Annie Chong, manager of Carswell’s payroll consulting group, fields questions from readers
Question: How do I report pay adjustments and pay corrections on a record of employment (ROE)?
Answer: A pay adjustment is a type of retroactive earning that is required when an employer has not immediately recognized, implemented or processed a change to an employee’s pay, such as a wage increase after it has been awarded.
Pay adjustments are insurable for earnings, but not for hours. Include the amount of a pay adjustment in blocks 15B (total insurable earnings) and 15C (insurable earnings by pay period).*
If the pay adjustment was paid while the employee was still working for the employer, it is allocated to the pay period in which it is paid. If paid on separation, allocate the pay adjustment to the last pay period in which regular salary or wages was paid.
Do not include any hours associated with the pay adjustment in block 15A (total insurable hours).
A pay correction is a type of retroactive earning that is required when an employer has made an error regarding an employee’s pay such as hours missed when a payroll was processed in a previous pay period.
Pay corrections are insurable for both earnings and hours. On the ROE, include the hours associated with a pay correction in block 15A. Include the earnings related to a pay correction in blocks 15B and 15C.*
Allocate the pay correction earnings to the pay period in which the employee earned them.
*Note: Employers who use the paper version of the ROE only complete block 15C if the employee did not earn any insurable earnings in one or more pay periods. Employers who use electronic ROEs must complete block 15C and report the equivalent of 53 weeks of payroll data (or less, if the employment period is shorter than 53 weeks).
Question: We are changing our pay period from semi-monthly to biweekly. I have heard that we have to issue ROEs to our employees because of the change. Is this accurate? Do we have to issue ROEs even though there is no interruption of earnings?
Answer: Yes, ROEs should only cover one pay period type such as weekly, biweekly, semi-monthly, monthly or 13 pay periods. As a result, if an employer changes its pay period type, it must issue ROEs for all of its employees even though there is no interruption of earnings.
The ROE should reflect the period of employment up to the change to the pay period type.
In block 6 (pay period type), do not forget to enter the new pay period type. If, at a later date, an employee has an interruption of earnings, the employer must issue another ROE for the period of employment from the change in pay period type to the interruption of earnings.
On the latter ROE, report in block 10 (first day worked) the date of the first day after the pay period change. In block 11 (last day for which paid), report the last day for which the employee was paid.
Question: When an employee takes a leave of absence under a salary deferral plan, does the employer have to issue an ROE for the period of leave?
Answer: Generally, an employer would not have to issue an ROE for such a leave (often called a self-funded leave) because there is no interruption of earnings.
An employee on a leave under a salary deferral plan has already worked and earned the pay, but has deferred a portion of it to fund the leave of absence.
An employer would have to issue an ROE if either the employee or the employer ends the agreement that allowed for the self-funded leave of absence. In such a case, the employer would enter in block 11 (last day for which paid) the date of the last day the employee worked before starting the leave.
Annie Chong is manager of the payroll consulting group at Carswell, a Thomson Reuters business, which publishes the Canadian Payroll Manual and operates the Carswell Payroll Hotline. She can be reached at [email protected] or (416) 298-5085.
