Canadian HR Reporter

16 www.hrreporter.com F E A T U R E S IN an ordinary year, executing payroll year-end is a challenge. Running a year-end close requires reconciliations to payroll accounts, adjustments to employment insurance (EI) and Canada Pension Plan/Quebec Pension Plan (CPP/QPP) rates, and calculations are needed for workers' compensation and other government remittances — all under tight deadlines and with exacting standards for accuracy. The year 2020, to put it mildly, will be anything but ordinary. COVID-19 has changed the employment landscape. Financial uncertainty has taken a toll in skyrocketing unemployment and injecting uncertainty into business operations from coast to coast. For those in payroll and HR who oversee payroll year-end, this will certainly be the most complex year-end ever. "They will now have to navigate payroll anomalies caused by widespread layoffs, re-hirings and employee furloughing," says Janet Grossett, manager of compliance services and professional development at the Canadian Payroll Association (CPA). The association's Payroll InfoLine has seen a dramatic rise in inquiries due to the COVID-19 pandemic, she says, with many people seeking clarity on what the seemingly daily announcements by federal and provincial governments will mean for year-end processes. Some of the challenges that payroll and HR professionals might come up against during year-end include: Canadian Emergency Wage Subsidy (CEWS) When the federal government introduced the CEWS, it was meant as a stop-gap for even though they were initially approved. This means that there is likely to be an increase in payroll audits down the road, with the government looking to ensure that employers met the eligibility criteria and properly calculated their subsidy. Second, many laid-off workers applied for the CERB, only to then be rehired by their employers who had received funding through the CEWS. The government will want to ensure that individuals are not double-dipping by collecting both the CERB and CEWS, and employers will likely be asked to report social insurance numbers for employees receiving support under the CEWS. Workers' compensation deferrals Financial pressures on businesses stemming from COVID-19 propelled most provincial workers' compensation boards to implement premium deferrals for 2020. As is traditionally the case with many of these boards across the country, employers are required to estimate their payroll for the coming year so that the board can invoice premiums. Of course, no one could have predicted that a global pandemic would so severely impact the workforce. As a result, a host of employers will find their estimates are significantly off-base. Over- or underestimating payrolls is likely to result in penalties incurred by employers. The huge fluctuations to company payrolls in 2020 thus present an added challenge for HR and payroll professionals who oversee premiums. And while workers' compensation boards might reduce or remove penalties, there has not yet been any indication that they will delay reporting or payments. Employers that have provided estimates CEWS CLAIMS AS OF JUNE 22, 2020 employers struggling through the pandemic. Responding to layoffs being made by employers whose businesses were financially impacted, the feds greenlit the CEWS to minimize job losses. Under the program, employers could rehire furloughed employees or maintain active employees and use the CEWS to subsidize 75 per cent of employee wages for up to 24 weeks. Complicating matters was the fact that the CEWS was introduced alongside the Canadian Emergency Response Benefit (CERB), a subsidy providing financial support for employees who had been laid off. "The subsidies were broadly applied, with simplified applications to expedite getting funds to businesses and individuals struggling financially," says Steven Van Alstine, vice president of the CPA. "The government took a 'Pay first, ask questions later' approach when approving subsidy applications. As a result, there will certainly be compliance errors in the administration of the subsidies that will have to be dealt with at year-end." The challenge will be twofold. First, there will need to be reporting or a reconciliation by employers to ensure that they met the criteria for the CEWS, For those in payroll and HR who oversee payroll year-end, 2020 will be the most complex year-end ever, with challenges including government subsidies, workers' compensation and pandemic pay, says Alison Rutka of the Canadian Payroll Association YEAR-END COMPLEXITY REACHES NEW LEVELS "The government took a 'Pay first, ask questions later' approach when approving subsidy applications." Steven Van Alstine, Canadian Payroll Association 515,420 Number of approved claims for the CEWS (out of 512,600 received) 490,040 Number of CEWS claims worth $100,000 or less 24,290 Number of CEWS claims worth $100,000 to $1 million 990 Number of CEWS claims worth $1 million to $5 million 100 Number of CEWS claims worth over $5 million $15.77 billion Total value of subsidies paid Source: Government of Canada F O C U S O N : PAY R O L L

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