CPA publishes guidelines to help payroll practitioners understand multi-jurisdictional legislation and review company policies and procedures
It’s a cliché, but it’s true: Often, the only time payroll professionals hear from employees is when there is an error with their pay. But a payroll person possesses extensive knowledge and contributes in many other ways to an organization.
Each year, Canada’s 1.5 million employers pay more than $700 billion in wages and benefits, $220 billion in payroll remittances to the Canada Revenue Agency (CRA) and the Ministère du Revenu du Québec (MRQ) and $77 billion in health and retirement benefits, along with issuing more than 24 million T4s, eight million T4As and six million RL-1s — while complying with more than 185 federal and provincial legislative acts. These payroll responsibilities are mission-critical to the business, government and employees.
To help payroll practitioners understand multi-jurisdictional legislation and ensure compliance within their organization, the Canadian Payroll Association (CPA) offers the publication Pay Statement Guidelines to members. It includes comprehensive information on the applicable federal and provincial legislation for the issuance of pay statements, along with best practices and suggested formats.
These can be used as a reference tool to assess current practices and assist in the development and review of company policies and procedures. The guidelines can also provide benchmarking when implementing or designing an in-house payroll solution or preparing for a payroll audit.
Best practices are intended to maximize the quality, accuracy, timeliness, efficiency and effectiveness of processes and procedures. And since the objective of payroll is to pay employees accurately, on time and in compliance with legislative requirements, these areas lend themselves well to benchmarking, resulting in best practice development. Best practices must continue to evolve with the introduction of new legislation, new technology, company policy, collective agreements and trends.
The following is a selection of three best practices related to pay statements: a communication plan, electronic statements and privacy considerations.
Communication plan
Communication is a common activity of payroll and it is critical to develop a comprehensive communication plan to ensure effective and efficient delivery of payroll. This should include a clear understanding of pay-statement information through the education of employees on its various components.
The CPA recommends the following measures:
• Publish a template that will identify all elements of the pay statement, including details of earnings and deductions.
• Explain how different exemption amounts and tax credits can impact net pay and be different for each individual.
• Involve payroll in the orientation of new employees.
• Consider the organization’s broader communication strategies that use intranet, Internet and print publications.
• Prepare an annual statement of compensation and benefits.
Electronic pay statement
Electronic pay statements can result in cost savings for an organization and provide better access to information for employees.
When reviewing or preparing to launch pay statements electronically, there are considerations beyond legislative requirements. If your organization is providing remote access to pay statements, ensure a secure information technology (IT) protocol is in place. For employees who are terminated or on a leave of absence, printed pay statements should be provided if their electronic access has been removed.
Other considerations include:
Privacy and access: Employees must have a confidential means to view and access their pay statements, such as self-service kiosks in the absence of a personal workstation.
Ability to print: Employees must have the ability to print their pay statements at the workplace or at a remote location through a secure channel.
Choice of opting in or out: It is important to consider current employees as well as new employees. Legislatively, current employees cannot be forced to opt for electronic pay statements, they must agree to receive their statements electronically. This can, however, be made a condition of employment for new employees.
Record retention: Under the Canada Labour Code, employers are required to keep a history of all electronic pay statements for current and past employees for at least three years from the day on which the document is first provided to the employee. Such requirements vary across jurisdictions.
Privacy considerations
Payroll, by its very nature, has always operated under the assumption of confidentiality and non-disclosure of employees’ personal and related information. While pay statement legislation does not have specific requirements related to privacy, organizations should make specific considerations related to the information on the pay statement and whether it should be included.
Other considerations include:
Social insurance number: The Canadian government uses the social insurance number (SIN) to confirm employees can receive government benefits and services to which they are entitled. The SIN should not be recorded on the pay statement or be used in any way as an identification or employee number.
Bank account information: Although not legislated, a best practice from a liability perspective would prescribe bank account information be excluded from the pay statement due to the risk of lost or misplaced statements.
Distribution: When physically distributed, pay statements must be properly sealed and delivered in person. For example, statements must not be left at an unattended workstation.
A full copy of the Pay Statements Guidelines is available to CPA members under the resources section at www.payroll.ca.
Steven Van Alstine is the vice-president of compliance programs and services at the Toronto-based Canadian Payroll Association. He can be reached at [email protected].
Honest Canadians
Majority would report payroll overpayment
Apparently Canadians are an honest lot — almost nine in 10 (88 per cent) would inform their employer if they were mistakenly overpaid by 50 per cent.
That’s according to an annual ADP Payday Poll that found the number drops only slightly if employees are overpaid by 25 per cent (87 per cent) or by 10 per cent (81 per cent).
However, younger Canadians (aged 18 to 29) are less likely to report they have been overpaid by one-half (24 per cent), one-quarter (25 per cent) or one-tenth (34 per cent).
The poll also found:
• More than one-third (36 per cent) of employees don’t know what their annual take-home pay is, after deductions and taxes, to the nearest thousand.
• Just one-quarter (23 per cent) would sneak a peek at a colleague’s paycheque, even if no one would ever find out.
• Most Canadians (76 per cent) would accurately report their incomes to friends, but this number declines slightly in situations involving a future employer (72 per cent) and a colleague (70 per cent).
• More than one-half (52 per cent) would discuss how much money they make but only 21 per cent would reveal intimate details of their love lives.
Each year, Canada’s 1.5 million employers pay more than $700 billion in wages and benefits, $220 billion in payroll remittances to the Canada Revenue Agency (CRA) and the Ministère du Revenu du Québec (MRQ) and $77 billion in health and retirement benefits, along with issuing more than 24 million T4s, eight million T4As and six million RL-1s — while complying with more than 185 federal and provincial legislative acts. These payroll responsibilities are mission-critical to the business, government and employees.
To help payroll practitioners understand multi-jurisdictional legislation and ensure compliance within their organization, the Canadian Payroll Association (CPA) offers the publication Pay Statement Guidelines to members. It includes comprehensive information on the applicable federal and provincial legislation for the issuance of pay statements, along with best practices and suggested formats.
These can be used as a reference tool to assess current practices and assist in the development and review of company policies and procedures. The guidelines can also provide benchmarking when implementing or designing an in-house payroll solution or preparing for a payroll audit.
Best practices are intended to maximize the quality, accuracy, timeliness, efficiency and effectiveness of processes and procedures. And since the objective of payroll is to pay employees accurately, on time and in compliance with legislative requirements, these areas lend themselves well to benchmarking, resulting in best practice development. Best practices must continue to evolve with the introduction of new legislation, new technology, company policy, collective agreements and trends.
The following is a selection of three best practices related to pay statements: a communication plan, electronic statements and privacy considerations.
Communication plan
Communication is a common activity of payroll and it is critical to develop a comprehensive communication plan to ensure effective and efficient delivery of payroll. This should include a clear understanding of pay-statement information through the education of employees on its various components.
The CPA recommends the following measures:
• Publish a template that will identify all elements of the pay statement, including details of earnings and deductions.
• Explain how different exemption amounts and tax credits can impact net pay and be different for each individual.
• Involve payroll in the orientation of new employees.
• Consider the organization’s broader communication strategies that use intranet, Internet and print publications.
• Prepare an annual statement of compensation and benefits.
Electronic pay statement
Electronic pay statements can result in cost savings for an organization and provide better access to information for employees.
When reviewing or preparing to launch pay statements electronically, there are considerations beyond legislative requirements. If your organization is providing remote access to pay statements, ensure a secure information technology (IT) protocol is in place. For employees who are terminated or on a leave of absence, printed pay statements should be provided if their electronic access has been removed.
Other considerations include:
Privacy and access: Employees must have a confidential means to view and access their pay statements, such as self-service kiosks in the absence of a personal workstation.
Ability to print: Employees must have the ability to print their pay statements at the workplace or at a remote location through a secure channel.
Choice of opting in or out: It is important to consider current employees as well as new employees. Legislatively, current employees cannot be forced to opt for electronic pay statements, they must agree to receive their statements electronically. This can, however, be made a condition of employment for new employees.
Record retention: Under the Canada Labour Code, employers are required to keep a history of all electronic pay statements for current and past employees for at least three years from the day on which the document is first provided to the employee. Such requirements vary across jurisdictions.
Privacy considerations
Payroll, by its very nature, has always operated under the assumption of confidentiality and non-disclosure of employees’ personal and related information. While pay statement legislation does not have specific requirements related to privacy, organizations should make specific considerations related to the information on the pay statement and whether it should be included.
Other considerations include:
Social insurance number: The Canadian government uses the social insurance number (SIN) to confirm employees can receive government benefits and services to which they are entitled. The SIN should not be recorded on the pay statement or be used in any way as an identification or employee number.
Bank account information: Although not legislated, a best practice from a liability perspective would prescribe bank account information be excluded from the pay statement due to the risk of lost or misplaced statements.
Distribution: When physically distributed, pay statements must be properly sealed and delivered in person. For example, statements must not be left at an unattended workstation.
A full copy of the Pay Statements Guidelines is available to CPA members under the resources section at www.payroll.ca.
Steven Van Alstine is the vice-president of compliance programs and services at the Toronto-based Canadian Payroll Association. He can be reached at [email protected].
Honest Canadians
Majority would report payroll overpayment
Apparently Canadians are an honest lot — almost nine in 10 (88 per cent) would inform their employer if they were mistakenly overpaid by 50 per cent.
That’s according to an annual ADP Payday Poll that found the number drops only slightly if employees are overpaid by 25 per cent (87 per cent) or by 10 per cent (81 per cent).
However, younger Canadians (aged 18 to 29) are less likely to report they have been overpaid by one-half (24 per cent), one-quarter (25 per cent) or one-tenth (34 per cent).
The poll also found:
• More than one-third (36 per cent) of employees don’t know what their annual take-home pay is, after deductions and taxes, to the nearest thousand.
• Just one-quarter (23 per cent) would sneak a peek at a colleague’s paycheque, even if no one would ever find out.
• Most Canadians (76 per cent) would accurately report their incomes to friends, but this number declines slightly in situations involving a future employer (72 per cent) and a colleague (70 per cent).
• More than one-half (52 per cent) would discuss how much money they make but only 21 per cent would reveal intimate details of their love lives.
