2.6 Provincial Legislation and How Covid Impacted Payroll

2.6.1 Provincial Legislation Other than Employment Standards

Besides employment standards, there are other provincial and territorial pieces of legislation that impact payroll.

2.6.1.1 Workers’ Compensation Legislation

Each province and territory in Canada has workers’ compensation legislation, which authorizes workers’ compensation boards and agencies to fund a no-fault workplace-injury compensation scheme. These boards and agencies are funded through employers’ premiums, and workers’ compensation legislation requires employers to participate. Employers must register with their provincial or territorial workers’ compensation board, pay premiums, and provide information annually, which impacts their premium rate. Employers’ premiums for workers’ compensation are discussed further in Chapter 6.

2.6.1.2 Employer Health Tax

British Columbia and Ontario have instituted employer health taxes via legislation. Manitoba has a health and post-secondary education tax paid by employers. These taxes are based on the size of an organization’s payroll, and there are exemptions for employers with total remuneration to employees under a certain threshold. Employer health taxes are discussed further in Chapter 6.

2.6.1.3 Other Legislation: Digital Platform Workers’ Rights Act (Ontario)

Occasionally, provinces, territories, or the federal government may pass other legislation that impacts payroll. In 2022, Ontario passed the Digital Platform Workers’ Rights Act (DPWRA), which will come into force at an unspecified date to be named by the Lieutenant Governor of Ontario. The DPWRA creates certain rights that apply to digital platform workers, whether or not they are employees. Digital platform workers work for companies like Uber, Skip the Dishes, Door Dash, and Lyft—rideshare, delivery, courier, and other services that can be arranged through a digital platform. Rights under the DPWRA include the right to a minimum wage under Ontario employment standards, the right to a recurring pay period and payday, and the right to receive tips or gratuities without any amounts being withheld or deducted by the digital platform operator.

2.6.2 How COVID-19 Impacted the Payroll Landscape

Employees want to be paid and expect that the deductions and remittances made by payroll are accurate and up to date. The COVID-19 pandemic (January 2020 to May 2023) complicated the payroll process for most employers.

Although it is normal for payroll-related legislation to change from time to time, in response to the COVID-19 pandemic, changes to legislation and policies happened more quickly and on short notice for both federal and provincial legislation. Employment standards were updated, COVID-related leaves were created, and changes were made to temporary layoff rules. Legislation was introduced to amend the Income Tax Act to provide Canadian employers with an emergency wage subsidy to assist employers in paying employees (Emond Harnden LLP, 2021). Initially, the subsidy was to be administered through payroll in the form of reductions to remittances. Ultimately, the wage subsidy was administered by the CRA, with the record-keeping obligation being put on payroll departments to establish pre-COVID wages and proof of ongoing payment to employees.

It was also difficult for payroll to keep up with the fast pace of business closures, employee leaves, and layoffs, as well as issuing a significant volume of employees’ records of employment (ROEs).

The strain of the pandemic illustrates the need for both a process for payroll to keep up with rapid changes and the capacity for payroll to handle rapid volume increases. With respect to the former, annual legislative review protocols will help because payroll professionals will have a sense of where to look for updated information (Canada Revenue Agency, provincial and territorial employment standards). Having an existing process for reviewing payroll-related government announcements and news would also be of assistance in emergencies. With respect to volume challenges, software solutions, particularly cloud-based payroll software, may have helped some organizations handle increased volume and may have prompted some employers to upgrade or update their payroll systems.

References

Emond Harnden LLP. (2021). Federal government introduces increased Canada Emergency Wage Subsidy. https://ehlaw.ca/federal-government-introduces-increased-canada-emergency-wage-subsidy/