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

5.2.1. Authorization for Hiring¶

This internal document includes:

New employee’s basic info
Start date, department, salary
Probation details
Hiring authority’s signature

Important: Employer must obtain a valid SIN. A SIN starting with 9 must have a valid expiry date and associated work permit.

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

5.3.3. Entering Employee Information into Sage50¶

To enter a new employee into the Sage 50 Payroll module (Canada edition), start by navigating to the Employees & Payroll section in the Home window. Right-click the Employees icon and choose “Add Employee” to begin creating employee’s record. Input the employee’s full legal name. Then, proceed to fill in the personal and payroll details across several tabs: the Personal tab for birth date and contact info, the Taxes tab to select the appropriate provincial tax table, the Income tab to configure their pay frequency, and the Deductions tab to define benefit or pension deductions. You’ll also want to enter their bank details for direct deposit. For compliance, be sure to complete and store signed TD1 forms (Federal and Provincial) separately, as Sage50 does not automatically generate these. You’ll also need to set up EI, CPP, and Income Tax deductions and link them to remittance vendors in the system. Once all information is reviewed for accuracy, save and close the record to finalize setup. If you prefer a guided approach, Sage50 also offers an Employee Wizard to walk you through these steps.

5.3.3.1. Entering Perdonal Information¶

Important

To maintain accuracy and compliance in Sage 50 Payroll, carefully verify that all employee information entered into the system, including full legal name, Social Insurance Number (SIN), residential address, and compensation details, matches the data provided on official documentation such as the signed employment contract and government-issued identification (e.g. driver’s licence, Employment Contract). Double-checking these entries helps prevent administrative errors and ensures that payroll records remain consistent with legal and regulatory standards.

5.3.4. Review Questions¶

What is the significance of accurately entering the “Date Hired” field when setting up a new employee profile in Sage 50?

Accurately entering the “Date Hired” in Sage 50 is a critical step in ensuring the integrity of payroll records and overall HR compliance. This field defines the employee’s official start date, which determines pay cycle alignment, benefit entitlement periods, and the correct application of mandatory deductions such as CPP and EI. It also plays a pivotal role in historical payroll reporting—including audit readiness and the generation of year-end T4 slips. Furthermore, the hire date is essential when preparing a Record of Employment (ROE), as it establishes the starting point for the employee’s insurable earnings and service duration.

#. Within the scope of Payroll Administration, how should the department ethically and legally respond when a supervisor requests access to an employee’s date of birth for the purpose of workplace recognition, given that this personal information is already held by payroll? Additionally, what procedures or company-wide practices should be implemented to ensure that the sharing of such sensitive data complies with privacy regulations and maintains proper standards for handling employee information?

*Under Canadian payroll administration and the Personal Information Protection and Electronic Documents Act (PIPEDA), sharing an employee’s date of birth—even for positive intentions like workplace recognition—is not legally or ethically appropriate without the employee’s explicit consent.

PIPEDA requires employers to:

Limit the collection, use, and disclosure of personal information to what is necessary for clearly identified business purposes.

Obtain meaningful consent before using personal data for any purpose beyond what it was originally collected for—such as payroll or benefits administration.

Protect employee privacy by restricting access to personal information on a strict need-to-know basis.

In this case, using the date of birth for celebrations or acknowledgments is outside the scope of payroll processing. Even if the Payroll department holds this information, it cannot be disclosed to supervisors or other staff unless the employee has formally agreed to such use.

To make the practice of sharing employee birth dates for recognition purposes both appropriate and compliant, the Payroll department must establish a structured framework aligned with Canadian privacy legislation, particularly PIPEDA. This begins with creating a formal consent process, allowing employees to voluntarily authorize the use of their birth date for non-payroll purposes, such as birthday celebrations. Consent must be clearly informed, specifying the intended use, who will access the information, and how long it will be retained. Employees should also retain the right to withdraw consent at any time. The company’s privacy policy should be revised to include provisions for using personal information in recognition programs, and any updates must be effectively communicated to all staff, including supervisors. Access to birth date data should remain restricted to authorized personnel, and the information must only be used for its approved purpose. Payroll should maintain secure documentation of all employee consents and conduct periodic audits to ensure proper data usage. In addition, training programs should be provided to supervisors and managers to reinforce privacy obligations and encourage a culture of respect for personal data. By implementing these measures, the Payroll department can support positive workplace initiatives while safeguarding employee privacy and meeting legal standards.*

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.