Being an employer entails many responsibilities and obligations, both to yourself and your employees. Government regulations have been established for every step of the hiring process, from recruiting an employee to the termination of their employment. And it is your duty to adhere to the rules that apply to you. Whether or not you own your own business, you may have already asked yourself what actions are required upon hiring or during the process of terminating an employee. If so, this article provides useful information on the topic.
Q1: What to do when hiring an employee?
If you have just hired an employee, you might be wondering what comes next. You must verify certain information with your recruit and have them fill out required forms, most importantly federal and provincial tax forms.
To start, you are responsible for verifying the employee’s social insurance number (SIN) within three (3) days after their employment begins. Numerous documents can verify this information. It can be validated with a SIN card, a letter that confirms the employee’s SIN or any other document on which the number appears.
Note that SINs beginning with a “9” are issued to temporary workers who are neither Canadian citizens nor permanent residents. When you hire an employee whose SIN begins with a “9”, you must confirm that the person has a valid immigration document authorizing them to work in Canada.
To remit statements of earnings online, your employee must sign an authorization form unless previously stipulated in the terms of employment. According to labour standards, certain employer obligations must be respected regarding the issuance of pay slips. It must include information such as the employer’s name and the amount of wages paid to the employee.
As soon as your employee is hired, you have to withhold and remit certain deductions based on the amounts paid to them at each pay period. Therefore, you may find a payroll service provider useful. They can accurately calculate and remit your source deductions to government agencies, preventing any risk of incurring penalties.
Your recruit must complete federal, provincial and territorial tax forms in order for you to set up their source deductions and remittances. Individuals in Quebec should use the federal TD1 form and the provincial TP-1015.3 form. Note that each province has its own set of forms; therefore, you have to verify which form to use according to your situation.
The employee has to complete these forms when their employment begins or when there is a change in their status. The following information must appear on the forms: the employee’s legal name, SIN, date of birth, address and information required to calculate the income tax deduction.
Certain situations (e.g., filing of earnings statements and income tax information returns) may require the use of employee personal information, notably an employee’s place of residence. An employee’s date of birth is also a pertinent piece of information since it does factor into the calculation of income tax deductions.
It is important to remember that some of these details are confidential and should not be shared with your company’s management or social comities without your employee’s consent.
Q2: What do I have to pay and produce when my employee leaves?
As an employer, you have certain responsibilities toward an employee whose employment is being terminated. In fact, you will have many obligations and will have to produce various documents that are required by law, such as a record of employment (ROE).
With regard to wages, an employee is entitled to all outstanding amounts when their employment is terminated. This includes unpaid wages, overtime and vacation pay (e.g., 4% or 6%). Generally, these unpaid amounts can either be paid upon termination or on the next regular payroll. However, the payment deadline does differ between provinces, so be sure to check which one applies to you.
Keep in mind that whether you have one or more payments left to make to your employee, you have responsibilities with regard to each payroll, and every payment is subject to government source deductions and remittances.
Furthermore, there is an impact on the payments that you will have to make to a terminated employee depending on when their employment is terminated; in the middle of a pay period, you will have to finalize the payments on the next payroll within a maximum of two (2) weeks.
The termination of an employee’s employment marks the end of their compensation and the need to issue their employment history. The ROE is not only important, but mandatory because it provides information on an employee’s background and the total number of hours banked.
You can either produce your ROE electronically or in paper format, but the deadline differs between these two methods. If you issue an ROE electronically, you have up to five (5) calendar days after the end of the pay period in which an employee’s interruption of earnings occurs to issue the ROE.
If you issue an ROE on paper, you must do so within five (5) calendar days of the first day of an interruption of earnings or the day you become aware of. Since special rules may apply, we advise you to follow the recommendations outlined on the government website.
For more information, consult the Resources section of our website anytime. We offer a number of tools designed to answer your questions about employer obligations, and the information provided is always in accordance with current legislation.
The Canadian Payroll Association (CPA) has a practical guide on their website in the form of a new hiring checklist. You can consult this tool when hiring new employees.
Given the current economic situation, Nethris’s Our solutions in response to the COVID-19 pandemic page is actively kept up to date. Here, we list different tools to help you understand and effectively manage the various support measures that are available to you. For more information on the Government of Canada’s main support measures, consult the Useful links section. Note that Internet Nethris Suite users can access the “COVID-19 Documents” area via the Documentation section.
The Government has put in place numerous measures to support and encourage employers during the pandemic. Subsidies to help finance your business and support your company during this period of economic recovery, are available on the Government of Canada website. The Financial and economic support section outlines the available programs and subsidies. This information takes precedence over any other information and we advise you to consult it first.
What are my obligations toward an employee? The process of hiring an employee and terminating their employment is punctuated by rules that have to be followed. Firstly, you must confirm that your new employee is authorized to work in Canada by verifying the accuracy of their legal information. Therefore, you must request their SIN. If it begins with a nine “9” you must also verify that your employee’s immigration documents are valid and that they are authorized to work in Canada.
Other information is also required; name, address and date of birth. Not only is this information necessary to create the employee’s file, it is also imperative for tax purposes. Your employee has to complete the federal and provincial/territorial source deductions return forms.
When an employee’s employment is terminated, you must pay them all outstanding amounts due: wages, overtime hours, compensation owed, etc. Details may vary by province or territory, so check what information applies to you. If you still have payments to make, keep in mind that every payroll is subject to remittances.
Finally, you have to produce the employee’s ROE. Once again, you have to respect the deadlines, and these vary depending on whether you choose to produce an ROE on paper or electronically.
The content of this document is for information purposes only. In the event of a discrepancy between the content of this page and information provided by official agencies, the latter always takes precedence. Nethris is not responsible for errors and omissions that may be on this page nor for consequences resulting from its use.
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