5. 🍁 OBNOARDING EMPLOYEE 🍁¶
In the context of Canadian payroll administration, onboarding an employee refers to the formal process of integrating a new hire into both the organizational and payroll systems. It ensures that the employee is properly registered, legally compliant, and ready to be paid accurately and on time.
Key Steps on Onboarding an Employee:
Collect Required Personal Information: Includes full legal name, address, date of birth, and Social Insurance Number (SIN). The SIN is critical for tax reporting to the CRA (Canada Revenue Agency).
Obtain Federal & Provincial Tax Forms: New employees must complete Form TD1 (Federal and possibly a Provincial version) to declare tax credits and determine income tax withholdings.
Set Up Banking Info for Direct Deposit: Employees usually provide a void cheque or bank form to set up electronic payments.
Register the Employee in the Payroll System: Involves entering all personal and job-related data, assigning a payroll ID, and verifying employment status (e.g. full-time, part-time, contract).
Enroll in Benefits or Pension Programs: If applicable, the employee may be signed up for group insurance, retirement savings plans (like RRSP or pension plans), and other benefits. These deductions must be accurately reflected in payroll.
Assign Statutory Deductions that Employers must withhold and remit
CPP (Canada Pension Plan)
EI (Employment Insurance)
Income Tax (based on TD1 form)
Confirm Employment Agreement & Start Date
🍁 Compliance & Record Keeping
Employers in Canada are responsible for keeping accurate records of employee data, pay stubs, deductions, and remittances for at least 6 years.
If audited by CRA, these documents must be readily available.
Employers must also provide T4 slips by end of February each year to summarize annual earnings and deductions for tax filing.
5.1. Employment Standards Requirements¶
Each province/territory, as well as the federal government, sets minimum employment standards, including:
Minimum wage
Minimum age (may also be governed by other legislation)
Required pay statement information: - Employee name - Pay period date - Rates of pay and hours worked - Gross earnings - Itemized deductions - Net pay
5.2. Internal Forms¶
Typical commencement package forms include:
Authorization for hiring
Direct deposit agreement
Union membership application
Benefits enrollment (e.g., health/dental, pension)
Confidentiality agreement
5.2.2. Union Membership¶
For unionized workplaces:
Union dues are deducted
Employees sign authorization for deduction
Exemptions may apply, but dues equivalent still required
5.2.3. Benefit Enrollment Forms¶
Forms cover group insurance and pension plans:
Employee indicates coverage type
Signatures authorize payroll deductions
5.2.4. Confidentiality Agreement¶
A legally binding agreement protecting sensitive company info:
Defines proprietary data
Outlines responsibilities, penalties, and timeframe
5.3. Required Federal and Provincial/Territorial Forms¶
Purpose: Determine correct income tax withholdings.
Forms:
TD1 (Federal)
TD1 (Provincial/Territorial)
TP-1015.3-V (Québec employees)
Provincial/territorial withholding is based on province of employment, but tax liability is based on province of residence.
Adjustments:
Request extra withholding via TD1 or TP-1015.3-V
Request reduction using CRA Form T1213 or RQ Form TP-1016-V
Essential Info on All Forms:
Employee name
Date of birth
Social Insurance Number
5.3.1. Tax Credits (TD1)¶
Basic personal amount
Canada caregiver (infirm children)
Age amount
Pension income
Tuition
Disability
Spouse/common-law partner amount
Eligible dependant
Caregiver for infirm spouse or dependant
Caregiver for dependant age 18+
Transfers from spouse
Transfers from dependant
Total
Additional Instructions:
Fill out TD1 only if claiming more than basic credit
Québec employees must always complete TP-1015.3-V
5.3.2. Tax Credits (TP-1015.3-V – Québec)¶
Basic amount
Transfer from spouse
Amount for dependants
Impairment in mental/physical function
Age amount, retirement income, living alone
Career extension
Deductions:
Remote area housing
Deductible support payments
5.4. Content Review Highlights¶
Consent is required for personal info collection
TD1 and TP-1015.3-V are used to calculate source deductions
Claim amounts may differ between federal and provincial forms
Employers must keep the forms on file (do not send to CRA/RQ)
5.5. Review Questions (Sample)¶
What does an offer letter signature signify?
What documents are included in a commencement package?
Name three common internal forms
What must payroll verify on a hiring form?
What must be checked for SINs starting with “9”?
True/False: Union dues can be deducted without consent.
What authorizes benefit premium deductions?
5.6. Example Evaluations¶
Gloria Meyer (Alberta): - Claimed: Basic, eligible dependant, transferred tuition - Appears accurate
Luc Laframboise (Québec): - Claimed: Basic, spouse, dependant in school, tuition transfer - Appropriate provincial and federal claims made
Ingrid Johansson (Alberta, Single Parent): - Claimed credits for two children - Overclaimed dependant credit – only one is eligible - Needs correction on federal and AB TD1 forms
ONBOARDING EMPLOYEE EXERCISE
Using MS Forms, create a questionaire for gathering all required information for onboarding a new employee at Quebec-based company for the payroll purposes.