Navigating British Columbia payroll legislation? Let us help you!

If you’re a British Columbia (BC)-based business, or an organization with employees in BC, you likely have questions about a few BC-specific payroll legislative components. We get it! Legislative requirements differ between provinces and territories in Canada, and they can – and do – change often.

If you’re looking for straightforward and centralized info on some of BC’s payroll legislation in order to stay compliant, read on… because we’ve got you covered.

BC Employer Health Tax (EHT)

BC is one of the five provinces in Canada with a “payroll tax”; the others include Manitoba, Québec, Newfoundland and Ontario. In BC, it’s called EHT and according to the province’s website is “an annual tax on an employer’s B.C. remuneration paid to employees and former employees in a calendar year beginning on January 1, 2019… The employer health tax is separate and distinct from remitting source deductions or MSP premiums.” Much like in other provinces with this tax, the purpose of BC’s EHT is to assist the government with revenue to fund health care in the province. While there are some similarities between provincial EHTs, the parameters of the legislation between those jurisdictions is different.

Here’s what BC-based businesses or businesses with employees in BC need to know:

• EHT does not apply to businesses that have under $1 million in BC payroll remuneration – those businesses are exempt from EHT.
• The rate at which EHT is calculated for businesses that have between $1 million and $1.5 million in BC payroll remuneration is 5.85%, and those businesses receive an EHT exemption on the first $1 million of their payroll. As an example, if a business has $1.3 million in BC payroll remuneration, they would receive a $1 million exemption and would pay 5.85% on $300,000.
• The rate at which EHT is calculated for businesses with greater than $1.5 million in BC payroll remuneration is 1.95%, and those businesses do not receive the $1 million exemption outlined above.
• EHT in BC applies differently to charitable or non-profit employers.

Businesses that are legislatively required to contribute EHT can use BC’s EHT online calculator to figure out the amount owed, or they can make this process even simpler by using a solution like Payworks Payroll application. Not only will EHT calculations be done for you; we’ll actually handle the remittances on your behalf! Third-party solutions like Payworks can also generate annual EHT reports, really streamlining the process for our clients.

Payworks pro tip – take a look at your year-end reports. If your BC payroll remuneration is close to reaching $1 million, you can register for an EHT account. When your business becomes eligible to contribute to EHT, you’ll already be set up! If any assistance is required, your dedicated Client Service Representative (CSR) can walk you through the process.

Payment of final wages

When there’s a termination of employment, specific legislation needs to be followed surrounding the payment of outstanding wages in BC. Final wages “is everything the employer owes an employee. It may include regular wages, overtime, statutory holiday pay, compensation for length of service and vacation pay,” according to the province’s Employment Standards.

Here’s what BC-based businesses or businesses with employees in BC need to know about the payment of final wages:

• If an employer terminates employment, final pay – all wages owing – are to be paid to the departing employee within 48 hours (ie: two calendar days).
• If an employee terminates employment, final pay – all wages owing – are to be paid to the departing employee within six calendar days.

In the instance where the employer terminates employment, the legislative requirements can pose a unique set of challenges for payroll professionals to navigate in staying compliant:

• A quick turnaround on calculations must be performed, which can include compensation components additional to the employee’s regular remuneration (the aforementioned pay elements, pay in lieu, severance, and more).
• Payroll practitioners might have to set up special payroll runs to adhere to the legislative requirements.

Payworks pro tip – BC employers can run an employee’s final pay through the Payworks Payroll application. Clients can create a departed employee’s Record of Employment (ROE) using our ROE Manager that aids with compliance, which Payworks will submit to Service Canada on the business’ behalf. Payworks clients can also use our Payroll application to process and distribute a departed employee’s tax form at the end of the year, using tools like our Employee Self Service (ESS).

Minimum wage and overtime

Federal and provincial legislation determines that all employees are eligible to receive minimum wage. By definition, it’s the lowest rate at which an employer can legally pay its employees and is not dependent on whether the employee has full-time, part-time or casual employment, or if they’re paid salary, commission, or a flat, piece, or hourly rate. The minimum wage rate for employees varies by province and territory, and it’s the employer’s responsibility to ensure they’re adhering to the legislation in their own jurisdiction.

For employees working in the Province of BC, there are different minimum wage rates for, live-in camp leaders, live-in home support workers, and resident caretakers in addition to the general rate. Here’s what employers need to know about minimum wage in BC:

• The general minimum wage rate increased on June 1, 2023.
• There is a liquor servers’ minimum wage, and as of June 1, 2021 the rate has been the same as general minimum wage.
• There is a live-in camp leader’s minimum wage, which is a daily rate for each day or part day worked.
• There is a live-in home support worker’s minimum wage, which is a daily rate or part day worked.
• There is a resident caretaker’s minimum wage, which is a monthly wage based on the number of suites in the building. For more information, visit: https://www2.gov.bc.ca/gov/content/employment-business/employment-standards-advice/employment-standards/wages/minimum-wage.
• Some employees, like farm workers, are paid piece rates as opposed to minimum wage. For more information, visit: https://www2.gov.bc.ca/gov/content/employment-business/employment-standards-advice/employment-standards/hiring/farm-workers#wages.

Payworks pro tip – within the Payworks application, there are minimum wage warnings and pop-up reminders to help payroll professionals and business owners stay on top of changing legislation throughout the year.

An exception to minimum wage occurs when a worker exceeds their normally scheduled hours and qualifies for overtime rates. Like minimum wage, overtime rates in Canada vary by province and territory. In BC, overtime is paid at a different rate that’s dependent on the number of hours worked. For more information about overtime pay in BC, visit: https://www2.gov.bc.ca/gov/content/employment-business/employment-standards-advice/employment-standards/hours/overtime-pay.

When to pay employees in BC

Legislation across the country dictates that employees are to be compensated for the work they perform and that they are entitled to receive at least minimum wage for their hours worked. In BC, it’s also required for employees to be paid a minimum of twice per month.

Here’s what BC-based businesses or businesses with employees in BC need to know about timing around compensating their employees:

• Employees must be paid twice per month, and it’s legislatively required that pay periods cannot be longer than 16 days.
• Money earned, such as overtime and statutory holiday pay, must be paid within eight days after the end of the pay period.
• Employees’ annual vacation and wages in a time bank do not need to be paid within the pay period.
• Wages must be paid in Canadian currency by cash, cheque, bank draft, money order, or direct deposit into an employee’s bank account if it’s agreed to in writing or is part of a collective agreement.

Farm labour contractors’ wages must be paid directly into their bank account. According to our in-house payroll experts, this legislation is particularly tricky for certain industries, such as those with a lot of contract workers, sales and other occupations where flexible hours and/or commissions would make it more accurate and efficient to pay the employee on a monthly basis. But don’t stress – Payworks has a solution!

Payworks pro tip – one simple way to remain compliant under the circumstances outlined above is to set up a monthly payroll accompanied by a mid-month advance. Using the Payworks Payroll application, administrators have the capability to pay employees a set dollar amount as a mid-month advance. After the full scope of employee earnings for the month has been determined, the advance can be deducted from the monthly payroll run. Alternatively, within the Payworks application, administrators can set up a semi-monthly payment schedule. To learn more, Payworks clients can reach out to their dedicated CSR.

Statutory holidays and statutory holiday pay

Statutory holiday pay occurs when an employee qualifies to be compensated for working on or in lieu of a public holiday designated by the province or territory’s legislation. Across the country, it’s common that both the statutory holidays themselves and the regulations for which employees qualify for statutory holiday pay differs. In the Province of BC, there are eleven statutory holidays, which are:

• New Year’s Day
• Family Day
• Good Friday
• Victoria Day
• Canada Day
• BC Day
• Labour Day
• National Day for Truth and Reconciliation
• Thanksgiving Day
• Remembrance Day
• Christmas Day

As of September 2023, National Day for Truth and Reconciliation was established as a statutory holiday in BC, where provincial government offices and schools will be closed on September 30, or on a day in observance if the day falls on a non-working day. Employees under BC’s Employment Standards Act will be entitled to a paid day off.

The basic rules to qualify for statutory holiday pay in BC are:

• If the employee has been employed for 30 calendar days and has worked or earned wages on 15 of the 30 days before the statutory holiday.
• If an employee doesn’t qualify, they are to be paid regular pay for working on a statutory holiday.

For more information on qualifying for statutory holiday pay and employee exemptions, visit: https://www2.gov.bc.ca/gov/content/employment-business/employment-standards-advice/employment-standards/statutory-holidays/qualify-for-statutory-holiday-pay.

Here’s what BC-based businesses or businesses with employees in BC need to know about calculating statutory holiday pay for employees who qualify:

• Include all days worked during the 30 calendar days before the statutory holiday.
• Include all days worked, which is any day when wages were earned, including paid vacation days, other paid statutory holidays and paid sick days.
• Include all wages, but exclude overtime.
• Include all wages: regular wages, salary, commission, statutory holiday pay, paid vacation, and paid sick days.

The legislation regarding what’s classified as wages for statutory holiday pay is particularly pertinent for payroll professionals in BC, as there are unique pay elements included in the province’s legislation that are absent in other jurisdictions’ legislation.

For more information on extra pay to work statutory holidays or statutory holidays that occur on a day off, visit: https://www2.gov.bc.ca/gov/content/employment-business/employment-standards-advice/employment-standards/statutory-holidays/calculate-statutory-holiday-pay.

Payworks has you covered so you can stay informed on payroll legislation changes through our Payroll Guide: a comprehensive resource that contains both legislative and regulatory information to keep you up to date on the payroll details you need to pay employees accurately. To download your free copy, visit: https://www.payworks.ca/landing-pages/campaigns/payroll-guide.