A look at what the new plan means for employers
The federal and Quebec governments have reached a final agreement that will allow the province to implement its new Parental Insurance Plan (QPIP) beginning January 1, 2006.
The two governments signed the final agreement on March 1, 2005.
The agreement incorporates the points set out in an Agreement in Principle that the two governments signed last May. (For more information on the key points agreed to last year, please see the August/September 2004 issue of The Canadian Payroll Manager (Vol. 16, No. 7, p. 1).)
The final agreement “provides the administrative, financial, and operational provisions under which Quebec will establish its plan,” stated background documents accompanying the federal government’s announcement of the agreement.
Quebec passed legislation to establish the QPIP in 2001, but could not implement it until it reached an agreement with the federal government to, among other issues, reduce the amount of EI premiums that Quebec employers and employees pay since eligible Quebec residents would receive maternity, parental, and adoption benefits from the QPIP rather than the EI program.
The final agreement includes a mechanism for the federal government to calculate a reduced EI premium rate for Quebec employers and employees. Employees and employers in the province would continue to contribute to the EI program because Quebec residents would still be covered under it for benefits other than maternity and parental benefits. The reduced premium rate would be equal to the portion of the EI rate that applies to maternity and parental benefits outside the province.
The federal government has committed to publishing the EI premium rate reduction for Quebec each year in the same way that it publishes the regular EI rate and other EI premium reductions.
What this Means for Employers
Employers with Quebec payrolls will have to administer premiums for two separate employment benefit programs for two governments after January 1, 2006. Employers will continue to collect EI premiums from employees through source deductions and pay their portion of EI premiums to the Canada Revenue Agency (although, as explained above, the employer and employee premium will be reduced).
In addition, they will have to collect QPIP contributions from Quebec employees through source deductions and remit this amount to Revenu Québec, along with the employer QPIP contribution. (Premiums will be paid to Revenu Québec, but it will be the ministère de l’Emploi et de la Solidarité sociale that will administer the QPIP.)
The new remittance requirements will mean that employers will have to make changes to their payroll systems to incorporate the new requirements for 2006.
Revenu Québec plans to revise its applicable forms (e.g., a new box will be included on the source deduction remittance form in 2006 and QPIP reporting will have to be added to the year end reporting forms).
Revenu Québec says that in November it will provide employers with the information required to calculate employer and employee QPIP contributions.
As part of the final agreement, the federal government will allow Quebec to use the Record of Employment and federal social insurance number register to administer the QPIP. Not only will this allow the Quebec government to save on administrative costs, government officials say it will ease the “administrative burden” on employers.
It is also expected that the Canada Revenue Agency and Human Resources and Skills Development Canada (HRSDC) will revise their applicable forms and documents to incorporate the QPIP.
Unlike the EI program, the QPIP would cover both eligible employees and self-employed workers in the province. It would be funded through contributions paid by employers, employees, and the self-employed. For employers and employees, contributions would be similar to other source deductions, in that employers would be responsible for deducting the employees’ contributions at source and remitting them to Revenu Québec, along with the employer portion, at the same time that they remit Quebec Pension Plan contributions and income tax deductions.
The scope of the parental insurance legislation is wide reaching when it comes to paying contributions. Not only would the contributions apply to “every employee resident in Quebec on the last day of a year”, they would also apply to every Quebec resident who reports for work at a place of business in another part of Canada, and to those who are not required to report for work at the business establishment but who are paid from a place of business in Canada outside of Quebec. Every employer would be required to pay contributions for each employee subject to the legislation. The Act states that all types of work would be covered, although regulations may later define what is included and excluded.
To determine how much to deduct from an employee’s earnings, employers would multiply the employee’s annual wages or the annual maximum insurable earnings, whichever is less, by an employee contribution rate. To calculate the employer’s contribution, the employer would do the same using an employer contribution rate. The Act would provide special rules for calculating contributions for employees who live in Quebec, but who work at a place of business in another part of Canada (or who are paid from a place of business in another part of the country, if they are not required to report for work at the employer’s establishment).
The maternity and parental benefits offered under the QPIP would differ from those available under EI. For example, the number of weeks of benefits and the rate at which they would be paid would depend on which of two benefit options an individual selected for maternity, parental, and adoption benefits.
Until the QPIP comes into force next year, Quebec residents will continue to be subject to EI requirements for maternity, parental, and adoption benefits and pay full EI premiums.
The final agreement also includes provisions for dealing with issues of employees who move from Quebec to another part of Canada and vice versa and for the two governments to share pertinent personal information to run the programs. More information on these issues can be found in the final agreement, available on the HRSDC website at www.hrsdc.gc.ca.
Under the Employment Insurance Act, the federal government and any Canadian province or territory can enter into a similar agreement. So far, Quebec is the only province to do so.
The Canadian Payroll Manager will provide more information about the QPIP in upcoming issues.
The two governments signed the final agreement on March 1, 2005.
The agreement incorporates the points set out in an Agreement in Principle that the two governments signed last May. (For more information on the key points agreed to last year, please see the August/September 2004 issue of The Canadian Payroll Manager (Vol. 16, No. 7, p. 1).)
The final agreement “provides the administrative, financial, and operational provisions under which Quebec will establish its plan,” stated background documents accompanying the federal government’s announcement of the agreement.
Quebec passed legislation to establish the QPIP in 2001, but could not implement it until it reached an agreement with the federal government to, among other issues, reduce the amount of EI premiums that Quebec employers and employees pay since eligible Quebec residents would receive maternity, parental, and adoption benefits from the QPIP rather than the EI program.
The final agreement includes a mechanism for the federal government to calculate a reduced EI premium rate for Quebec employers and employees. Employees and employers in the province would continue to contribute to the EI program because Quebec residents would still be covered under it for benefits other than maternity and parental benefits. The reduced premium rate would be equal to the portion of the EI rate that applies to maternity and parental benefits outside the province.
The federal government has committed to publishing the EI premium rate reduction for Quebec each year in the same way that it publishes the regular EI rate and other EI premium reductions.
What this Means for Employers
Employers with Quebec payrolls will have to administer premiums for two separate employment benefit programs for two governments after January 1, 2006. Employers will continue to collect EI premiums from employees through source deductions and pay their portion of EI premiums to the Canada Revenue Agency (although, as explained above, the employer and employee premium will be reduced).
In addition, they will have to collect QPIP contributions from Quebec employees through source deductions and remit this amount to Revenu Québec, along with the employer QPIP contribution. (Premiums will be paid to Revenu Québec, but it will be the ministère de l’Emploi et de la Solidarité sociale that will administer the QPIP.)
The new remittance requirements will mean that employers will have to make changes to their payroll systems to incorporate the new requirements for 2006.
Revenu Québec plans to revise its applicable forms (e.g., a new box will be included on the source deduction remittance form in 2006 and QPIP reporting will have to be added to the year end reporting forms).
Revenu Québec says that in November it will provide employers with the information required to calculate employer and employee QPIP contributions.
As part of the final agreement, the federal government will allow Quebec to use the Record of Employment and federal social insurance number register to administer the QPIP. Not only will this allow the Quebec government to save on administrative costs, government officials say it will ease the “administrative burden” on employers.
It is also expected that the Canada Revenue Agency and Human Resources and Skills Development Canada (HRSDC) will revise their applicable forms and documents to incorporate the QPIP.
Unlike the EI program, the QPIP would cover both eligible employees and self-employed workers in the province. It would be funded through contributions paid by employers, employees, and the self-employed. For employers and employees, contributions would be similar to other source deductions, in that employers would be responsible for deducting the employees’ contributions at source and remitting them to Revenu Québec, along with the employer portion, at the same time that they remit Quebec Pension Plan contributions and income tax deductions.
The scope of the parental insurance legislation is wide reaching when it comes to paying contributions. Not only would the contributions apply to “every employee resident in Quebec on the last day of a year”, they would also apply to every Quebec resident who reports for work at a place of business in another part of Canada, and to those who are not required to report for work at the business establishment but who are paid from a place of business in Canada outside of Quebec. Every employer would be required to pay contributions for each employee subject to the legislation. The Act states that all types of work would be covered, although regulations may later define what is included and excluded.
To determine how much to deduct from an employee’s earnings, employers would multiply the employee’s annual wages or the annual maximum insurable earnings, whichever is less, by an employee contribution rate. To calculate the employer’s contribution, the employer would do the same using an employer contribution rate. The Act would provide special rules for calculating contributions for employees who live in Quebec, but who work at a place of business in another part of Canada (or who are paid from a place of business in another part of the country, if they are not required to report for work at the employer’s establishment).
The maternity and parental benefits offered under the QPIP would differ from those available under EI. For example, the number of weeks of benefits and the rate at which they would be paid would depend on which of two benefit options an individual selected for maternity, parental, and adoption benefits.
Until the QPIP comes into force next year, Quebec residents will continue to be subject to EI requirements for maternity, parental, and adoption benefits and pay full EI premiums.
The final agreement also includes provisions for dealing with issues of employees who move from Quebec to another part of Canada and vice versa and for the two governments to share pertinent personal information to run the programs. More information on these issues can be found in the final agreement, available on the HRSDC website at www.hrsdc.gc.ca.
Under the Employment Insurance Act, the federal government and any Canadian province or territory can enter into a similar agreement. So far, Quebec is the only province to do so.
The Canadian Payroll Manager will provide more information about the QPIP in upcoming issues.
