What New B.C. Employment Standards Mean for Your Payroll
Changes to CPP and EI in 2020: Are You Ready?
Ringing in the new year means adjusting to both recent and upcoming changes to employment standards. While it’s difficult to balance shifting regulations and benefits, it’s even harder to deal with complex legal issues or costly fines.
There were a number of B.C. Employment Standards Act amendments and introductions in 2019, including:
The minimum working age increased from 12 years to 16 years.
Employees are now able to take an unpaid leave of absence to care for critically ill family members—up to 36 weeks for a child and up to 16 weeks for an adult.
Employers aren’t allowed to withhold tips or other gratuities from workers.
A new payroll tax dubbed the “employer health tax” was introduced to offset the loss in revenue from medical service plan (MSP) premiums.
We can’t possibly cover all the B.C. Employment Standards Act changes in one article, so let’s look at two that could have a big impact on your business in 2020.
The Canada Pension Plan (CPP)
Employees who worked and contributed to CPP in 2019 received higher benefits in exchange for making higher contributions. The Government of Canada called it a “Canada Pension Plan enhancement.”
Up until 2019, the CPP retirement pension replaced, on average, one quarter of employees’ work earnings. After 2019, it replaced a third. From 2019 to 2023, the contribution rate for employees will continue to increase by one percentage point (from 4.95% to 5.95%) on earnings between $3,500 and the original earnings limit.
What does this mean for payroll?
You’ll need to treat CPP enhancement contributions in the same way you do as the base CPP. Enter the base and enhanced CPP contributions as one amount on the employee's T4; both are tax deductible.
Employment Insurance (EI)
Employers will pay less into EI in 2020 thanks to lower unemployment projections, which lead to decreased rates for business owners.
The premium rate will be $1.58 per $100 of insurable earnings, which is a drop of four cents (compared to the 2019 rate) for employees. For employers, who pay 1.4 times the employee rate, the new rate of $2.21 is six cents lower. The maximum annual EI contribution for employers will go down by $5.41 to $1,198.90 per employee. Read more about EI contributions.
No matter which B.C. employment standards affect your business in 2020, accurate accounting is crucial. The Employment Standards Branch hired a number of new “proactive” enforcement officers in 2019, who will be knocking on doors to make sure business owners are complying with the B.C. Employment Standards Act.
Claiming ignorance won’t work! Don’t risk a payroll error or omission that could lead to a hefty fine or legal trouble. It’s the Carol On Call Office Assistance teams’ job to ensure compliance with the CRA, and we’re certified with the Institute of Professional Bookkeepers of Canada. Contact Carol on Call Office Assistance to find out more and to check if your payroll practices are compliant.
Nurturing your business, means nurturing your books!