Canadian Payroll Reporter

5 Canadian HR Reporter, a Thomson Reuters business 2018 Calculating statutory holiday pay QUESTION: How do we calculate statutory holiday pay for those entitled to the holiday who take the day off? ANSWER: Statutory holiday pay require- ments are governed by employment stan- dards laws in each jurisdiction: Canada Labour Code: Employers must pay employees 1/20th of the wages they earned, excluding overtime pay, in the four weeks right before the week in which the holiday falls. If employees are paid entirely or partially by commission and they have worked for their employer for at least 12 continuous weeks, employers must pay them at least 1/60th of the wages they earned, excluding overtime pay, in the 12 weeks right before the week of the holiday. Alberta: Employers must pay employ- ees their average daily wages. Average daily wage is calculated as five per cent of the wag- es, statutory holiday pay, and vacation pay that the employee earned in the four weeks immediately before the holiday. British Columbia: Employers must pay employees their average day's pay. It is calcu- lated by dividing the employee's total wages in the 30 calendar days before the holiday by the number of days the employee worked. Total wages include wages, commissions, statutory holiday pay, and vacation pay, but do not include overtime pay. Vacation taken in the 30-day period counts as days worked. Manitoba: Statutory holiday pay must be at least equal to the amount of an employee's wages for working standard hours on a reg- ular day in the pay period. If an employee's wages vary, the amount paid for the holiday must be equal to at least five per cent of the employee's total wages, excluding overtime, in the four weeks right before the holiday. New Brunswick: Employers are required to pay employees their regular daily wages. If employees' wages vary, the employer must pay them their average daily wage, excluding overtime, for the 30 calendar days immedi- ately before the holiday. Newfoundland and Labrador: To calcu- late statutory holiday pay, employers must multiply an employee's hourly rate by the av- erage number of hours the employee worked in a day in the three weeks before the holiday. Northwest Territories: If employees are paid by the hour, the amount of holiday pay must at least equal the wages they would have earned at their regular rate for standard hours of work. If employees are paid in another way, the amount of holiday pay must be at least equal to their average daily wages in the four weeks prior to the week of the holiday. Nova Scotia: Employers must pay em- ployees their regular daily wages. If employ- ees' wages vary, average them over 30 days. Nunavut: If employees are paid by the hour, statutory holiday pay must be equal to or greater than the wages they would have earned at their regular hourly rate for stan- dard work hours. If employees are paid in another way, holiday pay cannot be less than the employees' average daily wages in the four weeks worked prior to the week of the holiday. Ontario: Employers must pay employees the amount of regular wages they earned in the pay period before the statutory holi- day, divided by the number of days they worked in that pay period. If an employee was off work taking per- sonal emergency leave or vacation (or both) for the entire pay period before the holiday, the employer must use the regular wages earned in the pay period before the employee took the leave or vacation, divided by the number of days worked in that period. For new workers who were not employed in the pay period before the holiday, the em- ployer must use the regular wages that the employee earned in the pay period with the holiday, divided by the number of days the employee worked in that period. Prince Edward Island: Employers must pay employees a regular day's pay. If the em- ployee's work hours vary, the employer can average the hours or wages over 30 prior days. Quebec: Employers must pay staff 1/20th of the wages they earned, excluding overtime, in the four weeks before the week in which the holiday falls. Employees paid in whole or in part by commission must be paid 1/60th of the wages they earned in the 12 complete weeks of pay before the week of the holiday. Saskatchewan: Employers must pay em- ployees at least five per cent of the wages they earned in the four weeks before the holiday, excluding overtime pay. Yukon: If employees are paid by the hour, employers must pay them their regular rate of wages for standard work hours. If employees are paid a weekly or monthly salary, employ- ers must not reduce their pay for the holiday. If employees are paid by commission or piecework, the employer must calculate holi- day pay based on the employee's average daily wage, excluding overtime or bonuses, for the week in which a statutory holiday occurs. If employees work irregular hours or work fewer than the regular work hours, the em- ployer must pay them at least 10 per cent of their wages, excluding vacation pay, for the hours they worked in the two weeks right before the week of the holiday. CPR | April 2018 ASK AN EXPERT Annie Chong MANAGER OF CARSWELL'S PAYROLL CONSULTING GROUP annie.chong@thomsonsreuters.com | (416) 298-5085 ANSWER: For C/QPP contributions, pro- rate the annual basic exemption for the number of days in the year between the cur- rent commission payment and the previous one, as the following example shows: Number of days between payments: 63 days Prorate annual basic exemption: (63 ÷ 365) × $3,500.00 = $604.11 CPP contribution: Current contribution rate: 4.95 per cent $3,000.00 - $604.11 = $2,395.89 $2,395.89 × 4.95 per cent = $118.60 QPP contribution: Current contribution rate: 5.4 per cent $2,395.89 × 5.4 per cent = $129.38 Example: Commission employee paid irregularly A commission-based employee who is paid only when he sells something, which does not happen regularly, is paid a commission on March 30, of $3,000. The last commission the employer paid was on Jan. 26. For CPP, deduct $118.60 in contributions from the employee's earnings. For QPP, the contribution would be $129.38. The em- ployer contribution would match the em- ployee contribution. For EI, multiply the amount of the com- mission payment by the current EI pre- mium rate of 1.66 per cent (1.3 per cent for Quebec employees), unless the employee has reached the 2018 maximum premium ($858.22 for employees outside of Quebec and $672.10 for employees in Quebec). For income tax, use the bonus method. If a commission-based employee incurs ex- penses, he or she may submit a form TD1X, Statement of Commission Income and Ex- penses for Payroll Tax Deductions. In this case, calculate the amount of tax to deduct using the CRA's Payroll Deductions Online Calculator (PDOC) or its computer formu- las or a manual calculation method. Note: Do not deduct C/QPP if the employee has reached the maximum contribution for the year ($2,593.80 for CPP and 2,829.60 for QPP for 2018). Source deductions on irregularly paid commissions QUESTION: How do I calculate source deductions for commission-based employees who are not paid commissions regularly?

• Cover