Restaurant manager working on payroll for his restaurant

Ontario Payroll Guide

Understanding payroll regulations and rules is an important part in running a small business. In this payroll guide you will find out the information necessary to run your payroll according to Ontario regulations and laws. 

While the federal government has their own set of regulations, if you run your small business in Ontario it is important to understand what is expected of you.

Ontario Minimum Wage 

The general Ontario minimum wage for most employees is $15 per hour. 

The minimum wage for students is $14.10 per hour. This applies to students under the age of 18 who work 28 hours a week or less when school is in session, or work during a school break or summer holidays. 

People who work as hunting, fishing and wilderness guides make $75 per hour for working less than 5 consecutive hours in a day, and $150.04 per hour for working 5 or more hours in a day whether or not the hours are consecutive. A wilderness guide is a person who is employe to guide, teach, or assist a person while they are engaged in activities in a wilderness environment, including: 

  • Back-country skiing and snowshoeing
  • Canoeing, kayaking, and rafting
  • Dog sledding
  • Hiking
  • Horseback riding
  • Rock climbing 
  • Operating all-terrain vehicles or snowmobiles 
  • Wildlife viewing
  • Survival training

A wilderness guide doesn’t include a hunting or fishing guide or a student under 18 years of age.

Homeworkers make $16.50 per hour. This applies to employees who do paid work in their own homes.

Hours of Work

The maximum hours of work in Ontario is 8 hours per day or 48 hours per week. If an employee works more than 8 hours in the day or more than 48 hours in the week, they need to be compensated for overtime. The overtime pay is 1 and 1/2 times the employee's regular rate of pay. 

Employers are required to give their staff a half hour break per a consecutive 5 hours worked.

The minimum hours of work in Ontario is 3 hours per shift for their regular wage. 

Workers Compensation 

If you have been advised that one of your employees has been injured, you are required by law to report the injury to the Workers Safety and Insurance Board (WSIB) within 72 hours. While WSIB isn’t mandatory across Ontario those who work in the construction industry are required to have WSIB coverage. There are certain exceptions to this rule including:

Individuals, partnerships, or corporations performing home renovation work only and who are hired and paid directly by the homeowner or resident. 

For instructions on how to report an injury, including the types of accidents or situations that require an employer report of injury, login in to your WSIB account.

Wages and health benefits 

As the employer, you need to pay the injured worker's full wages for the day the injury occurred. If they are unable to work beyond the day of the accident, compensation payments start the first regular working day afterward. Cheques are issued every two weeks.

WSIB will cover 85% of your employees take-home pay if they cannot work because of a work-related injury or illness, up to a maximum insured wage of $90,300.

Payroll Remittances Ontario

Common payroll responsibilities include: 

  • Open and maintain a payroll program account. Meet the conditions in chapter 1.
  • Get your employee’s social insurance number (SIN)
  • Get a completed federal Form TD1, Personal Tax Credits Return, and, if applicable, a provincial or territorial Form TD1. New employees or recipients of other amounts such as pension income must fill out this form.
  • Deduct CPP contributions, EI premiums, and income tax from remuneration or other amounts, including taxable benefits and allowances, you pay in a pay period. You should hold these amounts in trust for the Receiver General and keep them separate from the operating funds of your business. Make sure these amounts are not part of an estate in liquidation, assignment, receivership, or bankruptcy.
  • Remit these deductions along with your share of CPP contributions and EI premiums. 
  • Report the employee’s income and deductions on the appropriate T4 or T4A slip. You must file an information return on or before the last day of February of the following calendar year. 
  • Prepare a Record of Employment (ROE) when an employee stops working and has an interruption of earnings. (for example if a temporary lay off occurs)
  • Keep records in your payroll account because officers can ask to see them. 

Below is a guide for Ontario specific tax brackets and rates: 

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Deductions employers are not allowed to take from wages

An employer cannot deduct the following (even if it is in a collective agreement or you have agreed to it in writing):

  • money for your faulty work
  • cash shortages or property loss if someone other than you had access to the cash or property (for example, if you share a till with other people at work, you alone cannot be held liable if the till is short cash)
  • cash shortages from you not collecting all or part of the purchase price from a customer
  • any amount to purchase, use, repair or clean any uniforms or other special clothing that you are required to wear at work

Canadian-controlled private corporations not in an associated group may claim a small business deduction on active business income (that is, non-investment income), up to the small business threshold of $500,000. Canadian-controlled private corporations in an associated group share the maximum small business threshold.

Ontario Pay Statements 

An employer must provide an employee with a statement of earnings on or before the pay period. 

  • pay period
  • regular and overtime hours of work
  • wage rate and overtime rate
  • The gross amount of pay, listing items separately (for example: wages, overtime, general holiday pay and vacation pay)
  • deductions from earnings and the reason for each deduction
  • hours taken off in lieu of overtime
  • the net amount of wages

Electronic statements are acceptable if employees have confidential access to and can view and print them.

Privacy legislation may require an employer to maintain the confidentiality of the employee’s payroll information.

Employers must keep paying employees at least once a month, or use one of the following pay periods listed below:

  • daily
  • weekly
  • bi-weekly
  • semi-monthly

Employers must also:

  • provide employees with a statement of earnings for each pay period
  • keep employment records for 3 years
  • pay employees within 10 consecutive days after the end of the pay period, unless employment is terminated

Leave of Absence 

For regular sick leave, there is no provincial law that requires employers to provide sick days or pay for sick days. Employers may offer sick days at their discretion by employment contract.

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Termination Notice

Ontario has a policy for when/if an employee’s employment is terminated. An employer must give the following notice: 

  • If the employee has had a period of employment of less than a year 1 week notice is required. 
  • If the employee has had a period of employment of 1 year but less than 3 years, 2 weeks notice is required. 
  • If the employee has had a period of employment of 3 years but less than 4 years, 3 weeks notice is required. 
  • If the employee has had a period of employment of 4 years but less than 5 years, 4 weeks notice is required. 
  • If the employee has had a period of employment of 5 years but less than 6 years, 5 weeks notice is required.
  • If the employee has had a period of employment of 6 years but less than 7 years, 6 weeks notice is required.
  • If the employee has had a period of employment of 7 years but less than 8 years, 7 weeks notice is required. 
  • If the employee has had a period of employment of more than 8 years, 8 weeks notice is required. 

For mass employee layoffs, the following notice is required:

  • 8 weeks notice if the employment of 50 - 199 employees is being terminated 
  • 12 weeks notice if the employment of 200 - 499 employees is to be terminated
  • 16 weeks notice if the employment of 500 or more employees is to be terminated 

During the statutory notice period employers must:

  • Not reduce the employee’s wage rate or alter any other term or condition of employment
  • Continue to make whatever contributions would be required to maintain the employee’s benefit plans 
  • Pay the employee the wages they are entitled to 

There is an option to give termination pay in lieu of notice. This is usually a lump sum payment equal to regular wages for a regular work week that an employee would have been entitled to during the notice period. 

QuickBooks Online streamlines your payroll process by giving you access to features that help you set up multiple pay schedules and frequencies, setting up vacation and sick leave policies, time tracking, filing taxes and more. Try it today

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