Canadian Payroll Reporter

News Published 12 times a year by Thomson Reuters Canada Ltd. Subscription rate: $179 per year Customer Service Tel: (416) 609-3800 (Toronto) (800) 387-5164 (outside Toronto) Fax: (416) 298-5106 E-mail: carswell.customerrelations @thomsonreuters.com Website: www.carswell.com One Corporate Plaza 2075 Kennedy Road Toronto, Ontario, Canada M1T 3V4 Director, Carswell Media Karen Lorimer Publisher John Hobel (on leave) Acting Publisher/Editor-in-Chief Todd Humber Editor Sheila Brawn sbrawn@rogers.com Editor/Supervisor Sarah Dobson Assistant Editor Mallory Hendry Marketing Manager Robert Symes rob.symes@thomsonreuters.com (416) 649-9551 Circulation Co-ordinator Keith Fulford keith.fulford@thomsonreuters.com (416) 649-9585 Payroll Reporter Can R Can R adian adian a www.payroll-reporter.com ©2016 Thomson Reuters Canada Ltd ISBN/ISSN: 978-0-7798-2810-4 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, photocopying, recording or otherwise without the written permission of the publisher (Carswell, a Thomson Reuters business). Return Mail Registration # 1522825 | Return Postage Guaranteed Paid News Revenue Toronto Canadian Payroll Reporter is part of the Canadian HR Reporter group of publications: • Canadian HR Reporter — www.hrreporter.com • Canadian Occupational Safety magazine — www.cos-mag.com • Canadian Payroll Reporter — www.payroll-reporter.com • Canadian Employment Law Today — www.employmentlawtoday.com • Canadian Labour Reporter — www.labour-reporter.com See carswell.com for information April 2016 | CPR length for an initial agreement is 26 weeks, but employers may ap- ply for an additional 12 weeks. Employers have to include a recovery plan that outlines steps they will take to return employ- ees to their normal working hours by the time the agreement ends, and a list of whose work hours would be reduced. To be eligible, employers must be a publicly held company, a private business or a not-for- profit organization that has been in business year-round in Cana- da for at least two years. In addition, the employer must show its business activity has gone down by at least 10 per cent within the last six months. The resulting shortage of work must be temporary and beyond the employer's control. Busi- nesses with cyclical or recurring slowdowns are not eligible, nor are organizations with reduced activity due to a labour dispute. The employees that the em- ployer proposes to include in a work-sharing plan must be eligible to receive EI benefits and must agree to reduce their nor- mal work hours so that they can share available work. If employ- ees included in a work-sharing agreement (or their union if there is a collective agreement) do not sign it, the employer can- not implement it. The employees must also be what Service Canada calls "core employees" — permanent em- ployees who work year round, full-time or part-time, and per- form "everyday functions of nor- mal business activity." However, Service Canada says employees who are needed to help generate work or who are essential to the business' recov- ery should not be included in the work-sharing plan. This could include senior management, sales and marketing executives, outside sales representatives or technical employees involved in product development. They should be working full-time to help the employer recover. If approved, the employer and employees must sign the agree- ment within 60 days. If turned down, there is no appeal process. Once an employer sets up a work-sharing agreement, it has to ensure it provides Record of Employment (ROEs) for each employee taking part in the pro- gram. Service Canada advises employers consider starting their work-sharing agreements at the end of a pay period to simplify the process. Employ- ers should keep in mind Service Canada requires all agreements to begin on Sundays. When completing ROEs for work-sharing agreements, Ser- vice Canada says payroll depart- ments should pay close attention to boxes 11 (last day for which paid) and 16 (reason for issuing ROE). For box 16, payroll must use code H, Work-Sharing. For box 11, Service Canada advises payroll departments to report the last day of work before the start date of the work-shar- ing program. For example, if em- ployees work Monday to Friday and the work-sharing agreement begins on a Sunday, the date pay- roll enters in box 11 would be the Friday before the week in which the agreement starts. Payroll departments may be asked to help their employer complete weekly Utilization Re- ports for Service Canada. Em- ployers must complete and sub- mit a report every week. Without it, Service Canada cannot pay EI benefits to the employees. In the report, the employer must provide information about each employee taking part in the agreement, including the em- ployee's normal weekly hours, actual hours worked and total hours of work missed due to work-sharing. Employers must include in the report any vacation employees take (including vacation pay), days missed due to sickness (in- cluding sick pay) or any other amounts paid for stat holidays or termination of employment. Under the agreement, em- ployers remain responsible for paying employees for the hours they work (EI benefits cover the days they are not working). They are also responsible for employ- ment standards payments such as vacation and stat holiday pay. In addition, employers are re- quired to maintain all existing employee benefits, including health/dental insurance, vaca- tions, and pension benefits. For any benefits calculated on earn- ings or hours of work, Service Canada advises payroll or HR departments inform employees the benefits may be reduced be- cause of fewer hours per week. Communication with em- ployees is an important compo- nent of ensuring a work-sharing agreement runs smoothly. Ser- vice Canada advises employers also provide information on EI benefits and taxation issues. Service Canada says there may be a delay in first EI benefits due to initial processing time. It sug- gests payroll/HR let employees know in advance. It also suggests employers inform employees of the pos- sible income tax implications of receiving EI benefits. While the EI benefits are taxable, it does not always deduct income tax at source because of the weekly amount of benefits paid. To avoid having to pay a large amount of tax, Service Canada says employees may want to in- crease the amount of income tax deducted from their EI benefits. Employers should advise em- ployees who wish to do this to contact Service Canada. It will also be important for payroll departments to continue to keep detailed records. The records should include hours worked each week, including overtime, and wages and other remuneration. Employers will have to show the records if re- quested during an audit or in- spection. To learn more, interested payroll professionals should re- fer to Service Canada's website at www.servicecanada.gc.ca/ eng/work_sharing//index.sht- ml. While the program does not guarantee it can save jobs in the long run, it does give businesses time to find a way to recover. from SHARING on page 3 Tax implications of EI Service Canada requires a detailed application form, including a recovery plan outlining steps to return employees to normal working hours.

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