Canadian Employment Law Today

Canadian Employment Law Today Canadian Employment Law Today | | 3 Cases and Trends Cases and Trends Canadian HR Reporter, 2020 BY ALEKSANDRA PRESSEY OF THE MANY BUSINESS CHALLENGES that have emerged from the disruption of the COVID-19 crisis, the human resources impli- cations have been some of the most difficult to manage. Organizations that once handled ba- sic administrative and compliance duties with relative ease are encountering new hurdles due to rapid legislative and economic changes. But that pales in comparison to the predicament facing other businesses — even entire indus- tries — that remain under full or partial lock- down. Their ability to deliver products and services is limited by social-distancing measures that are being lifted in some jurisdictions, while being strictly maintained (or enhanced) in others. Many organizations are struggling to hold on to valued employees and are relying on programs such as the Canada Emergency Wage Subsidy and the Canada Emergency Business Account to stay afloat, all while re- ducing work hours and slashing executive pay. Still others have managed to adapt and pivot their business model to not only survive but thrive in the face of the global pandemic. We've seen organizations retool their assembly lines from making auto parts to ventilators and distilleries exchange spirit production in favour of hand sanitizers, while countless companies have turned to video conferencing and online project management platforms to enable their workforces to work remotely, all in a span of just a few months. An embrace of workplace change is the new norm in the COVID-19 era. That brings us back to a standard HR task that used to be relatively straightforward to manage but is now burdening already-taxed HR departments: payroll deductions. As em- ployers lay off staff and bring them back to work — in many cases at reduced hours and reduced compensation — there is a far greater chance that HR professionals could make pay- roll errors that will have negative tax and em- ployment law compliance consequences. At the same time, much-needed COVID-19 relief measures that are providing companies with critical financial aid are also complicating pay- roll deduction procedures. Of course, getting payroll deductions right takes on new urgency as employers ramp up return-to-work plans in the months ahead. It's wise for employers to prepare and be diligent in their approach to managing payroll remittances and deductions, because even as the Canada Revenue Agency (CRA) and pro- vincial treasuries are offering leniency with tax deadline delays and late-penalty deferrals, they will eventually be conducting audits to ensure that remittances have been made as required. When that time comes, you want to ensure that your organization has its books in order and isn't suddenly subject to costly back payments, penalties or fines when it may have limited financial resources. The first step is to understand your orga- nization's payroll remittance obligations. As you know, the deductions that employers can make from wages depend on applicable fed- eral/provincial/territorial law. Generally, they can make the following deductions: • Deductions required by federal/provincial/ territorial legislation (taxes, EI premiums, etc.) • Deductions authorized by law or by a col- lective agreement (court-ordered garnish- ment of wages, union dues, etc.) • Specific amounts authorized by the em- ployee in writing Overpayment of wages It's important to note that when it comes to payroll deductions to recoup overpaid wages, each province has varying rules as to how the process should be managed. In Ontario, for ex- ample, the Employment Standards Act, 2000, specifies that an employer must obtain an em- ployee's written permission to deduct an over- payment from regular wages, even if it's the result of a clerical error, or unless authorized by a court order or statute. In Quebec, on the other hand, overpayments can be deducted if the employer can prove that the overpayment has occurred. Failure to obtain written authorization from employees to make payroll deductions may mean that employers can't make certain stan- dard deductions such as for benefits or vaca- tion that's used but not earned at the time of termination. There are some deductions em- ployers can't make, even with a signed autho- rization. For example, in Ontario, an employer cannot deduct wages for a loss due to "faulty work," such as where equipment is damaged, if there is a mistake with a credit card transac- tion or where there is a cash shortage or lost/ stolen property when an employee did not have sole and total control over the property in question. These rules are designed to protect employees from unfair wage clawbacks stem- ming from circumstances that may be outside of their control. In addition, employers must make the fol- lowing payroll deductions and remit to the CRA: • Canada Pension Plan contributions (except in Quebec, which has its own pension plan) • Employment Insurance premiums • Federal income tax • Provincial income tax Employers may also be required to make additional payroll deductions (such as for pension plans or union dues) based on nego- tiated agreements. Payroll tax deductions can be complicated in certain circumstances. For example, if an employee lives in Manitoba but works in On- tario, payroll deductions to Ontario must be made on the employee's behalf. Government relief measures can complicate payroll Factor in compliance requirements stemming from recently introduced COVID-19 relief measures and the task becomes even more complex. As part of Canada Emergency Wage Subsidy (CEWS) — currently in effect until Aug. 29, 2020 — eligible employers can re- duce payroll remittances of federal, provincial and territorial income tax sent to the CRA. But with increasingly variable staffing and revolv- ing layoffs in some organizations, understand- ing what to remit can be confusing. Those dif- Keeping payroll on course during crisis Staffing changes and government relief measures add to payroll management challenges during pandemic ABOUT THE AUTHOR Alexsandra Pressey Alexsandra Pressey is a lawyer at Williams HR Law in Markham, Ont., where she practises in all areas of management-side labour, employment and human rights law. She can be reached at (905) 205-0496 ext. 228 or apressey@williamshrlaw.com. PROACTIVE on page 7 »

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