At a glance
- Your province or territory decides what an employee is owed: vacation pay, vacation time, holiday pay, overtime and notice.
- The CRA decides how that pay is taxed and reported: income tax, CPP, EI, remittances and T4s.
- PayCub handles the CRA side automatically. For employment standards, it helps with defaults and reminders, but some decisions stay with you.
Three separate questions
A lot of payroll mistakes come from mixing up who sets which rule. It helps to keep three questions apart:
What is the employee owed?
Set by the province or territory where the employee works (or the Canada Labour Code for federally regulated employers).
How is it taxed and reported?
Set by the CRA for the whole country, with provincial tax tables built in.
What does PayCub decide for you?
The CRA calculations, every run. Employment standards decisions that depend on facts PayCub can't see stay with you.
1. Employment standards: what's owed
Each province and territory has its own employment standards law. It sets the minimums an employee is entitled to, and they differ from place to place:
- Vacation pay and vacation time, including the years of service where they go up (see Vacation pay by province).
- Statutory holidays: which days are paid, who qualifies, and how holiday pay is worked out.
- Overtime: after how many hours, and at what rate.
- Minimum wage, notice of termination and termination pay.
- What counts as wages for each of these, and the exceptions for particular jobs or industries.
The province that applies is generally where the employee reports to work. Federally regulated businesses (such as banks, airlines and telecommunications) follow the Canada Labour Code instead.
2. CRA payroll: how it's taxed and reported
Once you know what to pay, the CRA rules decide what comes off it and what you report:
- Income tax, using federal and provincial tax tables and the employee's TD1.
- CPP, CPP2 and EI, up to the yearly maximums (see CPP, CPP2 and EI maximums).
- Remittances of what you withheld, on the CRA's schedule (see Remittances and due dates).
- T4 slips at year-end (see T4 slips).
The CRA doesn't decide how much vacation or holiday pay an employee is owed. It only decides how that pay is taxed once you pay it.
3. What PayCub decides for you
PayCub automates the parts that follow fixed rules, and leaves you in charge where the answer depends on facts it can't know.
Automatic, every pay run
- Federal and provincial income tax from the current CRA tables, using the employee's TD1 and Province of Employment.
- CPP, CPP2 and EI, including stopping each one at its yearly maximum.
- Vacation pay at the percentage on the employee's profile, paid each period or accrued.
- Year-to-date totals for the remittance report, T4s and ROEs.
Helped, but your decision
- Vacation pay percentage. PayCub suggests the minimum for a new employee's Province of Employment and reminds you if the rate is below the minimum for their years of service. It never blocks payroll, because a contract or collective agreement may set things differently.
- CPP by age. PayCub shows from the date of birth whether CPP applies, and you turn on CPP Exempt when it doesn't.
Yours to decide
- Whether an employee qualifies for a particular statutory holiday, and how much holiday pay they're owed.
- Overtime eligibility and rates, and any industry or job-specific exceptions.
- Termination pay, and the reason code on a Record of Employment.
When one of these applies, enter the result as an earning on the pay run. PayCub then takes care of the tax, CPP and EI on it. If you're not sure what your province requires, its employment standards office is the authority.