Employment Equity Regulations – Definitions and interpretations for reporting salary – IPG-106
Salary interpretations for employment equity reporting under the Legislated Employment Equity Program (LEEP).
This guideline clarifies what employers must include as salary in their annual employment equity reports and what they must not.
The LEEP covers federally regulated private-sector employers, including Crown corporations and other federal organizations, that are subject to the Employment Equity Act (the Act).
The Employment Equity Regulations (the Regulations) require LEEP employers to include pay gap and salary range information, in their annual employment equity reports due by June 1.
The following payments and benefits must be included for employment equity reporting purposes and are defined in the next section:
- bonus pay, and
- overtime pay
When completing any part of Form 2 Parts A to G of their employment equity reports, employers must not include “bonus pay” and “overtime pay” in the annual salary and hourly wage calculations. Rather, employers must report “bonus pay” and “overtime pay” separately.
The following payments and benefits must not be included for employment equity reporting purposes and are defined in the last section:
- benefits (including taxable benefits)
- compensation for extra-duty services other than overtime
- payment in kind
- reimbursements for employment expenses
- retroactive payments (for commitments outside the reporting period)
- severance pay or termination pay
- supplementary payments
- vacation pay (no time taken)
Definitions and interpretations of payments to report
Salary means remuneration paid for work performed, before deductions*, in the form of:
Deductions are amounts that can be deducted from an employee’s pay because they are:
- required by federal or provincial law, such as taxes, Canada/Quebec pension plan contributions and employment insurance premiums
- authorized by a court order, such as child support or garnishment, or by a collective agreement, such as union dues, or
- specific amounts authorized in writing by the employee (with very limited exceptions)
An employer may also deduct overpayments of wages from an employee’s pay, but these overpayments should not be included in the employee’s salary for employment equity reporting purposes. These deductions are often the result of a salary payment error and therefore do not fairly represent an employee’s salary.
Salary should be understood to cover the annual vacation, general holidays and paid leaves (maternity-related reassignment and leave, personal leave, leave for victims of family violence, and bereavement leave, under certain conditions) that are mandatory under the Canada Labour Code. Additional forms of paid leave offered by the employer to the employee in the reporting year should also be included in salary.
If an employee works on a statutory or general holiday, any additional pay received above their standard rate of pay for the holidays should be reported as overtime pay. The hours worked during these holidays should be reported as overtime hours.
Basic pay is the sum of earnings an employee receives in return for the contracted amount of work. This is usually set out in the:
- terms and conditions of employment
- employment contract, or
- labour agreement
Pay for piecework
Pay for piecework refers to amounts an employee receives based on units produced or tasks achieved rather than time worked.
Shift premiums may also be referred to as “shift differential pay” and include weekend premiums. This is the practice of paying an employee premium rates to recognize that the employee is scheduled to work less desirable hours or shifts because it is required for operations.
Employers should include shift premiums as salary for the purposes of employment equity reporting when they are:
- part of regular work conditions, and
- part of an employee’s ongoing remuneration
Bonus pay means any additional remuneration an employer pays an employee as a result of:
- profit sharing
- commissions, or
- any other incentive (for example, signing bonuses)
If employees receive payments in addition to their basic pay as automatic rewards, employers should report these as bonus pay. Compensation for working additional hours should be reported as overtime pay.
Employers should report bonuses for the calendar year they are paid to the employee, even when the bonus was earned in a previous the calendar year.
Employers should report non-monetary bonuses that are vested and paid to the employee for the calendar year they are paid. This includes:
- shares, and
- any other types of equity compensation
In addition to their basic pay, payments an employee receives as a result of the following, should also be reported as bonus pay:
- profit sharing, and
- other incentive plans introduced by an organization that are dependent on the organization’s profitability
Overtime pay means any remuneration paid for the hours worked by an employee in excess of the standard hours of work.
The conditions for receiving overtime pay will usually be set out in the:
- Canada Labour Code, Part III
- terms and conditions of employment
- employment contract, or
- labour agreement
Employers should report payments received by employees for working extra hours as overtime pay for the calendar year the payment is made.
This includes all premiums paid for work performed during extra hours, including premiums paid for:
- extra work, in addition to regular work
- especially heavy work
- work under unusually onerous conditions, or
- shift premiums for overtime hours only
When a premium payment for shift work is part of an employee’s regular work conditions, employers should report it as salary.
If an on-call employee is called into work, the pay received (e.g., call-back pay; call-in pay) should be reported as overtime pay for the calendar year it is received by the employee. The corresponding hours should be reported as overtime hours.
Payments and benefits not to report
The payments and benefits defined in this section are not to be included for employment equity reporting purposes because they vary greatly across employers or their cash value can be difficult to assess.
An allowance is any periodic or other similar payment to support the duties of the employee’s employment that meets all of the following criteria:
- the amount paid is predetermined
- the amount is paid for a certain purpose
- the amount paid is at the sole disposition of the employee receiving the payment, and
- there is no requirement for the employee receiving the payment to repay or to demonstrate that the amount was actually spent
These can include payments made for:
- meals, or
- cost differences between remote and other locations, if working in isolated locations
Benefits (including taxable benefits)
These are payments for something that is personal in nature, such as payments for a good or service:
- given to the employee by the employer, or
- that the employer arranges for a third party to give
Compensation for extra-duty services other than overtime
Compensation for extra-duty services is a payment for:
- extra work performed during regular hours of work
- especially heavy work, performed during regular hours of work, or
- work performed under unusually onerous conditions, during regular hours of work
Payment in kind
Payment in kind is the use of a good or service as payment instead of cash.
Reimbursements for employment expenses
These are payments to repay costs that an employee incurred while carrying out their duties of employment. They are made on presentation of proof of disbursement.
Retroactive payments (for commitments outside the reporting period)
Retroactive payments are payments issued to honour commitments of previous calendar years that were not fulfilled within an expected or usual timeline. It is the difference between what was supposed to be paid and what was paid.
Payments issued to honour past salary commitments for the same reporting period are to be reported as salary.
Payments issued to honour past overtime pay commitments for the same reporting period are to be reported as overtime pay.
Payments issued as bonus pay should be reported for the calendar year that they are paid to the employee even when the employee earned the bonus in a previous calendar year.
Securities are a broad set of financial assets. They include debt, equity and derivatives. Securities that do not lead to payments from employers are excluded from salary.
Securities, like stocks and shares, paid by an employer to an employee as bonus should be reported as bonus pay.
Severance pay or termination pay
Severance pay is a payment issued to terminated employees who have completed at least 12 consecutive months of continuous employment. Termination pay, or wages in lieu, is a payment issued to employees upon termination when written notice has not been provided. Severance payments in the form of salary continuance should also be excluded in pay gap reporting.
These are any other type of payments, not already mentioned and defined in this guidance, made in addition to basic pay.
These include “on-call pay” or “stand-by pay” payments received for the time spent being available to the employer for overtime opportunities during an employee’s off-duty hours. Compensation for off-duty time spent waiting for an overtime call should not be reported as salary or overtime pay.
Supplementary payments also include top-up payments issued to supplement Employment Insurance benefits for leaves, such as maternity, parental (including adoption) or caregiving benefits (including compassionate care, family caregiver benefit for children and family caregiver benefit for adults).
Vacation pay (no time taken)
Vacation pay with no time off taken is a payment received in lieu of taking vacation. It is calculated based on a percentage of the wages of the employee during the year of employment. It is paid out to:
- employees who are not entitled to vacation time, or
- employees who decide not to take the vacation time to which they are entitled
Payments issued to employees for vacation leave periods taken during the calendar year, such as annual vacation, should be reported as salary.
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