5 Things You're Getting Wrong with Payroll
by Chelsey Kitaguchi, Supervisor
With the new Alberta Employment Standards that came into effect January 1, 2018, employers like you are full of questions. With the day-to-day business problems to solve, now you also need to dive into your employee policies to ensure they are up to date. Here are the top five things you might get wrong and how to do it right.
Number 1: Calculating Overtime
For most industries, overtime is “all hours worked over 8 hours a day and 44 hours a week, whichever is greater”. This means employers must examine both the daily and weekly overtime. The common mistake is to check the employee’s hours for the pay period, instead of on a weekly basis. To improve your timesheets, recreate a new template so it is easy to calculate both daily and weekly overtime, or use a timesheet software that can calculate it for you.
Number 2: Calculating General Holiday Pay
There are only 9 general holidays in Alberta, as the following are optional: Boxing Day, Easter Monday, Heritage Day. The new employment standards have changed the eligibility requirements and calculation of this pay. For eligibility, regardless of the day(s) of the week the employee typically works, as long as they did not bail on their scheduled shift immediately before or after the general holiday, they are eligible. This means your part time employee who only works Saturdays is now eligible for general holiday pay. For payment for most industries, the Average Daily Wage is calculated 5% of wages + vacation pay + prior general holiday pay, earned in the 28 days immediately preceding the holiday.
If the employee does not work the general holiday, pay the Average Daily Wage only. If the employee does work the general holiday, pay the Average Daily Wage plus 1.5 times the wage rate for all hours worked.
Number 3: Accruing Vacation Pay
It is ultimately up to you, the employer, to choose between accruing or not accruing vacation pay.
- If accrued, calculate 4%-6% of employee’s wages for the pay period, and ensure to track this amount either manually or using your payroll software. When the employee takes vacation, withdraw from their accrual and pay it to them.
- If not accrued, calculate 4%-6% of employee’s wages for the pay period, and include it in their earnings. When the employee takes vacation, they are not paid.
Number 4: 3-Hour Minimum
If an employer calls an employee into work when they were not previously scheduled to do so, the employer must pay at least three hours of wages. To calculate, choose the greater of:
- 3 hours x minimum wage
- Hours worked x employee’s regular wage rate
Number 5: Allowing Sick Time
There is no employment standard in Alberta regarding sick time. Employers are not required to give paid or unpaid sick time to employees. If employers wish to go above & beyond the minimum employment standard, they are permitted to.
The provincial government has created great resources to help employers like you get these new standards right. Click here for a handy reference poster. Still have questions? Call me at 403.382.6800 to discuss!