has been made available.
Tentative Change to CNESST Maximum Assessable Earnings for 2020 Announced
The CNESST has recently announced that the CNESST maximum assessable earnings will tentatively increase to $78,500 for 2020. The weekly maximum for the construction industry will change to $1,505.56. These changes will be confirmed towards the end of October 2019.
Food and lodging provided to an employee in the hospitality industry meals
The maximum price for calculating the value of meal benefit provided to an employee is $ 8.71 for 2019 and $ 8.93 for 2020.
The maximum weekly price for calculating the value of the housing benefit provided to an employee is $ 50.50 for 2019 and $ 51.25 for 2020.
Publication of the regulation respecting the pay equity report for employers (DEMES)
The Commission des normes, de l'équité, de la santé et de la sécurité du travail (CNESST) informed employers of the publication of the Regulation respecting the Pay Equity Report which came into force on Thursday, October 24, 2019. This regulation deals primarily with reporting frequency.
Employers must now submit a report once a year until they can certify that they have fully completed the initial pay equity exercise in their organization.
Subsequently, employers must submit a report when they complete a pay equity audit.
Upon certifying that they have completed a pay equity audit, employers are exempt from submitting a report until their next pay equity audit.
The Employer Report On Pay Equity (DEMES) is an accountability tool that is separate from the obligation to complete a pay equity exercise or in the organization Employers must complete this online form in order to report the organizational level of application of the PayEquity Act.
Who must file a DEMES and when?
The DEMES applies to all employers registered in the Québec enterprise register that declared therein 11 employees or more the previous year. It also applied to any employer who did not report employing 11 or more employees in the enterprise register but declared being subject to the Pay Equity Act in their last report. Employers must file their report within the same period of time designated for conducting the annual update of the enterprise’s records with the Registraire des entreprises (Québec enterprise register).
The CNESST will send a timely letter to all employers subject to the Regulation respecting the Pay Equity Report to remind them of their reporting obligation and the applicable period of time.
For more information on how to complete the DEMES, please visit: http://www.demes.gouv.qc.ca/ An example of an employer report on pay equity is also available under: Employer report on pay equity
Saskatchewan to Increase Minimum Wage on October 1, 2019
The Saskatchewan minimum wage will increase from $11.06 to $11.32 per hour on October 1, 2019.