Canadian Payroll Reporter

3 Canadian HR Reporter, a Thomson Reuters business 2017 Do your pay statements measure up? e beginning of a new year is a good time to review employee pay statements to make sure they comply with labour standards rules BY SHEILA BRAWN FOR MANY employees, pay- day is the most important day in their work schedule. It puts money in their hands or bank ac- counts and, for some, makes the daily grind of work worthwhile. While the focus of payday is often on the money, the pay statement that accompanies it is a vital part of the payroll process. Whether it is called a pay slip, a wage/pay statement, a pay sheet, or something else, the document is an important part of the employer-employee rela- tionship. It is a key communica- tions tool that allows employers to let employees know not only that they were paid, but the de- tails of the pay. Employees can use their pay statements to keep track of their earnings and deductions, as proof of employment if applying for loans, or to verify that their employer paid them correctly. Pay statements are such an im- portant part of the employment process that every jurisdiction in Canada has included rules for them in their labour standards laws. Whether an employer has been using the same pay state- ments for years or is changing them as part of a move to a new payroll system or payroll service provider, payroll professionals should periodically review their statements to ensure that they comply with legislative require- ments and good business prac- tices. Here is a look at some issues to consider when reviewing pay statements. When to provide pay statements Most jurisdictions require em- ployers to provide employees with pay statements when they pay wages. However, exceptions apply in some provinces and ter- ritories. In Yukon, for example, even though pay periods cannot exceed 16 days, the Employment Standards Act requires employ- ers to provide pay statements to workers at least once a month. Even though British Colum- bia requires employers to give employees pay statements on every payday, it allows for an exception when the statement does not change. The Employ- ment Standards Interpretation Guidelines Manual states that, "No wage statement is required when wages and deductions are identical to those given for the previous pay period." Manitoba allows for a similar exception. If the amount an em- ployer is paying an employee will not change over a period of time, the employer may give the em- ployee a statement at the begin- ning of that time period showing the wages to be paid, the wage rate, deductions, and the net amount to be paid on each pay- day instead of providing a pay statement with each pay. What to include on pay statements Each jurisdiction sets its own minimum requirements for what must be included on a pay statement. The requirements vary from a handful of items to a dozen, depending on the ju- risdiction. For example, in New Brunswick, the Employment Standards Act requires pay statements to list only the pay period dates, gross wages for the period, deductions and the reason for them, and net pay. By contrast, the British Co- lumbia Employment Standards Act requires employers to in- clude at least all of the following items on pay statements: • the employer's name and ad- dress • the hours worked • the wage rate • the overtime wage rate • the hours worked at the over- time rate • money, allowances or other payments • deductions and the reason for them • how the employer calculated the wages if the employee is paid other than by the hour or by salary • the gross and net wages • the amount of banked time used and amount remaining. Common items that most jurisdictions require on pay statements include pay period date, rate of pay, hours worked, deductions and the reason for them, and net pay. Other re- quirements may be unique to a jurisdiction or only required in a few provinces/territories. For example, Quebec is the only jurisdiction that requires employers to include an em- ployee's occupation on pay state- ments. Only British Columbia and Prince Edward Island man- date that pay statements include the employer's address. For employers with multi- jurisdictional payrolls, the varia- tion in requirements can mean either using different pay state- ments in different provinces or designing a statement that in- corporates the criteria from all of the locations. Some jurisdictions allow em- ployers to apply to be exempted from legislated pay statement requirements. This applies in Nova Scotia and Quebec and under the Canada Labour Code. Even if legislation does not require employers to include certain items on pay statements, payroll professionals may want to add them anyway. In a best practices guide on pay state- ments, The Canadian Payroll Association (CPA) identifies close to 20 items that it recom- mends employers include on pay statements to help employees better understand the earnings and deductions used to calculate their net pay. In Pay Statement Guidelines™, the CPA suggests that pay state- ments include items such as the employee's and the employer's name, pay period date, payment date, pay rate and hours worked at that rate, gross earnings, each type of payment being paid, banked overtime used, each de- duction itemized, and net pay. The guide is available on the CPA's website at payroll.ca. Special rules In addition to general pay state- ment rules, Ontario has legislat- ed requirements for issuing state- ments when employment ends. When there is a termination, em- ployers must give the employee a pay statement on or before the date it pays the employee. The statement must include: the gross amount of any termination pay or severance pay, vacation pay and other wages being paid, the ap- plicable wage rate (if there is one), the amount and purpose of de- ductions taken, room and board amounts, and net pay. If wages other than termina- tion, severance or vacation pay are being paid, the employer must specify the pay period to which they relate. The employer News CPR | January 2017 see STATEMENT page 8 Credit: graja/Shutterstock

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