A constant awareness of payroll compliance legislation is essential for businesses managing payroll in Canada. Payroll compliance legislation is a set list of regulations and laws employers must follow to ensure they meet their legal obligations to their employees when processing payroll.
Employers must keep up with changes to stay compliant with the evolving payroll compliance legislation. In 2024, there are payroll legislation changes that all small businesses should be aware of:
Second additional Canada Pension Plan (CPP) contributions
Beginning January 1st, 2024, there will be additional CPP contributions for workers who earn higher wages. Workers earning annual wages over a certain amount, the first earnings ceiling, will make CPP2 contributions up to the second earnings ceiling.
This means the employee and employer may be paying more in CPP for 2024. It is important to be aware of this change so that you can accurately predict payroll costs for the year and prevent any confusion or issues when you first see this additional value on your reports. To learn more about the second additional CPP contribution and how to calculate it, visit the Canada Revenue Agency website.
Canada Dental Benefit impact on tax form reporting
The interim Canada Dental Benefit helps lower dental costs for eligible families earning less than $90,000 annually. Parents/guardians are eligible if they pay for dental care for children under 12 years old who do not have access to a private dental insurance plan. This benefit impacts the information employers need to gather and report.
Employers will need to report whether they offer dental insurance to their employees on the employee’s T4 or T4A. This requirement is to let Health Canada know if an employee, former employee, or their spouse and dependents were eligible during the tax reporting year to access dental coverage of any kind. To learn more about the Canada dental benefit, visit the Canada Revenue Agency website.
Regulations for employee termination
Effective February 1st, 2024, an employer who terminates an employee who has completed a minimum of three years of employment must either provide the employee with written notice equivalent to at least one week per completed year of employment, up to a maximum of 8 weeks of notice, or pay the employee their regular wages in lieu of notice.
Employers are also required to provide employees with a statement of benefits at the time of termination that details their vacation benefits, wages, severance pay, and any other benefits and pay arising from their employment.
To learn more about federal labour standards around termination, layoff or dismissal, visit the Government of Canada website.
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Understanding payroll legislation changes and staying in compliance with these changes can help keep your employees happy and avoid various issues, potentially including financial penalties.
This guide is intended to be used as a starting point in analyzing an employer’s payroll obligations and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.
