Alberta, Ontario focus on payroll

Provinces pledge to reduce red tape, undo employment standards amendments

Alberta, Ontario focus on payroll
United Conservative Party Leader Jason Kenney meets with the media in front of the Alberta legislature in Edmonton after being voted in as premier of the province on April 16. Credit: Candace Elliott (Reuters)

Payroll issues are on the minds of government policymakers in at least two provinces.

In Alberta, a newly elected government has pledged to undo a number of the previous government’s payroll-related employment standards amendments.

In Ontario, the government is proposing to work with the Canadian Payroll Association (CPA) and other employer groups to find ways to reduce payroll-related red tape for businesses.

The proposals in both jurisdictions signal that changes may be ahead for payroll professionals.

During the recent Alberta election campaign, the United Conservative Party (UCP) said it would cut red tape by one-third over its mandate. It also committed to implementing a “one-in/one-out” rule, requiring ministries to identify at least one offsetting regulation for every new regulation they create.

The UCP also said one of its first actions in government would be to table legislation to amend the province’s employment standards and labour relations laws.

“Bill 2 under a UCP government would be the Open for Business Act, which would reverse job-killing NDP policies, restore workplace democracy, bring balance to Alberta labour laws, and incentivize the creation of youth employment,” said UCP campaign documents.

Proposed employment standard amendments would include changes to general holiday pay rules. The UCP has proposed returning to prior employment standards rules that required employees to work for their employer for at least 30 days in the 12 months before a general holiday to qualify for holiday pay.

The previous NDP government eliminated the 30-day requirement in 2018.

The UCP has also promised a return to a regular/irregular workday distinction for calculating general holiday pay.

Since 2018, the Employment Standards Code has required employers to pay employees for general holidays on which they do not work, regardless of whether the holiday falls on a regular workday.

With the 2018 amendments, employers must now pay employees who work on a holiday their average daily wages for the day, plus 1.5 times their regular wage rate for each hour worked, or pay them their regular wage rate for the day and give them a day off with pay before their next annual vacation. This applies regardless of whether the holiday falls on a regular workday.

The UCP also pledged to reverse another 2018 amendment that requires employers with overtime banking agreements to provide employees with 1.5 hours of time off with pay for each hour of overtime worked.

Previously, employees could only bank one hour for each overtime hour worked.

Minimum wage is another area that may see changes. While the new government said it would keep the province’s general minimum wage rate at $15 an hour, it added that it might allow for other minimum wage rates for certain workers.

It has proposed a $13-an-hour minimum wage rate for workers under 18 years and the creation of a minimum wage expert panel to assess whether workers in the hospitality industry who serve alcohol should have a lower minimum wage rate.

For some employers, the proposals are welcome.

“Alberta’s move to a $15 minimum wage rate has taken its toll on businesses who are also faced with higher costs for overtime, holidays, and restrictions on how they schedule workers,” said the Alberta Chamber of Commerce.

However, labour advocates warn that the proposed changes, especially those affecting overtime pay, would be bad for workers.

“The NDP brought Alberta in line with all other provinces by guaranteeing that all banked overtime would be calculated on a time-and-a-half basis instead of a straight-time basis, whether it was taken as cash or time off,” said Gil McGowan, president of the Alberta Federation of Labour.

“The change proposed by the UCP would make Alberta an outlier among Canadian provinces and it would provide a big financial incentive for employers to use banked overtime to deal with overtime rather than paying it out,” he said.

“Employers that don’t currently have a banked overtime policy will almost certainly introduce them in order to avoid paying time-and-a-half.”

Meanwhile, the Ontario announcement was included in this year’s provincial budget, which Finance Minister Vic Fedeli tabled on April 11.

“The government is committed to ensuring the more effective and efficient administration of payroll legislation,” said the budget document.

“To achieve this, the government is exploring working with key partners, such as the Canadian Payroll Association, to establish the Ontario Payroll Burden Reduction Advisory Council. This approach aligns with steps already taken in other Canadian jurisdictions,” it said.

The proposal is one of several initiatives Fedeli put forward to reduce what he calls “regulatory burden” on businesses. He also announced that the government would continue reviewing ways to streamline business-related regulations, with a target of reducing them by 25 per cent by 2020.

Fedeli also proposed that the government would introduce one important red tape reduction bill each fall and spring during its term in office, in addition to tabling other bills to lessen regulatory requirements.

“Once fully implemented, these changes are expected to provide Ontario businesses with over $400 million in ongoing savings on their compliance costs,” said the budget.

The CPA said it was pleased to hear that the government might set up a payroll advisory council, adding that the province needs to be more in line with other jurisdictions when it comes to regulating businesses.

“(Ontario) currently has the most onerous payroll compliance regulatory framework in Canada, outside of Quebec,” said the CPA.

“Currently, Ontario has more payroll-specific regulatory requirements than British Columbia, Alberta and Manitoba combined.”

CPA president Peter Tzanetakis said with remittances from personal income tax, health premiums, employer health tax contributions, and Workplace Safety and Insurance Board (WSIB) premiums accounting for approximately $50.5 billion, or 40 per cent, of the province’s total annual revenues.

“We are pleased that the budget recognizes payroll’s essential role in the economy and the work done by payroll professionals on the government’s behalf to manage employee and employer revenue contributions efficiently and effectively,” he said.

Other payroll-related measures in the budget included proposals for the Ministry of Labour to use more digital tools in employment standards administration to reduce duplication and red tape for employers.

The proposal builds on a recent announcement that the ministry has developed a new online self-audit tool for employers to replace paper audits that employment standards officers used to do.

The budget also proposed amendments to pension plan legislation to allow plan sponsors to use electronic communication as the default method for communicating with plan members.

It also reiterated previous announcements that the government would freeze the minimum wage at $14 an hour until October 2020 and conduct an operational review of the WSIB, focusing on financial oversight, effectiveness, and efficiency.

Employers and payroll professionals in Newfoundland and Labrador and Prince Edward Island may also see payroll-related changes in their jurisdictions.

Shortly after delivering the budget on April 16, an election was called in Newfoundland and Labrador. New mandates generally bring legislative amendments. One likely change that payroll professionals can expect is the elimination of the province’s Temporary Deficit Reduction Levy by the end of the year.

The levy applies to individuals with an annual taxable income above $50,000. Employers collect it from employees with their income tax source deductions.

The provincial Liberal party, which implemented the levy in July 2016, has said it would only apply until the end of 2019.

P.E.I.’s new minority Progressive Conservative government has pledged to raise the basic personal amount claimed on a provincial TD1 (currently $9,160) to $12,000 and to index future increases to inflation.

The Official Opposition Green Party has said it wants to see the minimum wage reach $15 an hour by 2023. It is currently $12.25.

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