From calculating the amount to deduct to remitting payments to communicating with enforcement offices, payroll compliance is essential
Each province and territory in Canada has enacted legislation governing the enforcement of support orders, including a requirement for employers to garnish an employee’s wages where necessary.
"It’s a big component of what we do in terms of dispersing money to families. I know there is paperwork and time involved (for employers) but the proceeds go to a very, very good cause," says Christopher Beresford, director of maintenance enforcement in British Columbia.
When payroll departments receive a wage attachment order or notice from a court or a family maintenance enforcement program, it is essential that they follow the steps for complying with it. Failure to do so can lead to serious consequences for employers, including become liable for the employee’s support payments or arrears.
Overall, Beresford says most payroll departments do a good job complying with support orders.
Any compliance problems that programs see are usually the result of new payroll professionals not understanding the rules or payroll departments forgetting the rules because they do not handle a lot of support deduction orders, says Hannah Roots, managing director of B.C.’s Family Maintenance Enforcement Program (FMEP).
"The reality is that most people pay their maintenance, so the number of cases that we have where we are instituting an attachment like this on wage is not a lot, so I think some businesses may only see these once a year or once every couple of years," she says.
While the specific requirements for complying with support deduction orders vary depending on the jurisdiction, all require that employers deal with them promptly. Many provinces require employers to acknowledge in writing that they received an order for an employee within seven to 10 days of getting it.
One of the most important elements of compliance is calculating how much to deduct from the employee’s pay. In some jurisdictions, the support deduction notice will specify an exact dollar amount. In other provinces, the order will specify only a percentage and payroll departments will have to calculate the amount to deduct while following rules for how much of the pay is exempt from the deduction.
Most jurisdictions exempt a certain amount of an employee’s pay from garnishment for support orders. As with deductions, some provinces specify a dollar amount that is exempt, while others set out a percentage. In some jurisdictions, court orders determine the exemption and in some cases, judges have the authority to change an exemption amount.
Depending on the jurisdiction, the exemption may apply to the employee’s gross or net pay, making it important to thoroughly read the order before starting deductions.
In British Columbia, the formula for calculating deductions is more complex, says Beresford. "It’s a staggered or staged deduction. The first amount of money goes off the clear amount and there is a rate of deduction for the next few hundred dollars and then a higher rate of deduction. It’s not simply taking off 25 per cent or 30 per cent of the total paycheque."
An online calculator that FMEP has on its website helps. "It’s particularly useful for smaller employers because our formula can be a little daunting. It gets well used," says Roots. In fact, Beresford says employers in the province use the calculator over 10,000 times a year.
"Essentially, what a business can do is put in the gross wage (and) the payment pattern. Is it biweekly? Is it bimonthly? Is it monthly? Is it weekly? The calculator does all of the behind-the-scenes work and spits out a number that is the actual amount to be deducted from the paycheque," he says.
Once payroll departments have determined how much to deduct, they should not change the amount without specific instructions from a family maintenance enforcement program, even if the employee requests that they do so, says Lori Marshall, acting director of policy, administration and operations support with Alberta’s Maintenance Enforcement Program (MEP).
"If an employee indicates that the amounts requested are incorrect or that the employee has already or will make the payments themselves, the employee should be directed to contact MEP to resolve the issue. Unless the employer receives updated information from MEP, please remit as directed," she says.
Just as important is ensuring the deductions are sent to the maintenance enforcement program by the due date.
"Probably the biggest single problem we see is late payments," says Beresford. "The attachment is not acted on quite as quickly as it should be or that we would like it to be and the payments may be arriving past the date by which they are to be received."
Different deadlines apply depending on the jurisdiction. In B.C., for example, employers have to remit the payment within five days of deducting it. In Quebec, remittances follow a specific schedule.
Revenu Québec is responsible for collecting the support payments. It requires employers that remit other source deductions (QPP, QPIP and provincial income tax) to Revenu Québec weekly or twice monthly to send in the support deductions at the same time. In all other cases, employers must remit support deductions by the 15th day of the month following the month they deducted them.
Making sure ongoing deductions and remittances continue even after arrears are paid off can also be challenging, says Beresford.
"There are two parts of the deduction. There is the deduction of the regular support that is due for a child or children and then there is the deduction of arrears that has built up over time," he says. "It is important the employer know that there is both the ongoing and the arrears and that they don’t stop deducting at some point because they think all of the arrears have been paid off."
Communicating with the program office if there are employment changes is another important element of compliance. Maintenance enforcement laws across Canada require employers to notify the maintenance enforcement program office within a specified time (often 10 days) if an employee’s employment is terminated.
Remembering to restart deductions if a terminated employee is rehired can also be an issue for some employers, says Marshall. In Albert, support deduction notices can last for 12 years, so payroll departments need to find out if an old order is still valid.
"If an employee leaves their employment and later returns, the employer should start remitting again, unless the support deduction notice was terminated by MEP in the interim," she adds.
One challenge payroll can face is having to comply with more than one garnishment order for the same employee at the same time, says Roots.
"Where there are two for maintenance or two for child support, what we recommend is just do the calculation and send us the full amount and we will divide it between the families," she says.
"If it’s a garnishment from another source, and the most common one is Revenue Canada, our advice to the employer is to just phone us. We will deal with Revenue Canada and we will work it out with them. To their credit, Revenue Canada is usually very willing to work with us and they are usually more willing to talk to us than to the employer," she adds.
The process of complying with support deduction orders can be even more challenging for employers with workplaces in more than one province since each jurisdiction has its own rules.
Beresford says maintenance enforcement programs recognize this and try to standardize processes where possible.
"Each province, each territory has its own legislative framework, but we have really tried to work together, I wouldn’t say to make our legislation identical, but to be relatively harmonized in how we do things," he says.
"We have monthly teleconferences of the programs and we have an annual meeting. One of the things that we want to do is remove the gaps that exist between us and to make things work a little bit more seamlessly.
About one case in five involves a parent living in one province or territory and a parent in a different province or territory. Canadians are very mobile so we really have to work together if we are going to be effective on this."
The best way to avoid errors with any support deduction notice is to call the applicable maintenance enforcement office with any questions or concerns, says Marshall. "We have a dedicated phone queue for employers so we can provide answers quickly."
Beresford echoes this. "Five minutes on the phone can save untold difficulties down the road in getting these right.
"That will ensure that they are very accurately following the terms of the notice and then they are in the clear and the payor is in the clear because ultimately if the deduction isn’t done in a timely way or a proper way, it’s not good for the company, it’s not good for the program and it’s certainly not good for the payor," he adds.
