Payroll can be intimidating (especially for new employers) and it’s something we get asked about a lot.
Where to start with Payroll…
Congratulations! You’ve found a new employee to join your team, but both of you know they’re not working for free…so let’s get them set up. As a good employer, make sure they fill out a Federal TD1 and a Provincial TD1 before they start working. This will give you enough time to prepare their first paycheque. There’s no need to send these to the Canada Revenue Agency (CRA), but make sure you keep a copy of both the Federal and Provincial TD1’s on file.
Fun Tip for employers: Did you know TD1’s can also be used if an employee wants to change credits that are being deducted?
Fun tip for employees: Have you ever worked two jobs at once and found yourself still owing tax? Make sure to read the TD1’s so that you only claim the basic personal exemption on one job instead of both.
How often should I pay my employees?
Figuring out how often your employees are paid is an essential part of payroll. In B.C., employees are required to be paid at least twice a month. Pay dates can be every two weeks or on the 15th and the last day of the month. It’s up to you to pick what works best for your schedule.
Qualifying for statutory holidays
There are many reasons to celebrate a long weekend. As an employee, you might get a paid day off, but if you’re working, this might mean you get paid time-and-a-half.
As an employer, you might find statutory holidays (or stats) to be a little more complex when it comes to calculating payroll. To qualify, your employee has to have been employed for 30 days and have worked or earned wages (like vacation days or another stat holiday) on 15 of those 30 days before the stat holiday in question. If they don’t qualify for stat pay, they will be paid their regular wage.
Here’s a formula to help you calculate stat pay:
Total wages ÷ number of days worked = stat pay
(Make sure the total wages and days worked are based on the 30 days before the stat holiday.)
Tip: If you are a nursing student or volunteer firefighter, a silviculture worker, a commission salesperson, or a car/truck salesperson, you will not receive statutory holiday pay. Find out if you or your employees fit any of these categories here.
What about overtime or minimum time?
In B.C., our standard work hours are eight hours a day and 40 hours a week. Overtime is extra pay owed to your employees when they work more than these typical hours. Employees earn time-and-a-half when they work over eight hours a day and are paid double-time if they work over 12 hours. Your employees will still get time-and-a-half if they work more than 40 hours a week (a week is Sunday to Saturday) even if each day is less than eight hours.
The minimum an employee can work per day is two hours. Even if they show up for less than that time, they still receive pay for two hours.
Vacation pay
We all love vacation, but vacation with pay is even better!
If someone has been employed for 1-5 years, the minimum vacation pay they can earn is 4% of wages paid in the previous year. After 5 years, an employee can receive 6%.
After 12 months of working, your employee is entitled to take two weeks of vacation. This time off needs to be used within 13-24 months of work. When it comes to paying your employee, it’s best to do it when they take their vacation time. However, if your employee requests, they can get paid out on their paycheque.
Tip: Using your vacation time is always a good idea. You’ve earned it and so has your mental well-being!
Hopefully, we were able to help and payroll is something you’re a little more comfortable with. Happy hiring, and please come have a chat with us if you have any questions!
*These notes have been put together for general informational purposes and we do advise that you contact a professional to advise you on your particular situation.