News in Brief

Payroll one of most common functions to be outsourced: Survey

MENLO PARK, Calif. — Within a company’s finance department, payroll is one of the most common functions to be outsourced, a recent survey finds.

The staffing firm Robert Half and the Financial Executives Research Foundation surveyed almost 1,400 finance executives in Canada and the United States for an annual benchmarking study.

The survey found that 39 per cent of Canadian companies and 43 per cent of U.S. companies outsource payroll. The only other finance function more commonly outsourced in Canada than payroll was tax, the survey found, which was outsourced by 45 per cent of Canadian businesses polled.

In the United States, slightly fewer firms (42 per cent) outsourced tax. Fewer than four per cent of Canadian businesses said they outsourced other finance functions such as accounts payable and general accounting.

The survey also found that payroll outsourcing was more common in companies with relatively large and relatively small revenues compared to those with revenues in-between.

Fifty per cent of firms with annual revenues of $1 billion or more said they outsourced payroll.

In businesses with revenues of less than $25 million, 46 per cent said they outsourced payroll. In companies with revenue between $25 million and $1 billion, the average for outsourcing varied from 33 per cent to 39 per cent.

The study says for smaller companies, payroll is often outsourced because of "lack of internal staff or expertise." In larger firms, it says, "the presence of workers in multiple countries is often a key factor in the decision to outsource payroll."

It provides an example of a multinational company that chose to use a payroll service provider to process payroll for its European employees, who are in more than a dozen countries, rather than set up its own payroll system for each jurisdiction. The company says it uses an in-house payroll team for its North American payroll.

The survey also found that 14 per cent of Canadian companies polled manage their payroll through their shared service centre. Seventy-nine per cent of Canadian companies that responded to the survey said their internal shared service centre is located in Canada, while nine per cent said it is in the United States.

Seven per cent of Canadian respondents said they locate their company’s shared service centre in the region called Europe, Middle East, Africa. This is an increase from zero per cent in last year’s survey.

Other locations cited by a smaller number of respondents included India, South America, Mexico and Asia-Pacific.

Businesses call for expanded definition of ‘comparable’ for proposed ORPP

TORONTO — The Ontario Chamber of Commerce (OCC) and a coalition of Ontario employers are calling on the provincial government to broaden its definition of a "comparable" pension plan under its proposed Ontario Retirement Pension Plan (ORPP).

The Ontario government announced last year it plans to phase in the ORPP beginning in 2017. The plan, which would be funded by mandatory contributions from employers and employees in the province, would be mandatory for employees and their employers if the individuals are employed in eligible employment in Ontario, are 18 to 70 years old and do not take part in a comparable workplace pension plan. Employers and employees with comparable plans would be exempt from ORPP contributions.

The government has yet to define "comparable," but in a consultation paper released late last year, it said it was considering restricting the definition to only defined benefit pension plans and target benefit multi-employer pension plans.

In a news release, the OCC says it, along with municipal chambers of commerce and over 90 employers, recently sent a letter to Premier Kathleen Wynne outlining the reasons why businesses want the government to expand the definition of "comparable" to include capital accumulation plans such as defined contribution plans.

"This move would ensure that companies in the province that have an existing pension plan for their employees would not be forced to incur this new cost of doing business," the chamber said in a news release.

The letter says the government’s current focus on only allowing defined benefit and target benefit multi-employer pension plans to be comparable would penalize employers that contribute to employees’ retirement savings through other types of plans, such as defined contribution plans and group RRSPs.

It adds that some of these employers may reduce their contributions to these plans to offset mandatory ORPP contributions, which would hurt employees’ ability to save for retirement. The government has announced the ORPP contribution rate would be 1.9 per cent for employers and employees on an employee’s annual earnings up to $90,000.

The province says it is reviewing feedback it received from consultations held earlier this year on the plan’s design and will soon announce how it will proceed on key design issues, including the definition of "comparable" and a minimum earnings threshold for participation.

Average weekly earnings up in March: StatsCan

OTTAWA — Average weekly earnings of non-farm payroll employees were $954 in March, up from $951 in February, Statistics Canada reports. On a year-over-year basis, weekly earnings increased 2.8 per cent in March.

The increase in weekly earnings during the 12 months to March reflected a number of factors, including wage growth, changes in the composition of employment by industry, occupation and level of job experience, as well as average hours worked per week.

Non-farm payroll employees worked an average of 33 hours a week in March, unchanged from 12 months earlier.

Year-over-year earnings of non-farm payroll employees increased in all provinces, with the biggest growth in New Brunswick and Prince Edward Island. The smallest growth occurred in British Columbia.

Economy gained 59,000 jobs in May: StatsCan

OTTAWA — Canada’s economy gained 59,000 jobs in May, but the unemployment rate remained 6.8 per cent, Statistics Canada reports.

The job growth came mostly from the private sector, which added close to 57,000 jobs. While the number of self-employed workers also increased, employment in the public sector declined by 19,000 jobs in May. Statistics Canada says the lack of movement in the unemployment rate is due to more people entering the labour market to look for work.

Industries where employment increased included manufacturing; health care and social assistance; retail and wholesale trade; business, building and other support services; and finance, insurance, real estate and leasing. Employment was down in industries such as public administration and agriculture.

On a provincial basis, job gains were strongest in Ontario, where almost 44,000 jobs were added in May. The unemployment rate in the province dropped from 6.8 to 6.5 per cent.

Newfoundland and Labrador continued to have the highest unemployment rate at 13.8 per cent, up from 12.6 per cent in the previous month. Saskatchewan continued to have the lowest unemployment rate at 4.9 per cent, but the rate was up from 4.3 per cent in April.

The unemployment rate was also up in Alberta (to 5.8 per cent), Manitoba (to 5.7 per cent) Prince Edward Island (to 11 per cent) and Quebec (to 7.6 per cent). Besides Ontario, the rate dropped in British Columbia (to 6.1 per cent), New Brunswick (to 9.6 per cent) and Nova Scotia (to 8.8 per cent).

In the United States, the U.S. Bureau of Labor Statistics reports that the American economy added 280,000 jobs in May. The unemployment rate rose slightly from 5.4 per cent to 5.5 per cent.