The following chart details the different types of earnings that employees can typically receive. It also indicates whether or not the earnings and the hours are insurable. In case the earnings and the hours are insurable, the table specifies the pay period that the employers would need to allocate to these insurable earnings and hours. It is worth mentioning that the contents of the following chart are in alphabetical order. This serves to make the summary chart easier to use.
Type of earnings | Insurable? | Allocate to pay period | |||
Earnings | Hours | For Which They are Paid [Footnote 1] | In Which They are Paid [Footnote 2] | The Last Pay Period of Regular Wages [Footnote 3] | |
Automobile Stand-by Charge | No | No | |||
Automobile Operating Expense Benefit | No | No | |||
Bonus, All Types | Yes | No | Yes | ||
Bonus, if Paid Because of the Separation | Yes | No | Yes | ||
Commissions – both Regular and Irregular | Yes | Yes [Footnote 4] | Yes | ||
Cost-of-Living Allowance | Yes | No | Yes | ||
Cost-of-Living Allowance – if Paid on Separation | Yes | No | Yes | ||
Gratuities (Also Called Tips) that the Employer Typically Controls | Yes | No | Yes | ||
Gratuities (Also Called Tips) that the Employer Typically Controls, if Paid on Separation | Yes | No | Yes | ||
Group Term Life Insurance | No | No | |||
Incentive Payment | Yes | No | Yes | ||
Incentive Payment, if Paid on Separation | Yes | No | Yes | ||
Non Taxable Allowance [Footnote 5] | No | No | |||
Overtime – Worked and Paid [Footnote 6] | Yes | Yes | Yes | ||
Overtime – Worked and Taken as Leave [Footnote 7] | Yes | Yes | Yes | ||
Overtime, Accumulated and Paid on or after Separation:
| Yes | Yes | Yes [Hours] | Yes [Earnings] | |
Pay Adjustments [Footnote 10] | Yes | No | Yes | ||
Pay Adjustments (Paid on Separation) [Footnote 10] | Yes | No | Yes | ||
Pay Corrections [Footnote 11] | Yes | Yes | Yes | ||
Pay in Lieu of Notice, Paid on or after Separation | Yes | No | Yes | ||
Retirement Leave Credits or Retiring Allowance (including Severance Pay, Accumulated Sick Leave Credits Paid as Part of a Retiring Allowance on Separation) [Footnote 12] | No | No | |||
Room and Board Benefit or Allowance, with Insurable Earnings in the Same Pay Period | Yes | No | Yes | ||
Room and Board Benefit or Allowance, without Insurable Earnings in the Same Pay Period | No | No | |||
Registered Retirement Savings Plan (RRSP) Contribution Paid by the Employer to a Non-Restricted Registered Retirement Savings Plan (RRSP) | Yes | No | Yes | ||
Registered Retirement Savings Plan (RRSP) Contribution Paid by the Employer to a Restricted Registered Retirement Savings Plan (RRSP) | No | No | |||
Salary and Wages (Including Unpaid Wages due to Bankruptcy, Receivership, or Impending Receivership) | Yes | Yes | Yes | ||
Salary Continuance | Yes | Yes | Yes | ||
Shift Premium | Yes | No | Yes | ||
Shift Premium, if Paid Because of the Separation | Yes | No | Yes | ||
Sick Leave Taken, if Paid by the Employer | Yes | Yes | Yes | ||
Sick Leave Credits, Accumulated and Paid Out, on Anniversary Date or not, and Taxable as Employment Income (if Paid on Termination as Part of Retirement Leave Credits or Retiring Allowance) For more details, see “Retirement Leave Credits / Retiring Allowance” | Yes | No | Yes | ||
Stand-by Hours, Spent at the Employee’s Place of Work at the Employer’s Request, Paid at any Rate | Yes | Yes | Yes | ||
Stand-by hours, Spent Elsewhere than the Employee’s Place of Work, Paid at a Rate Equivalent to or more than the Employee’s Regular Rate | Yes | Yes | Yes | ||
Stand-by hours, Spent Elsewhere than the Employee’s Place of Work, Paid at a Rate Less than the Employee’s Regular Rate | Yes | No | Yes | ||
Statutory Holiday Pay, Occurring after the Last Day Worked, when the Employee’s Departure is Final | Yes | No | Yes | ||
Statutory Holiday Pay, Occurring after the Last Day Worked, when the Employee’s Departure is not Final | Yes | Yes | Yes | ||
Statutory Holiday Pay, Taken on the Day Itself, Any Day Recognized Instead of the Statutory Day, or Any Other Day Off with Pay in Place of the Statutory Day | Yes | Yes [Footnote 13] | Yes | ||
Supplementary Unemployment Benefits (SUB) Plan Benefits (Made under a Plan that is Registered with Service Canada) | No | No [Footnote 14] | |||
Taxable Allowance (for instance, Taxable Car Allowance of $400 per Month) | Yes | No | Yes | ||
Taxable Benefit – Monetary | Yes | No | Yes | ||
Taxable Benefit – Mostly Non-Monetary | No | No | |||
Tips (Also Called Gratuities) that the Employer Typically Controls | Yes | No | Yes | ||
Tips (Also Called Gratuities) that the Employer Typically Controls, if Paid on Separation | Yes | No | Yes | ||
Top-ups to Maternity, Parental, and Compassionate Care Benefits – Paid by the Employer | No | No | |||
Vacation Pay – Paid on Separation | Yes | No | Yes | ||
Vacation Pay, where no Vacation Time is Taken, However Paid | Yes | No | Yes | ||
Vacation Pay, where Vacation Time is Taken, However Paid | Yes | Yes | Yes | ||
Wage-Loss Insurance (Insurable), Paid by the Employer | Yes | Yes | Yes | ||
Wage-Loss Insurance Top-up, Paid by the Employer – Claim Accepted | No | No | |||
Wage-Loss Insurance Top-up, Paid by the Employer – Prior to Acceptance | Yes | No | Yes | ||
Workers Compensation Benefits Top-up, Paid by the Employer – Claim Accepted | No | No | |||
Workers Compensation Benefits Top-up, Paid by the Employer – Prior to Acceptance | Yes | No | Yes | ||
Footnotes
Footnote 1: The authorities require employers to allocate the earnings they pay to an employee to the pay period during which the employee earned these monies. In case the employee took a leave, the employers would need to allocate the earnings to the period of leave.
Footnote 2: The authorities require employers to allocate the earnings to the pay periods in which the employers paid them
Footnote 3: The authorities require employers to allocate the earnings to the last pay period during which they paid the employee a regular salary, wages or commissions
Footnote 4: In some cases the employers might not be aware of the actual hours of work of the employee. This usually happens in the case of employees who receive payment by commissions. Alternatively, it could happen when the worker and the employer have not agreed on the number of hours they will consider for insurability. In this scenario, the employers would need to determine the hours of work by dividing the insurable earnings in the last 52 calendar weeks (or fewer depending on the period), by the applicable minimum wage for the province or territory where the employee is working that is in force on January 01 in the year that the earnings are payable. In some cases, this period could overlap two calendar years. Therefore, the employers would need to perform two calculations using the minimum wage in force for each year (if different). It is worth highlighting that the maximum number of hours that employers can allocate is 35 hours per week.
Footnote 5: It is worth mentioning that most non-taxable earnings are not insurable. This include earnings such as travel allowances. For more information on such earnings, employers would need to contact the Canada Revenue Agency (CRA).
Footnote 6: When an employee works overtime and receives payment for it, the hours become insurable. As such, the employers would need to include the actual number of hours the employee worked for. This is regardless of the rate at which the employers pay the hours.
Footnote 7: In some cases, an employee might take overtime as a leave. In this case, the employers would need to consider the insurable hours as the number of hours that the employee takes in leave.
Footnote 8: Situations could arise where an employee accumulates overtime hours and the employer pays for those hours on separation or afterwards. In this scenario, the employers would need to ensure that they include these hours in the actual period when the employee worked overtime. For reporting purposes, if the employee worked the overtime during the previous 52 weeks (or since the issuance of the last Record of Employment (ROE), in case the period is shorted than 52 weeks), the employer would need to add the number of overtime hours worked to the total insured hours reported in Block 15A. In some cases, it is possible that the employee might have worked the overtime before this period. In this scenario, the employers would not need to report this. On occasions, Service Canada representatives might need to contact employers for verifying the time when the employee worked the overtime. This will usually only happen when the employee does not qualify for Employment Insurance (EI) benefits based on the figures reported. As such, knowing which period the overtime represents could well result in the employee qualifying for the appropriate benefits.
Footnote 9: In some cases, the employee might accumulate overtime. In addition, the employer might pay this overtime on separation or afterwards. In this scenario, the employer would need to include the insurable earnings in the last pay period of regular pay.
Footnote 10: It is worth highlighting that pay adjustments typically occur when a delay occurs in recognising, implementing or processing changes in the employee’s pay. For instance, such situations could typically comprise an increase in wages under a union contract, which the employer has agreed to three months after the end of the previous contract. Such an occurrence typically leads to a retroactive pay increase or adjustment.
Footnote 11: It is worth mentioning that pay corrections will typically involve errors. This might involve hours missed when the employer processed a previous pay period. Or, it might involve the payment of back wages to an employee, whom the employer wrongfully dismissed.
Footnote 12: For more information on retiring allowances, the employers would need to contact the Canada Revenue Agency (CRA)
Footnote 13: In some cases, an employee might end up working on a statutory holiday. In this scenario, the employers would need to remember that the insurable hours are the greater of the hours actually worked or the otherwise normal hours of work. For instance, when an employee who usually works 7.5 hours in a working day, receives payment for four hours of overtime on a statutory holiday, 7.5 hours are insurable. In case the employee worked 10 hours on that holiday, 10 hours would be insurable.
Footnote 14: In some cases, the Supplementary Unemployment Benefits (SUB) plan might note be registered with Service Canada. In this scenario, the employers would need to treat the Supplementary Unemployment Benefits (SUB) payments as insurable. For more details on registering Supplementary Unemployment Benefits (SUB) plans, the employers would need to go through the Supplementary Unemployment Benefits (SUB) Program Guide.
Note:
Situations could arise where the employees have questions concerning the insurability of earnings and hours
To eliminate their doubts, the employers would need to contact the Canada Revenue Agency (CRA)
For this, they would need to visit the website of the Canada Revenue Agency (CRA)
Alternatively, they could contact the Canada Revenue Agency (CRA) by calling at 1-800-959-5525
