PCL Chap 2 en Ca

Chapter
2
Federal Legislation
Learning Objectives:
Upon completion of this chapter, you should be able to:
1. describe the payroll compliance requirements of the Canada Revenue

Agency (CRA)
2. describe the payroll compliance requirements of Employment and Social
Development Canada (ESDC) and Service Canada (SC)
3. describe the payroll compliance requirements of the following acts:
 Personal Information Protection and Electronic Documents Act
(PIPEDA)
 Pension Benefits Standards Act
4. describe the relevance to payroll of the Human Rights Act and the
Employment Equity Act
Communication Objectives:
Upon completion of this chapter, you should be able to:
1. explain the division of responsibility for the Canada Pension Plan (CPP)
between the CRA and ESDC/Service Canada
2. explain the division of responsibility for Employment Insurance (EI)
between the CRA and ESDC/Service Canada
3. explain the impact the Personal Information Protection and Electronic
Documents Act and the Pension Benefits Standards Act have on payroll
processes and procedures
© The Canadian Payroll Association – Payroll Compliance Legislation 2-1

Vs 12.0
Chapter 2
Federal Legislation
Chapter Contents
The Canada Revenue Agency ............................................................................................ 2-3

The Canada Revenue Agency's Responsibilities ............................................................... 2-4
Canada Pension Plan ...................................................................................................... 2-4
Employment Insurance .................................................................................................. 2-5
Income Tax .................................................................................................................... 2-6
Non-compliance Penalties ................................................................................................. 2-7
Content Review .............................................................................................................. 2-8
Review Questions .......................................................................................................... 2-9
Employment and Social Development Canada................................................................ 2-10
Service Canada................................................................................................................. 2-12
Social Insurance Number ............................................................................................. 2-13
Content Review ............................................................................................................ 2-15
Review Questions ........................................................................................................ 2-16
Statistics Canada .............................................................................................................. 2-17
Personal Privacy............................................................................................................... 2-20
The Ten Fair Information Principles............................................................................ 2-20
The Personal Information Protection and Electronic Documents Act ......................... 2-22
Disclosure of Employee Information ........................................................................... 2-26
Organizational Policies and Procedures Requirements ............................................... 2-27
Content Review ............................................................................................................ 2-29
Pension Benefits Standards Act ....................................................................................... 2-33
Canadian Human Rights Act ........................................................................................... 2-34
Employment Equity Act .................................................................................................. 2-35
Content Review ............................................................................................................ 2-36
Information on Federal Government Acts ....................................................................... 2-38
Chapter Review Questions and Answers ......................................................................... 2-40

Chapter 2
Federal Legislation
The Canada Revenue Agency

The Canada Revenue Agency (CRA) is a federal government agency that manages the
following business lines for the federal government: Tax Services and Benefit Programs.
The Tax Services business line assists over 25 million individuals, businesses, trusts, and
organizations to meet their obligations under the tax system. Each year, the CRA collects
approximately $300 billion in gross taxes and excise duties on behalf of the federal and
provincial governments − the equivalent of about $1.2 billion every working day. The CRA’s
mission is to promote compliance with Canada’s tax legislation and regulations through
communication, quality service, and responsible enforcement, thereby contributing to the
economic and social well-being of Canadians.
From this mission comes the CRA’s mandate to:
 collect revenues and administer tax laws for the federal government and for most
provinces and territories
 deliver various social and economic benefit incentive programs to Canadians
The CRA tracks the success of the first part of its mandate by measuring compliance in the
following areas:
Filing – The CRA’s goal is to have over 90% of individual and corporate income tax and
registered business’ goods and services tax/harmonized sales tax (GST/HST) returns filed on
time.
Registration – The CRA measures its success in this area by ensuring that the majority of all
known businesses are registered for various programs including corporate income tax,
GST/HST, payroll deductions, and import/export accounts.
Remittance – The CRA’s goal is to have over 90% of individual and corporate tax filers pay
their taxes on time.
Reporting – The CRA measures reporting compliance through the information it receives on
tax documents, for example, the T4 and T4A information slips.
The CRA’s program responsibilities that are specifically related to payroll include the
administration of:
 the Canada Pension Plan (CPP) (shared responsibility with Employment and Social
Development Canada and Service Canada)
 Employment Insurance (EI) (shared responsibility with Employment and Social
Development Canada and Service Canada)
 Income Tax

Chapter 2
Federal Legislation
Each of these programs requires compliance by employers to withhold deductions from their
employees’ pay for CPP contributions, EI premiums and income tax deductions. These
withholdings are termed statutory deductions as the deductions are required under legislative
statute. Statutory deductions are the first deductions to be withheld from an employee’s gross
pay.
The Canada Revenue Agency's

Responsibilities
Under the Canada Pension Plan Act and the Employment Insurance Act, the CRA is
responsible for determining:
 whether or not an individual's employment is pensionable under the Canada Pension

Plan Act or insurable under the Employment Insurance Act
 the types of earnings that are considered pensionable or insurable
 how many hours an insured person has in insurable employment
 the recovery of any debts owed as a result of overpayment of Canada Pension Plan,
Employment Insurance, or Old Age Security benefits
The CRA is also responsible for ensuring that CPP contributions and EI premiums are
deducted, remitted, and reported as required by legislation.
Canada Pension Plan

The Canada Pension Plan became operational on January 1, 1966. The plan was fully
effective in 1976 after a ten year transitional period.
The Canada Pension Plan is a social insurance program, legislated under the federal Canada
Pension Plan Act, designed to provide protection in the form of benefits to contributors and
their families against loss of income due to retirement. In addition to retirement pension
benefits, the plan provides supplementary benefits in the form of:
 surviving spouse pensions

 disability benefits
 benefits for orphans and children of disabled contributors
 death benefits payable upon the death of a contributor

Chapter 2
Federal Legislation
All employers are required by law to deduct CPP contributions from pensionable earnings
paid to their employees, and to remit these deductions, along with the employer’s portion, to
the CRA. The employer matches the employee’s contributions dollar for dollar.
Example:
Janet Frank has $45.00 in CPP contributions deducted from her gross pay. Her employer,
Northern Skies, must match her contribution of $45.00. A total of $90.00 in CPP
contributions must be remitted to the CRA.
CPP contributions take priority over all other deductions and are therefore the first statutory
deduction to be withheld from an employee’s gross pay.
Employment Insurance
The CRA’s responsibility for the Employment Insurance program is associated with the
collection of employee and employer premiums. It also makes decisions about which types of
remuneration are considered insurable, and, therefore, subject to EI premiums.
All employers are required by law to deduct EI premiums from the insurable earnings paid to
their employees, and remit these deductions, along with the employer’s portion, to the CRA.
The employer’s portion is 1.4 times the employee’s portion.
Example:
Janet Frank has $20.00 in EI premiums deducted from her gross pay. Her employer, Northern
Skies must contribute $28.00 ($20.00 x 1.4). A total of $48.00 in EI premiums must be
remitted to the CRA.
EI premiums are the second statutory deduction to be withheld from an employee’s pay.
Employers are also required to track the employee’s insurable earnings and insurable hours
by pay period for reporting purposes, such as completing the Record of Employment for a
terminated or inactive employee.

Chapter 2
Federal Legislation
Income Tax
Income taxation began in Canada, and in many other countries, during World War I. In July
1917, the Government of Canada passed legislation which enabled the government to levy a
temporary tax on personal income. This tax was intended to help finance government
expenditures for World War I; however, it eventually became the basic tax on all incomes.
When income tax was first introduced, each person was responsible for paying their own
income tax directly to the federal government. In 1940 the federal government legislated
deductions at source, which meant that employers became responsible for withholding
income tax from remuneration paid to employees. Beginning January 1, 1962, all provinces
imposed personal income tax; prior to that date, only Québec imposed such a tax.
Income tax withholdings are calculated by applying a federal tax rate and a separate
provincial/territorial tax rate to the employee’s taxable income. The employee’s province of
employment determines which provincial/territorial tax rate to apply. The federal
government and all provinces and territories, except Québec, have the same definition of
taxable income.
All Canadian provinces/territories, except Québec, have entered into tax collection
agreements with the federal government. Under these agreements the CRA collects the
provincial/territorial income taxes on behalf of the provinces/territories. The CRA then
distributes the provincial/territorial income taxes it has collected through a series of transfer
payments to the provinces/territories. These transfer payments are based on the personal tax
returns filed by Canadian taxpayers.
As the federal government collects both the federal and the provincial/territorial portions of
tax from all employees working in a province/territory other than Québec, the two tax
withholdings, federal and provincial/territorial, are combined into one deduction amount. The
employee may only see one item ‘Income Tax’ or ‘Federal Income Tax’ listed on their pay
statement, however it is the total of two withholdings.
Québec collects its own provincial income tax. There are two separate income tax deductions
withheld from Québec employees — one for federal income tax and the other for Québec
provincial income tax. The federal income tax is remitted to the CRA and the Québec
provincial income tax is remitted to Revenu Québec (RQ). Québec employees will see
‘Federal Income Tax’ and ‘Québec Income Tax’ listed separately on their pay statements.
RQ is discussed extensively in a later chapter.

Chapter 2
Federal Legislation
Non-compliance Penalties
If an organization fails to deduct and remit the amounts withheld from employees for CPP
contributions, EI premiums and income tax, it may be left in the position of having to pay
both the employer’s and the employee’s portion of deductions not taken, as well as penalties
and interest charges on the outstanding amount.
An employer who remits withholdings or deductions late is subject to the following

penalties:
 3% will be applied to remittances that are 1 to 3 days late

 5% for remittances that are 4 or 5 days late
 7% for remittances that are 6 or 7 days late
 10% for remittances that are 8 or more days late
An employer who withholds the statutory deductions but does not remit them, or fails to
deduct the required deductions, will be subject to a 10% penalty for the first occurrence on
the amount that should have been deducted and remitted. This penalty may increase to 20%
for the second and each subsequent occurrence in the same calendar year if the failure was
made knowingly or under circumstances of gross negligence. Penalties will be applied to
amounts in excess of $500; however, in the case of wilful delay or deficiency, these penalties
can be levied on amounts of less than $500.
The Canada Revenue Agency (CRA) charges interest on any unpaid remittances and unpaid
penalties from the day the payment was due. The interest rate is determined every three
months, in accordance with the prescribed interest rates, and is available on the CRA
website.
As a payroll practitioner, you need to have a clear understanding of how and when to make
the required deductions and remittances to avoid these penalties and interest charges.
All monies deducted on behalf of the CRA are considered to be held “in trust” for the
Receiver General. The amount owed must be kept separate from the operating funds of the
organization. In the event of estate liquidation, assignment, receivership, or bankruptcy the
trust money for statutory deductions is still owed to the CRA.

Chapter 2
Federal Legislation
Content Review
 Under the Canada Pension Plan Act and the Employment Insurance Act, the Canada
Revenue Agency is responsible for determining:
o whether or not an individual's employment is pensionable under the Canada
Pension Plan Act or insurable under the Employment Insurance Act
o the types of earnings that are considered pensionable or insurable
o how many hours an insured person has in insurable employment
o the recovery of any debts owed as a result of overpayment of Canada Pension
Plan, Employment Insurance, or Old Age Security benefits
 The Canada Revenue Agency is responsible for ensuring that Canada Pension Plan
contributions and Employment Insurance premiums are deducted, remitted, and
reported as required by legislation.
 The Canada Revenue Agency collects provincial/territorial income taxes on behalf of
all provinces/territories except Québec.
 Revenu Québec collects the provincial income tax for the province of Québec.
 Employers who remit withholdings or deductions late, withhold the statutory
deductions but do not remit them, or fail to deduct the required deductions will be
subject to penalties, which may increase on subsequent occurrences, plus interest
charges.
 All monies deducted on behalf of the Canada Revenue Agency are considered to be
held “in trust” for the Receiver General.

Chapter 2
Federal Legislation
Review Questions
1. What are the three main programs specifically related to payroll that the Canada
Revenue Agency administers?
2. If an organization deducts $27,400 in Canada Pension Plan contributions from its

employees and $21,200 in Employment Insurance premiums, how much would have to
be remitted in total to the Canada Revenue Agency?
CANADA PENSION EMPLOYMENT

TOTAL
PLAN INSURANCE
Employee
Employer
Total
3. True or False: The Canada Revenue Agency collects provincial/territorial income taxes
for all provinces and territories.
4. True or False: Québec employees see two separate income tax withholdings on their pay
statements.

Chapter 2
Federal Legislation
Employment and Social Development

Canada
Employment and Social Development Canada (ESDC), a department of the Government of
Canada, is committed to building a stronger and more competitive Canada by supporting
Canadians in making choices that help them live productive and rewarding lives and to
improve their quality of life.
To do this, the department:
 develops policies that make Canada a society in which all can use their talents, skills
and resources to participate in learning, work and their community
 creates programs and support initiatives that help Canadians move through life’s
transitions—from families with children to seniors, from school to work, from one
job to another, from unemployment to employment, from the workforce to retirement
 creates better outcomes for Canadians through service excellence with Service
Canada and other partners
ESDC supports human capital development, labour market development and is dedicated to
establishing a culture of lifelong learning for Canadians. Some of their specific program
responsibilities include:
 Canada Pension Plan and Old Age Security

 Employment Insurance
 Employment Programs
 Youth Employment Strategies
 Canada Education Savings Program
 Canada Student Loans and Grants
ESDC is responsible for matters relating to:
 amending the regulations made under the Canada Pension Plan and the Employment
Insurance Act
 keeping records of each individual’s CPP contributions and pensionable earnings
 the establishment of annual maximum insurable earnings
 the administration of provisions related to Wage Loss plans
 the administration of provisions regarding Job Creation programs

Chapter 2
Federal Legislation
Almost all of today’s seniors receive income from Canada’s public pensions. Basic financial
support is also available to survivors, people who become too disabled to work, and their
children. These pensions and benefits are delivered through the Canada Pension Plan (CPP)
and Old Age Security (OAS) programs. Together, the CPP and OAS programs provide a
modest base upon which Canadians can build their retirement income.
The amount of CPP benefits is based on an individual’s CPP contributions. Employees

between the ages of 18 to 70 years old make contributions that are calculated on their annual
pensionable earnings between a minimum and a maximum amount. The minimum amount is
frozen at $3,500, while the maximum pensionable earnings are set each January, based on
increases in the average wage in Canada.
Employment Insurance (EI) is the program with the greatest impact on payroll. This program
provides temporary financial assistance for unemployed Canadians while they look for work
or upgrade their skills. It also provides coverage for Canadians who are sick, pregnant or
caring for a newborn or adopted child. Individuals who must care for a family member who
is seriously ill with a significant risk of death may also be assisted by Employment Insurance
benefits. Application of the EI rules will be looked at in more detail in another chapter.
The first Unemployment Insurance (UI) Act was passed into law in 1940, and was based on
the British Unemployment Insurance Act, 1935. Since that time, the UI Act has been repealed
and replaced four times – in 1955, 1971, 1985, and most recently in 1996. Clarifying details
on how the act is to be applied are found in the EI Regulations, which are amended as
required.
The purpose of the act is to provide income support during a temporary interruption of
earnings with the emphasis on returning the unemployed to the labour force as quickly as
possible. Contributions to the plan and the amount of benefits are based on a percentage of
insurable earnings. The ceiling on insurable earnings is reviewed annually to keep pace with
increases in average income and the cost of living. The premium rates payable by an insured
employee and the employer are also determined annually.

Chapter 2
Federal Legislation
Service Canada
Service Canada (SC) was created by the federal government in 2005 with the goal of
providing easy-to-access, one-stop personalized service to Canadians. The agency integrates
services from a number of federal departments to form a service delivery network. These
services often touch all aspects of the lives of Canadians: from parental and pension benefits,
to matching employers with job seekers, and obtaining a Social Insurance Number.
Service Canada serves as the government’s operational arm while Employment and Social
Development Canada (ESDC) operates as the policy-making body. ESDC makes the rules
for the various programs while Service Canada delivers the programs.
Some of Service Canada’s program responsibilities include:
 the issuance of Social Insurance Numbers (SIN) and the protection and security of
SIN information
 the delivery of services to employers, including Record of Employment on the Web
 the administration of Employment Insurance programs to individuals, including
regular, parental, sickness, seasonal and compassionate care benefits
 the administration of the Employment Insurance Premium Reduction program,
including granting qualified employers a reduced Employment Insurance premium
rate
 the administration of Canada Pension Plan benefits, including retirement, disability,
survivor, children’s and death benefits
 the administration of benefits for seniors, including the Old Age Security Program
and the Guaranteed Income Supplement
Through the Canada Pension Plan program, SC administers the payment of CPP benefits.
These payments have little impact on payroll. The biggest impact Service Canada has on
payroll is through the administration of the Record of Employment program and the Social
Insurance Number.
Payroll is responsible for deducting and remitting EI premiums on behalf of employees and
employers. They are also responsible for capturing information related to insurable earnings
and hours, and reporting that information on the Record of Employment, which is explained
in detail in a later chapter.

Chapter 2
Federal Legislation
Social Insurance Number

The Social Insurance Number (SIN) Program was introduced by Parliament in 1964 to
register people with the Unemployment Insurance Commission (now known as Employment
Insurance) and the Canada Pension Plan. In 1967, the SIN also became a file identifier for
Revenue Canada (now known as the Canada Revenue Agency).
Under the Employment Insurance Act, every person who works in Canada is required to have
a Social Insurance Number. As an employer, you must ask new employees to provide their
SIN number when they are hired. According to the Employment Insurance Regulations
which came into force on April 30, 2013, employees are required by law to provide their
SIN; they may do so by presenting a SIN card or the Confirmation of SIN letter. It is
important that you obtain the correct SIN of your employee so that payroll can report
accurate statutory withholdings for Canada Pension Plan contributions, Employment
Insurance premiums, and income tax on the employee’s information slips at the end of the
year.
Note:
In accordance with the Government’s plan to return to a balanced budget by 2014–2015,
Employment and Social Development Canada (ESDC) stopped the production and
distribution of the SIN card as of March 31, 2014.
SIN cards currently in circulation will remain valid. This decision supports the Government’s
agenda to modernize and streamline operations in order to decrease costs and to achieve
better value for money. The impact on individual Canadians will be negligible.
To apply for a Social Insurance Number, individuals must complete an application form that
can either be obtained from a SC office or downloaded from their website. Documents
proving the individual’s identity and status in Canada must also be submitted with the
application. The documents must be originals and written in English or French.
Social Insurance Numbers beginning with a "9" (commonly called 900-series) are issued to
individuals who are neither Canadian citizens nor permanent residents, but need a SIN for
employment purposes. All 900-series SIN cards/letters carry an expiry date that is the same
as the expiry date on the individual's work permit. Individuals must apply for new
documentation prior to expiry. Employees who are not residents of Canada, who are in
regular continuous employment, and are in possession of a 900-series SIN, are subject to all
applicable statutory deductions.

Chapter 2
Federal Legislation
Validating a Social Insurance Number

This material is being provided for information purposes only; it will not be on the final
exam.
Most payroll systems have a built-in validity check for the Social Insurance Number (SIN).
The following example illustrates how to manually check the validity of a SIN:
1. SIN to verify 1 9 3 4 5 6 7 8 7
2. Extract the 1st, 3rd, 5th and 7th digits
1 3 5 7 16
and add across
3. Extract the 2nd, 4th, 6th and 8th digits 9 4 6 8
4. Double these extracted digits 18 8 12 16
5. Add each of the digits in the above
step considering a two digit number 1+8 8 1+2 1+6 27
as separate numbers
6. Add the two sums above (step 2
43
and 5)
7. Round to the next highest number
50
ending in 0
8. Subtract the sum from this next
7
highest number (50-43)
9. Last digit from SIN 7

Chapter 2
Federal Legislation
Content Review
 Employment and Social Development Canada is responsible for matters relating to:
o amending the regulations made under the Canada Pension Plan and the
Employment Insurance Act
o keeping records of each individual’s Canada Pension Plan contributions and
pensionable earnings
o the establishment of annual maximum insurable earnings
o the administration of provisions related to Wage Loss plans
o the administration of provisions regarding Job Creation programs
 Employment and Social Development Canada’s Employment Insurance program
provides temporary financial assistance for unemployed Canadians while they look
for work or upgrade their skills.
 Service Canada serves as the government’s operational arm while Employment and
Social Development Canada operates as the policy-making body.
 Service Canada is responsible for:
o the issuance of Social Insurance Numbers (SIN) and the protection and
security of SIN information
o the delivery of services to employers, including Record of Employment on the
Web
o the administration of Employment Insurance programs to individuals,
including regular, parental, sickness, seasonal and compassionate care benefits
o the administration of the Employment Insurance Premium Reduction
program, including granting qualified employers a reduced Employment
Insurance premium rate
o the administration of Canada Pension Plan benefits, including retirement,
disability, survivor, children’s and death benefits
o the administration of benefits for seniors, including the Old Age Security
Program and the Guaranteed Income Supplement
 Payroll is responsible for deducting and remitting Employment Insurance premiums
on behalf of employees and employers.
 Payroll is responsible for capturing information related to insurable earnings and
hours, and reporting that information on the Record of Employment.

Chapter 2
Federal Legislation
Review Questions
5. True or False: The emphasis of the Employment Insurance program is on paying people
so they don’t have to return to work.
6. Please indicate which federal department or agency would be responsible in the

following scenarios.
 An employer is preparing the budget for the next year and wants to know the annual
maximum insurable earnings amount.
 An employee wants to retire and apply for Canada Pension Plan benefits.
 There is a new type of earning in the new collective agreement. You are not sure if it
is insurable.
 The organization would like to apply for a reduction in its Employment Insurance
premium rate.

Chapter 2
Federal Legislation
Statistics Canada
Statistics Canada produces statistics that help Canadians better understand their country—its
population, resources, economy, society and culture.
In Canada, providing statistics is a federal responsibility. As Canada’s central statistical

agency, Statistics Canada is legislated under the Statistics Act to serve this function for the
whole of Canada and each of the provinces/territories.
Objective statistical information is vital to an open and democratic society. It provides a solid
foundation for informed decisions by elected representatives, businesses, unions and non-
profit organizations, as well as individual Canadians.
Statistics Canada is committed to protecting the confidentiality of all information entrusted to

them and to ensure that the information delivered is timely and relevant to Canadians.
Payroll professionals may encounter the Business Payrolls Survey, a copy of which follows.
This survey measures payroll, employment, and paid hours and earnings of workers in most
industries. Employers of all sizes, in every industry (except agriculture, fishing and trapping,
private households, religious organizations, and the military) may be requested to complete
the Survey. Statistics Canada has published a guide to completing the Survey, available at:
http://www23.statcan.gc.ca/imdb-bmdi/document/2612_D8_T1_V4-eng.pdf.
Information is collected using the following data:
 census of administrative records from the CRA for organizations having 100
employees and more
 sample of administrative records from the CRA for organizations having fewer than
100 employees
 sample survey (Business Payrolls Survey) conducted to estimate the variables not
reported on administrative records
Information collected on the survey includes:
 number of employees (all employees, employees paid by the hour, salaried

employees, working owners, and other employees)
 regular gross pay, including overtime, for the last pay period of the month for
employees paid by the hour, salaried employees, and other employees
 overtime pay included in the regular gross pay amount for each type of employee
 total number of hours, including overtime, for the last pay period of the month for
employees paid by the hour
 number of overtime hours included in the total number of hours
 average number of working hours in a week for salaried employees
 special payments paid at any time during the month to employees paid by the hour,
salaried employees, working owners, and other employees

Chapter 2
Federal Legislation

Chapter 2
Federal Legislation

Chapter 2
Federal Legislation
Personal Privacy
The Canadian federal government and some provincial governments have legislation that sets
limits on the collection, use or disclosure of personal information. Privacy laws in Canada
currently only cover the employment information of workers who are federally regulated or
who are located in one of the three provinces with provincial laws: Alberta, British Columbia
and Québec. Therefore, approximately half of workers in Canada have privacy rights backed
by legislation, while the remaining 50% of the country’s 17 million or so workers have
privacy rights that are either voluntarily set in place by employers who have developed
employee privacy codes or have privacy rights because they have a collective agreement in
place. Arbitral jurisprudence has provided unionized workers privacy protection that is
roughly equivalent to the protections of the federal regulations.
Employers should also be aware that egregious violations of privacy may open them up to
civil damages, including class action law suits. Legislatures and the courts are recognizing
privacy rights and providing opportunities for civil remedies.
In drawing up its legislation for the protection of personal information, the Canadian
government based its privacy provisions on a set of guidelines called the Ten Fair
Information Principles that had been developed by the Canadian Standards Association in its
Model Code for the Protection of Personal Information. These principles had been the
informal privacy rules already in common use by Canadian corporations.
The Ten Fair Information Principles

This code of information principles was developed with input from organizations,
governments, consumer associations and other privacy stakeholders.
Principle 1. Accountability
An organization is responsible for personal information under its control and shall designate
an individual or individuals to be accountable for the organization's compliance with the
following principles.
Principle 2. Identifying Purposes

The purposes for which personal information is collected shall be identified by the
organization at or before the time the information is collected.
Principle 3. Consent
The knowledge and consent of the individual are required for the collection, use, or
disclosure of personal information, except where inappropriate. Note: In certain
circumstances, personal information can be collected, used, or disclosed without the
knowledge and consent of the individual. For example, legal, medical, or security reasons
may make it impossible or impractical to seek consent.

Chapter 2
Federal Legislation
Principle 4. Limiting Collection

The collection of personal information shall be limited to that which is necessary for the
purposes identified by the organization. Information shall be collected by fair and lawful
means.
Principle 5. Limiting Use, Disclosure, and Retention

Personal information shall not be used or disclosed for purposes other than those for which it
was collected, except with the consent of the individual or as required by law. Personal
information shall be retained only as long as is necessary for the fulfillment of those
purposes.
Principle 6. Accuracy
Personal information shall be as accurate, complete, and up-to-date as is necessary for the
purposes for which it is to be used.
Principle 7. Safeguards
Personal information shall be protected by security safeguards appropriate to the sensitivity
of the information.
Principle 8. Openness
An organization shall make readily available to individuals specific information about its
policies and practices relating to the management of personal information.
Principle 9. Individual Access

Upon request, an individual shall be informed of the existence, use and disclosure of his or
her personal information and shall be given access to that information. An individual shall be
able to challenge the accuracy and completeness of the information and have it amended as
appropriate. In certain situations, an organization may not be able to provide access to all the
personal information it holds about an individual. Exceptions to the access requirement
should be limited and specific. The reasons for denying access should be provided to the
individual upon request. Exceptions may include information that is prohibitively costly to
provide, information that contains references to other individuals, information that cannot be
disclosed for legal, security, or commercial proprietary reasons, and information that is
subject to solicitor–client or litigation privilege.
Principle 10. Challenging Compliance

An individual shall be able to address a challenge concerning compliance with the above
principles to the designated individual or individuals accountable for the organization's
compliance.

Chapter 2
Federal Legislation
The Personal Information Protection and

Electronic Documents Act
The federal government drew upon the Ten Fair Information Principles in its drafting of the
federal Personal Information Protection and Electronic Documents Act (PIPEDA) and the
spirit and much of the wording of the principles can be found throughout PIPEDA.
The mandate of the Office of the Privacy Commissioner of Canada (OPC) is overseeing
compliance with both the Privacy Act, which covers the personal information-handling
practices of federal government departments and agencies (including employee data), and the
Personal Information Protection and Electronic Documents Act (PIPEDA), Canada’s private
sector privacy law.
PIPEDA has applied to federally-regulated organizations such as banks, telecommunications

and transportation companies since January 2001 and applies to the collection, use or
disclosure of personal information in the course of any commercial activity within a
province that does not have its own privacy legislation, since January 2004.
The federal government may exempt organizations and/or activities in provinces/territories

that have adopted substantially similar privacy legislation.
While this protection of personal information legislation has a significant impact on how
organizations collect, use and disclose personal information relating to commercial
transactions (for example, customer/client lists and information), it is the effect of this
legislation on employee personal information that concerns the payroll and human resources
departments.
Employers collect personal employee information to conduct and protect their business, and
to comply with government legislation (for example, Employment Standards and statutory
deductions relating to CPP/QPP contributions, EI and QPIP premiums along with income
tax). As well, many employers provide benefits such as dental, medical and pension plans
that require the collection of even greater amounts of personal data.
Notice
PIPEDA does not require that employers obtain consent from prospective employees, current
employees, or terminated employees to collect, use, and disclose information about that
person where the information is necessary for the creation, maintenance, and termination of
the employment relationship. It is, however, the case that the employer will provide notice to
the employee so that they are knowledgeable with respect to the information that the
employer collects, uses, and discloses.

Chapter 2
Federal Legislation
Consent
According to PIPEDA, employers must obtain an employee’s consent before they collect
personal information where that information is not required for the employment relationship.
Further, the information collected must be for a specific purpose and must be destroyed once
that purpose is no longer valid.
PIPEDA states that the form of the consent sought by the organization may vary, depending
on the circumstances and the type of information. In determining the form of consent to use,
organizations should take into account the sensitivity of the information. Although some
information (for example, medical records and income records) is almost always considered
to be sensitive, any information can be sensitive, depending on the context.
There are two forms of consent that can be obtained from an employee − express and
implied:
Express consent means the employee provides their consent either verbally or in writing. If
the employee provides their consent verbally, when and how the consent was received should
be documented.
Implied consent means the employee is considered to have consented indirectly. An

example of implied consent is in the signing of a job offer where the employee is providing
consent for the employer to collect and use information reasonably required for employment
purposes, without specifically consenting to each item of information used. The job offer
may state that the employer will be collecting, using and disclosing employee information
required by various government agencies as well as various pension and benefit programs.
The offer letter could also outline what the information will be used for and who will have
access to it.
Implied consent of this nature may be deemed to be acceptable; however, such implied
consent will not work for other types of information requests.
In essence, the more sensitive the information, the more one should use express written
consent, which outlines in detail the specific purpose for which an employer is using the
information. For example, information concerning an employee's health or financial status
would always be considered highly sensitive, and therefore employers must obtain express
written consent from employees in the event that they wish to obtain this type of data from
employees. When requesting this type of information employers cannot use coercion tactics
or other forms of intimidation in order to obtain the information they are seeking.
It is critical for those working in payroll to be aware of the requirements of privacy

legislation and have the necessary procedures in place to comply with the legislation. Failure
to properly safeguard employee information and its use prove to be expensive for the entire
organization in a number of ways: poor employee morale and performance, increased
employee turnover, damage to public reputation and future recruitment, and the potential for
costly legal action.

Chapter 2
Federal Legislation
If an employee chooses not to disclose the information and is not required to do so by law, an
employer cannot force an employee to divulge it.
Exceptions to Consent Requirement

Subparagraph 7(3) of the Personal Information Protection and Electronic Documents Act
(Bill C-6) allows an employer to disclose personal information without the knowledge or
consent of the individual if the disclosure is made to a government institution which has
identified its lawful authority, and if the disclosure is for the purpose of administering any
law of Canada.
Example:
Under subparagraph 126(14) of the Employment Insurance Act, Service Canada has the
authority to ask for information about a specific individual receiving EI benefits if the
information is needed for the administration of the EI Act. Employers have an obligation to
answer these requests, but they are not required to inform their employee that they are
providing information to Service Canada. The Request for Payroll Information - INS5097
form has been amended to clearly identify the EI Act subparagraph that gives Service Canada
the legislative authority to request the information.
PIPEDA permits federal government agencies such as the CRA, ESDC, Service Canada and
provincial/territorial Ministries of Labour to obtain personal employee information needed to
administer programs or benefits, or to perform an audit. Legislation specifically provides
these government bodies with the right to request personal employee information and inspect
certain records and documents. As a result, the employer does not need to obtain the
employee’s permission to provide the information.
Use and Storage of Personal Information

According to PIPEDA, organizations can only use information for the purpose for which it
was collected. Employers must fully disclose in writing to the employee the reasons why
they require the information, as well as what will be done with it.
Organizations should take precautions in how they use and store employee information. Each
organization must store data in a form that permits retrieval and disclosure of only those
portions that would be needed. For example, a payroll administrator does not need access to
disciplinary or performance information but does need to know about decisions that affect
pay. Supervisors do not need access to benefit data to supervise an employee. Each employee
should only have access to the information needed to perform his/her duties.
Similarly, personal information must not be disclosed to external stakeholders without the
employee’s consent and only for the purpose for which the information was collected. For
example, if the organization is being audited by a government agency, such as the CRA, the
employee’s medical information should not be included with the information provided for
audit purposes.

Chapter 2
Federal Legislation
There are times when employers are required to collect information about employees in order
to comply with employment/labour standards or human rights legislation. For example, to
accommodate an employee for religious days and holidays, an employer needs to know about
the employee’s religious beliefs. To seek out this type of information for any other reason
invades the individual’s right to privacy.
Limitations on Use – the Social Insurance Number example

The purpose of a social insurance number (SIN) is to identify an individual for specific
government programs. This information may not be collected, stored, used or disclosed for
any other purpose without the employee’s consent. For example, if an organization requests
the SIN for purposes of employee identification only, it should clearly indicate that providing
the number is optional. If an organization collects the SIN for income-reporting purposes and
also intends to use it for purposes of identification, the organization should, at the time of
collection, clearly provide notice to this effect, and clearly indicate that the individual
consents to the use of the SIN for identification purposes.
Where the SIN is to be used for purposes of identification, an organization must provide a
convenient method for the employee to withdraw his/her consent for that use at any time.
Employers are authorized to collect a SIN from employees in order to produce Records of
Employment and income tax information slips. Unless the employee has provided a SIN for
another specific use, and has consented to that specific use in writing, an employer could be
subject to fines not exceeding $5,000 and/or 12 months’ imprisonment for each improper use
of that number.
As a general rule, an employer may not communicate the number to a third party without the
employee’s specific consent to do so. Exceptions are cases in which it is the employer’s
obligation to report an employee’s SIN to the CRA, ESDC, Service Canada or RQ.
The SIN should not be used on pay statements, or communicated to unions or benefit
carriers. They should not be used as an identifier by any organization other than the
government agencies mentioned above, unless the employee provides written consent to do
so.
Appeals
Employees or other stakeholders may not agree with an organization’s decision to collect,
use or disclose personal information.
Example:
An employee wants to see her personnel records but her supervisor refuses to disclose the
information. The employee needs access to an appeals process to determine if the supervisor
is correct under the terms of PIPEDA.

Chapter 2
Federal Legislation
There are provisions within the PIPEDA legislation that allow for an appeals process related
to the disclosure of personal information. The employee first approaches the organization’s
Privacy Officer. If the complaint is not satisfactorily resolved at this level, the employee may
appeal in writing to the Privacy Commissioner.
The steps in the appeals process are as follows:
 investigate the complaint

 mediate the complaint
 conduct an audit
If the appeal reaches a federal court hearing, remedies with punitive damages up to $20,000
can be awarded.
Disclosure of Employee Information

In many cases, employers share the personal information of employees with third parties, for
example, group insurance companies and payroll service providers. It is the responsibility of
each employer to ensure that these third parties protect and securely store the personal
information provided to them.
In some cases, external stakeholders collect and store personal information directly from the
employee. For example, many employers are moving away from collecting personal
information and moving into employee self-serve arrangements for benefit enrolment. In a
self-serve environment, the employee makes contact with the third party benefit suppliers
and provides them with the required personal information directly.
While benefit information regarding an employee would likely include age, sex, marital
status and dependants, it is highly unlikely that an employer would need to collect
information regarding an employee's religion, disabilities or sexual orientation. Third party
insurance companies often require information on disabilities and sexual orientation for the
purposes of establishing the proper benefit coverage that the employee needs. With self-serve
programs, employees can protect their privacy by not revealing this information to the
employer, but directly to the insurer.

Chapter 2
Federal Legislation
Organizational Policies and Procedures

Requirements
Since January 1, 2004, employers have been subject to PIPEDA and its standards with
respect to their commercial activities. Federally regulated employers have been subject to
the act since January 1, 2001. Alberta, British Columbia and Québec employers are also
subject to provincial/territorial legislation and specific standards with respect to private
sector employee personal information. Other provinces/territories have not followed suit to
date and may implement their own privacy legislation later. In most provinces (except
Ontario) civil servants have privacy protection under provincial public sector privacy laws.
Note:
In September 2013, Manitoba’s Bill 211 – The Personal Information Protection and Identity
Theft Prevention Act, received Royal Assent and will come into force upon proclamation on
a date which had yet to be announced at the time this material was printed.
The provincial privacy legislation requires all private sector organizations in their
jurisdictions to establish policies and procedures for the protection of personal information.
As well, the Privacy Commissioner of Canada has produced a Guide for Businesses and
Organizations to help organizations comply with the federal private sector privacy
legislation. The Guide follows the ten principles of the code for the protection of personal
information, sets out organizational responsibilities and provides an explanation, including
helpful tips, on how to fulfill those responsibilities.
Employers should base their policies, practices and procedures on the requirements set out by
PIPEDA or the legislation of the jurisdiction in which they operate. In doing so, they will
ensure that they are meeting their legislative compliance requirements.
Existing policies and procedures should be examined for the methods used to collect, use and
disclose personal information as well as the type of information collected and whether that
information is reasonably required for the purpose of establishing, managing or terminating
an employee-employer relationship.
No matter which legislation (federal or provincial) organizations are subject to, employers
should review and document the type of personal employee information that is being
collected, why it is being collected, and to whom it is being disclosed. Any collection, use or
disclosure that is not in compliance with legislation must be examined in greater detail. Non-
compliant practice would need to stop.
There are occasions where the payroll department may be contacted by a third party and
asked to verify an employee’s employment. There should be a departmental policy on how to
handle these requests. If such a policy does not exist, no information should be given to
anyone requesting information regarding an employee unless the employee has given
consent. Banks or other financial institutions may call to confirm an employee’s salary.

Chapter 2
Federal Legislation
Again, this information should only be released with the employee’s consent, preferably in
writing.
Once the review and documentation is complete, employers can then write specific privacy
policies and procedures for managing employee personal information using the ten fair
information principles as a framework of items to be addressed in their documents.
Privacy Resources
Additional information on the above-mentioned topics is listed in the table below:
Privacy legislation and other related information

Privacy Commissioner of Canada www.priv.gc.ca/index_e.cfm
Personal Information Protection and http://laws-lois.justice.gc.ca/PDF/P-8.6.pdf
Electronic Documents Act (PIPEDA)

Chapter 2
Federal Legislation
Content Review
 The Canadian government based its privacy provisions in its legislation for the
protection of personal information on a set of guidelines called the Ten Fair
Information Principles.
 The Personal Information Protection and Electronic Documents Act has applied to
federally-regulated organizations such as banks, telecommunications and
transportation companies since January 2001.
 Since January 2004 the Personal Information Protection and Electronic Documents
Act has applied to the collection, use or disclosure of personal information in the
course of any commercial activity within a province that does not have its own
privacy legislation.
 Express consent means the employee provides their consent either verbally (in which
case when and how the consent was received should be documented) or in writing.
 Implied consent means the employee is considered to have consented indirectly.
 The employer does not need to obtain the employee’s permission to provide personal
information where legislation provides federal government agencies such as the
Canada Revenue Agency, Employment and Social Development Canada, Service
Canada and provincial/territorial Ministries of Labour with the right to request
personal employee information in order to administer programs or benefits, or in the
case of an audit.
 Other than an employer’s obligation to report an employee’s Social Insurance
Number to the Canada Revenue Agency, Employment and Social Development
Canada, Service Canada or Revenu Québec, an employer may not communicate the
number to a third party without the employee’s specific consent to do so.

Chapter 2
Federal Legislation
Review Questions
7. How does the Personal Information Protection and Electronic Documents Act
legislation affect the handling of employee personal information?
8. When was the Personal Information Protection and Electronic Documents Act in effect
for private sector employers in provinces that do not have privacy legislation?
9. What provinces currently have privacy legislation that deals with employee personal
information?
10. Are the following statements true (T) or false (F)?
_____ The Personal Information Protection and Electronic Documents Act

deals with issues not covered under provincial privacy legislation.
_____ All provinces/territories have provincial private sector privacy

legislation.
_____ Legislation provides certain government agencies (Canada Revenue

Agency, Employment and Social Development Canada, Service
Canada, Ministries of Labour) with the authority to request employee
information.
_____ Employers must identify the purposes for which they are requesting
employee personal information.

Chapter 2
Federal Legislation
11. Explain the difference between implied and express employee consent and provide an
example of each.
12. Indicate with an ‘X’ the instances that are acceptable for the use of an employee’s
Social Insurance Number.
Benefit Plan Identification Number ____________
T4/T4A reporting ____________
Employee Identification Number ____________
Record of Employment reporting ____________
13. What guidelines should an organization initially follow when developing documentation
relating to the privacy of employee information?

Chapter 2
Federal Legislation
14. What is the appeals process to be followed for the resolution of a complaint related to
the disclosure of personal information?
15. The Personal Information Protection and Electronic Documents Act contains ten
principal code elements. Choose two items and develop a statement for each that could
be included in your organization’s privacy policy.

Chapter 2
Federal Legislation
Pension Benefits Standards Act

The Pension Benefits Standards Act (PBSA) is implemented by the Office of the
Superintendent of Financial Institutions (OSFI). Among its responsibilities, the OSFI
supervises approximately 1,200 federally-registered pension plans to determine whether they
meet the requirements as set out in the Pension Benefits Standards Act, 1985, and its
associated regulations.
In many organizations, the responsibility for pensions falls outside the day-to-day scope of
the payroll practitioner. There may be a formal pensions department within your organization
or there may be an actuary who is responsible for the administration and support of the plan.
However, payroll and pensions are intrinsically linked and the payroll professional is
responsible for the information that is passed from payroll into the pension system.
The PBSA outlines certain criteria that must be met within pension plans; the areas that
primarily impact payroll are:
 eligibility and membership requirements

 contribution requirements
The eligibility and membership requirements will determine when the employee will (or
may) become a member of the employer’s plan. Once an employee becomes a member,
pension credits begin to accumulate. In a contributory setting, the membership date will
impact when contributions can commence for employees.
The contribution requirements area of the plan document will contain the critical formula
information that will ultimately determine the retirement benefits. Within this section the
pensionable earnings that relate to the organization’s specific pension plan will be defined in
detail. This is different from the CRA’s or RQ’s statutory definition of pensionable earnings
that payroll practitioners are familiar with. The pensionable earnings defined in the pension
plan document are the types of earnings that are captured to determine the level of pension
benefits.
Payroll professionals should endeavour to obtain a copy of the plan document for their
organization’s pension plan to ascertain the areas where payroll can be of assistance or add
value within this field.

Chapter 2
Federal Legislation
Canadian Human Rights Act

Human rights legislation does not typically impact payroll directly, but it does govern
organizational compliance behaviour; therefore, the payroll practitioner must be aware of its
existence and its major implications.
The purpose of the Canadian Human Rights Act is to administer the principle that all
individuals should have an equal opportunity with others to make for themselves the lives
that they are able and wish to have. Individuals have a right to have their needs
accommodated, without being hindered in or prevented from doing so by any discriminatory
practices, specified as those based on:
 race
 national or ethnic origin
 colour
 religion
 age
 sex
 sexual orientation
 marital status
 family status
 disability
 conviction for an offence for which a pardon has been granted or a record suspended
The legislation states that:
“It is a discriminatory practice, directly or indirectly,
(a) to refuse to employ or continue to employ any individual, or

(b) in the course of employment, to differentiate adversely in relation to an employee, on
a prohibited ground of discrimination.”
The Canadian Human Rights Commission oversees both the human rights legislation and the
Employment Equity Act, which is outlined on the following page.

Chapter 2
Federal Legislation
Employment Equity Act

The current Employment Equity Act (Bill C-64) has been in force since October 24, 1996.
The purpose of this act is to ensure employment equity in the workplace so that no one is
denied an employment opportunity or benefit for reasons unrelated to ability. The act
addresses the need to correct the disadvantages in employment experienced by the four
designated groups:
 women
 Aboriginal peoples
 persons with disabilities
 members of visible minorities
Employers must implement the principle that employment equity means more than treating
people in the same way; it also requires special measures and the accommodation of
differences. The Canadian Human Rights Commission has the authority to conduct audits of
all employers under the legislation to verify that they are complying with the act.
Both the human rights and employment equity processes are complaints driven; there is a
step-by-step process in place to handle disagreements. Typically, before a complaint goes
through the formal process, a mediation resolution process would be followed.
More information regarding human rights and employment equity can be found at
http://www.chrc-ccdp.gc.ca/index.html.

Chapter 2
Federal Legislation
Content Review
 The Pension Benefits Standards Act is implemented by the Office of the
Superintendent of Financial Institutions.
 The Pension Benefits Standards Act outlines certain criteria that must be met within
pension plans and the areas that primarily impact payroll are: eligibility and
membership requirements and contribution requirements.
 The eligibility and membership requirements determine when the employee will (or
may) become a member of the employer’s plan.
 The contribution requirements contain the critical formula information that will
ultimately determine the retirement benefits.
 The purpose of the Canadian Human Rights Act is to administer the principle that all
individuals should have an equal opportunity with others to make for themselves the
lives that they are able and wish to have.
 The Canadian Human Rights Commission oversees both the human rights legislation
and the Employment Equity Act.
 The purpose of the Employment Equity Act is to ensure employment equity in the
workplace so that no one is denied an employment opportunity or benefit for reasons
unrelated to ability.

Chapter 2
Federal Legislation
Review Questions
16. Explain the difference between the eligibility and membership requirements and the
contribution requirements outlined in the Pension Benefits Standards Act.
17. What agency oversees both human rights legislation and the Employment Equity Act?

Chapter 2
Federal Legislation
Information on Federal Government Acts

The following table contains information on various federal government acts that impact
payroll.
EMPLOYER COMPLIANCE
LEGISLATION HISTORY AGENCY
REGISTRATION RULES
Canada Pension The Canada Pension Employer Employers must Canada Revenue
Plan Act Plan is an income- registration occurs deduct Canada Agency
related plan that when a Canada Pension Plan
Employment and
provides retirement Revenue Agency contributions from
Social
benefits to all payroll program their employees in
Development
Canadians. The account is pensionable
Canada
retirement income established to remit employment and are
system of Canada has source deductions. required to match the Service Canada
both public and private employee
components. The public contributions to an
component is made up annual maximum.
of the Canada Pension
Plan, Old Age Security
and the Guaranteed
Income Supplement.
The private component
is made up of registered
pension plans,
Registered Retirement
Savings Plans and
personal savings. The
act came into effect Jan.
1, 1966, and the Canada
Pension Plan became
fully effective in 1976
after a 10-year
transitional period.
Employment Employment Insurance Employer Employers must Canada Revenue
Insurance Act is a federal social registration occurs deduct Employment Agency
insurance program to when a Canada Insurance premiums
Employment and
compensate workers for Revenue Agency from their employees
Social
wage loss due to an payroll program in insurable
Development
interruption of earnings. account is employment and are
Canada
This government established to remit required to make
sponsored insurance is source deductions. their contributions Service Canada
funded by employer and based on a
employee premiums. percentage of
employee
contributions.

Chapter 2
Federal Legislation
EMPLOYER COMPLIANCE
LEGISLATION HISTORY AGENCY
REGISTRATION RULES
Income Tax Act The Income Tax Act Employer Employers are Canada Revenue
was introduced as a registration occurs required to deduct Agency
temporary measure in when a CRA income tax from
1917. Under this act, payroll program their employees and
every person or account is remit according to a
organization that pays established to remit pre-determined
remuneration is source deductions. schedule.
required to withhold
income tax from the
taxable portion of these
payments.
Statistics Act This act authorizes the All registered Employers are Statistics
collection and organizations in chosen at random to Canada
publication of statistical Canada. report.
information on almost
every facet of social and
economic life in
Canada.
Pension Benefits This act establishes All plans must be Requires filing an Office of the
Standards Act minimum requirements registered with the annual information Superintendent
for registered pension CRA in order to return within 180 of Financial
plans in such areas as give the employee days of the plan’s Institutions
contributions, an income tax year-end.
portability and vesting reduction on
for organizations that contributions at
are federally regulated. source.
Employment Enacted to ensure there None. Allows for Canadian
Equity Act are no artificial barriers government officials Human Rights
placed on hiring to check records on Commission
employees by the employer’s
organizations who are premises.
bidding on government
contracts.
Personal As of January 1, 2004 No formal Accountability Office of the
Information this act applies to the registration. Those through complaints Privacy
Protection and collection and governed under lodged and potential Commissioner
Electronic distribution of personal inter-provincial/ fines levied. of Canada
Documents Act information in the territorial trade
(PIPEDA) course of any must adhere.
commercial activity in a
province that does not
have its own privacy
legislation. It has
applied to federally
regulated organizations
since January 2001.

Chapter 2
Federal Legislation
Chapter Review Questions and Answers

1. What are the three main programs specifically related to payroll that the Canada Revenue
Agency administers?
Canada Pension Plan

Employment Insurance
Income Tax
2. If an organization deducts $27,400 in Canada Pension Plan contributions from its

employees and $21,200 in Employment Insurance premiums, how much would have to
be remitted in total to the Canada Revenue Agency?
CPP EI TOTAL
Employee $27,400 $21,200 $48,600
Employer $27,400 $29,680 $57,080
Total $54,800 $50,880 $105,680
3. True or False: The Canada Revenue Agency collects provincial/territorial income taxes
for all provinces and territories.
False, the Canada Revenue Agency does not collect Québec provincial income tax.
4. True or False: Québec employees see two separate income tax withholdings on their pay
statements.
True.
5. True or False: The emphasis of the Employment Insurance program is on paying people
so they do not have to return to work.
False. The purpose of the act is to provide income support during a temporary
interruption of earnings with the emphasis on returning the unemployed to the
labour force as quickly as possible.

Chapter 2
Federal Legislation
6. Indicate which federal department or agency would be responsible in the following

scenarios.
 An employer is preparing the budget for the next year and wants to know the annual
maximum insurable earnings amount.
Employment and Social Development Canada
 An employee wants to retire and apply for Canada Pension Plan benefits.
Service Canada
 There is a new type of earning in the new collective agreement. You are not sure if it
is insurable.
The Canada Revenue Agency
 The organization would like to apply for a reduction in its Employment Insurance
premium rate.
Service Canada
7. How does the Personal Information Protection and Electronics Documents Act
legislation affect the handling of employee personal information?
The federal Personal Information Protection and Electronic Documents Act

(PIPEDA) legislation sets limits on the collection, use or disclosure of personal
information.
8. When was the Personal Information Protection and Electronics Documents Act
legislation in effect for private sector employers in provinces that do not have privacy
legislation?
January 1, 2004.
9. What provinces currently have privacy legislation that deals with employee personal
information?
Alberta, British Columbia and Québec.

Chapter 2
Federal Legislation
10. Are the following statements true (T) or false (F)?
___F__ The Personal Information Protection and Electronics Documents Act

(PIPEDA) deals with issues not covered under provincial privacy legislation.
PIPEDA deals with the collection, use and disclosure of employee
personal information as does the provincial legislation.
___F__ All provinces/territories have provincial private sector privacy legislation.

Only Alberta, British Columbia and Québec have private sector privacy
legislation
___T__ Legislation provides certain government agencies (Canada Revenue Agency,

Employment and Social Development Canada, Service Canada, and Ministries
of Labour) with the authority to request employee information.
___T__ Employers must identify the purposes for which they are requesting employee
personal information.
11. Explain the difference between implied and express employee consent and provide an
example of each.
Implied consent means the employee is considered to have consented indirectly;

express consent means the employee provides their consent either verbally or in
writing.
An example of implied consent is the signing of a job offer where the employee is
providing consent for the employer to collect and use information reasonably
required for employment purposes, without specifically consenting to each item of
information used.
Information concerning an employee's health or financial status would always be

considered highly sensitive, and therefore employers must obtain express written
consent from employees in the event that they wish to obtain this type of data from
employees.
12. Indicate with an ‘X’ the instances that are acceptable for the use of an employee’s SIN.
Benefit Plan Identification Number ____________
T4/T4A reporting _____X______
Employee Identification Number ____________
Record of Employment reporting _____X______

Chapter 2
Federal Legislation
13. What guidelines should an organization initially follow when developing documentation
relating to the privacy of employee information?
Existing policies and procedures should be examined for the methods used to collect,
use and disclose personal information as well as the type of information collected
and whether that information is reasonably required for the purpose of establishing,
managing or terminating an employee relationship.
No matter which legislation (federal or provincial) organizations are subject to,

employers should review and document the type of personal employee information
that is being collected, why it is being collected, and to whom it is being disclosed.
Any collection, use or disclosure that is not in compliance with legislation must be
examined in greater detail. Non-compliant practice would need to stop.
14. What is the appeals process to be followed for the resolution of a complaint related to the
disclosure of personal information?
There are provisions within the PIPEDA legislation that allow for an appeals
process related to the disclosure of personal information. The employee first
approaches the organization’s Privacy Officer. If the complaint is not satisfactorily
resolved at this level, the employee may appeal in writing to the Privacy
Commissioner.
The steps in the appeals process are as follows:
 investigate the complaint
 mediate the complaint
 conduct an audit
15. The Personal Information Protection and Electronic Documents Act contains ten
principal code elements. Choose two items and develop a statement for each that could be
included in your organization’s privacy policy.
1. Accountability
The organization is accountable for all personal information in its possession or
control.
The organization has:
 established and put into effect, policies and procedures aimed at properly
protecting personal information
 educated its employees regarding its privacy policy and their role and
responsibilities in keeping personal information private
 appointed its Chief Privacy Officer to oversee privacy issues at the
organization

Chapter 2
Federal Legislation
2. Identifying Purposes
The organization collects personal information from employees and uses and
discloses such information for the purposes identified at or before the time of
collection.
3. Consent
Personal information will not be used for any purpose other than that for which
it was originally collected unless the individual is notified and his or her consent
is obtained or the use is otherwise permitted or required as a matter of law.
4. Limiting Collection
Only that personal information which is necessary for the organization’s

purposes will be collected and recorded.
5. Limiting Use, Disclosure, and Retention
As part of your employment, the organization may provide information about

you to others, such as a payroll service, insurers, health benefit providers, a
union and government departments. The organization will ask these third
parties to observe the same privacy requirements.
When personal information is no longer required it will be destroyed, erased or

made anonymous.
Personal information will be destroyed six years after employment with the
organization ends, unless there are special circumstances which require that it
be retained.
6. Accuracy
Each employee is entitled to access his or her individual personal information in

the possession of the organization and to question the accuracy and completeness
of that information. Requests for access should be directed to the Chief Privacy
Officer.

Chapter 2
Federal Legislation
7. Safeguards
Any and all personal information that is confidential or sensitive in nature is

kept in a secure location in the human resources department, or, if the
information is in an electronic format, in a computer file with limited and secure
access. Authorized personnel may access this information, in connection with the
purpose for which it was collected, on a strictly “need to know” basis.
8. Openness
This policy will be distributed to each new hire of the organization and will be
posted on the organization’s intranet site. Any amendments to this policy will be
communicated to all employees.
9. Individual Access
Each employee is entitled to access his or her individual personal information in

the possession of the organization, unless disclosure of particular information
would necessarily infringe the privacy rights of others, such as information that
contains references to other individuals, information that cannot be disclosed for
legal, security, or commercial proprietary reasons, and information that is
subject to solicitor–client or litigation privilege. Requests for access should be
directed to the Chief Privacy Officer.
10. Challenging Compliance
Employees may address any concerns with respect to the compliance of the
organization’s handling of personal information to the Chief Privacy Officer
and/or to the Office of the Privacy Commissioner.
16. Explain the difference between the eligibility and membership requirements and the
contribution requirements outlined in the Pension Benefits Standards Act.
The eligibility and membership requirements determine when the employee will (or
may) become a member of the employer’s plan.
The contribution requirements contain the critical formula information that will
ultimately determine the retirement benefits.
17. What agency oversees both human rights legislation and the Employment Equity Act?
The Canadian Human Rights Commission oversees both human rights legislation
and the Employment Equity Act.

PCL Chap 2 en Ca

Caricato da

Informazioni sul documento

Titolo originale

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

PCL Chap 2 en Ca

Caricato da

Copyright:

Formati disponibili

Chapter

Upon completion of this chapter, you should be able to:

1. describe the payroll compliance requirements of the Canada Revenue

Upon completion of this chapter, you should be able to:

© The Canadian Payroll Association – Payroll Compliance Legislation 2-1

The Canada Revenue Agency ............................................................................................ 2-3

© The Canadian Payroll Association – Payroll Compliance Legislation 2-2

The Canada Revenue Agency

From this mission comes the CRA’s mandate to:

© The Canadian Payroll Association – Payroll Compliance Legislation 2-3

The Canada Revenue Agency's

 whether or not an individual's employment is pensionable under the Canada Pension

Canada Pension Plan

 surviving spouse pensions

© The Canadian Payroll Association – Payroll Compliance Legislation 2-4

© The Canadian Payroll Association – Payroll Compliance Legislation 2-5

© The Canadian Payroll Association – Payroll Compliance Legislation 2-6

An employer who remits withholdings or deductions late is subject to the following

 3% will be applied to remittances that are 1 to 3 days late

© The Canadian Payroll Association – Payroll Compliance Legislation 2-7

© The Canadian Payroll Association – Payroll Compliance Legislation 2-8

2. If an organization deducts $27,400 in Canada Pension Plan contributions from its

CANADA PENSION EMPLOYMENT

© The Canadian Payroll Association – Payroll Compliance Legislation 2-9

Employment and Social Development

To do this, the department:

 Canada Pension Plan and Old Age Security

ESDC is responsible for matters relating to:

© The Canadian Payroll Association – Payroll Compliance Legislation 2-10

The amount of CPP benefits is based on an individual’s CPP contributions. Employees

© The Canadian Payroll Association – Payroll Compliance Legislation 2-11

© The Canadian Payroll Association – Payroll Compliance Legislation 2-12

Social Insurance Number

© The Canadian Payroll Association – Payroll Compliance Legislation 2-13

Validating a Social Insurance Number

© The Canadian Payroll Association – Payroll Compliance Legislation 2-14

© The Canadian Payroll Association – Payroll Compliance Legislation 2-15

6. Please indicate which federal department or agency would be responsible in the

© The Canadian Payroll Association – Payroll Compliance Legislation 2-16

In Canada, providing statistics is a federal responsibility. As Canada’s central statistical

Statistics Canada is committed to protecting the confidentiality of all information entrusted to

Information is collected using the following data:

Information collected on the survey includes:

 number of employees (all employees, employees paid by the hour, salaried

© The Canadian Payroll Association – Payroll Compliance Legislation 2-17

© The Canadian Payroll Association – Payroll Compliance Legislation 2-18

© The Canadian Payroll Association – Payroll Compliance Legislation 2-19

The Ten Fair Information Principles

Principle 2. Identifying Purposes

© The Canadian Payroll Association – Payroll Compliance Legislation 2-20

Principle 4. Limiting Collection

Principle 5. Limiting Use, Disclosure, and Retention

Principle 9. Individual Access

Principle 10. Challenging Compliance

© The Canadian Payroll Association – Payroll Compliance Legislation 2-21

The Personal Information Protection and

PIPEDA has applied to federally-regulated organizations such as banks, telecommunications

The federal government may exempt organizations and/or activities in provinces/territories

© The Canadian Payroll Association – Payroll Compliance Legislation 2-22

Implied consent means the employee is considered to have consented indirectly. An

It is critical for those working in payroll to be aware of the requirements of privacy

© The Canadian Payroll Association – Payroll Compliance Legislation 2-23

Exceptions to Consent Requirement

_F The Personal Information Protection and Electronics Documents Act

_F All provinces/territories have provincial private sector privacy legislation.

_T Legislation provides certain government agencies (Canada Revenue Agency,

T4/T4A reporting _X__

Record of Employment reporting _X__