Navigating Newfoundland & Labrador payroll legislation? We can help!

You likely have a great rhythm in place for paying your employees accurately and on time, but you’re also likely no stranger to extra time spent filtering through (and trying to understand) the legislation complications that pop up from time to time.

We’re all about helping Canadian businesses stay compliant, and if you’re a Newfoundland and Labrador (NL) employer, get ready to breathe a sigh of relief… because today we’ve got you covered with a centralized breakdown of payroll legislation relevant to your region.

For a closer look at payroll compliance in NL as it relates to minimum wage, overtime, public holidays and public holiday pay, HAPSET, and more, read on!

Minimum Wage

Federal and provincial legislation determines that all employees are eligible to receive minimum wage – the lowest rate an employer can legally pay its employees. The rate differs by province and territory, and in some jurisdictions there are even different minimum wage rates for certain industries (like employees who receive tips, as an example).

In NL, there’s one general minimum wage rate. According to the government’s website, rate increases are based off the Consumer Price Index for Canada and typically take effect on April 1; 2024 was no exception. For more information, visit: https://www.gov.nl.ca/releases/2024/ecc/0129n01/.

Overtime

When an employee exceeds the legislative threshold for hours worked within a certain timeframe, they qualify for overtime rates. It’s important for NL employers to be aware of this threshold because it differs from other jurisdictions in Canada. In NL, overtime pay is applicable when an employee exceeds 40 hours per week, and there are no daily overtime parameters.

However, there are exceptions to overtime in NL – for example, if there’s an arrangement for time off. Those employed in the farming and livestock industries or as a live-in housekeeper/babysitter are also exempt from receiving overtime.

Banking overtime

When an employee receives time off as an alternative to overtime pay, that’s referred to as banking overtime. Essentially, overtime hours are accumulated and at a later date used in exchange for time off at the regular rate of pay. Just like overtime rates, banking overtime legislation also differs by province and territory.

For employers and employees in NL, banking overtime is permissible as long as both parties have agreed to do so. There’s a designated rate at which overtime can be banked, which is 1.5 hours of paid time per one hour of overtime worked. It’s also important for employers to know that this banked time must be taken within three months of it being earned, unless there’s an agreed upon extension of up to 12 months.

For more information on overtime and baking overtime in NL, visit: https://www.gov.nl.ca/ecc/files/Publications_Labour_Relations_At_Work_Updates_October-2022.pdf.

Public holidays and public holiday pay

There are six public holidays in NL, any of which can be substituted with a different date of recognition if outlined in the workplace’s collective agreement and as long as the others are observed on their calendar date.

NL’s six public holidays are:

1. New Year’s Day
2. Good Friday
3. Memorial Day (Canada Day)
4. Labour Day
5. Remembrance Day
6. Christmas Day
   
   

Public holiday pay

For public holidays, eligible employees are entitled to receive the day off with an average day’s pay.

If any NL employee works on one of the six public holidays, they’re entitled to receive compensation at twice their regular rate of pay for the hours worked on that day or an additional day off with pay.

Calculating public holiday pay for shift work or those with varying hours differs in NL in comparison to other jurisdictions in Canada. For eligible NL employees, their hourly rate is multiplied by their average of hours worked per day in the three weeks prior to the public holiday.

Payworks pro tip: By using our Time Management solution’s Stat Pay Calculator, public holiday pay can be calculated in under five clicks. The number of stat holiday days are entered for the pay period and from there, the statutory holiday pay is calculated on your behalf for each employee and based on your businesses’ jurisdictional legislation. These tallies can be reviewed and then applied to payroll, with the Stat Pay Calculator values visible on the Pay Grid. Another intuitive feature is that our Time Management solution will apply employee eligibility rules surrounding public holiday pay to the Stat Pay Calculator.

For more information on public holiday pay in NL, visit: https://www.gov.nl.ca/ecc/files/Publications_Labour_Relations_At_Work_Updates_October-2022.pdf.

NL provincial government paid holidays

In NL, there are 12 paid holidays for provincial government employees. The list of paid holidays includes St. Patrick’s Day and St. George’s Day, among others. For more information, visit: https://www.gov.nl.ca/exec/tbs/2024-paid-holidays-2/.

National Day for Truth and Reconciliation

National Day for Truth and Reconciliation (September 30) is not one of the six paid public holidays in NL. It’s also not one of the 12 paid holidays for provincial government employees, although consultations are ongoing in that respect as noted on the government’s website.

For NL employers, it’s important to know that National Day for Truth and Reconciliation is a statutory holiday for the federal government and federally-regulated workplaces. This means this statutory holiday is observed by banks, port services such as marine shipping, and fisheries, among others. For a list of federally regulated workplaces, visit: https://www.canada.ca/en/services/jobs/workplace/federally-regulated-industries.html.

Health and Post Secondary Education Tax (HAPSET)

In the other four jurisdictions in Canada with similar taxes – including British Columbia, Québec, Manitoba, and Ontario – this type of tax is called the Employer Health Tax (EHT). In NL, it’s known as the HAPSET and is often referred to as the “Payroll Tax.” This tax is “payable by the employer with respect to remuneration paid or credited to employees who report for work in Newfoundland,” reads the government website.

Here’s what NL employers need to know about the HAPSET:

• HAPSET does not apply to businesses with NL payroll remuneration under $2 million are exempt from the HAPST

The exemption threshold for HAPSET increased from $1.3 million to $2 million as of January 1, 2023.

• The rate at which HAPSET is calculated for businesses with $2 million or more in NL payroll remuneration is 2%. Those businesses also receive the HAPSET exemption for the first $2 million of their payroll.

For example, if a business has $2.50 million in NL payroll remuneration, it would receive a $2 million exemption and would pay 2% on $500,000.

• For the purposes of allocating the exemption, an allocation agreement is required of employers associated with other corporations (including those in partnership with other employers who pay remuneration).

Payworks pro tip: Look at your year-end reports or the Business Numbers page within the Payworks application. If your NL payroll remuneration is close to reaching $2 million, ensuring your business is registered with the province’s electronic tax service will ensure you’re already set up to pay the HAPSET when you reach the threshold. Payworks can also collect and remit the HAPSET on your business’ behalf. If you need assistance, your dedicated Client Service Representative (CSR) would be happy to walk you through the process.

For more information, visit: https://www.gov.nl.ca/fin/files/tax-programs-incentives-business-taxefile-hapset-return-description.pdf.

Province of employment (POE)

POE is particularly relevant to employers in NL because of the province’s geographical location and proximity to other jurisdictions in Canada. When it comes to payroll compliance, there’s a specific distinction to be made between POE and province of residence – recognizing that they can actually differ in some instances! This is significant because it ensures businesses are deducting and remitting the correct statutory deductions (and that employees are being paid correctly, too!).

The employee’s POE is the basis for determining their Canadian Pension Plan (CPP), Québec Pension Plan (QPP), Employment Insurance (EI), and/or other income tax deductions. Essentially, the employee’s POE affects which federal and provincial or territorial TD1 form is used and determines the appropriate payroll deductions. The POE is also reported to the CRA and Revenu Québec via an employee’s tax forms.

There have also been some important changes from the Canada Revenue Agency (CRA) and Revenu Québec regarding POE as it pertains to remote work agreements. For more information, visit: https://blog.payworks.ca/province-of-employment-changes-from-the-cra-and-revenu-qu%C3%A9bec.

Employee leaves

In NL there are various leaves for which eligible employees qualify under the province’s labour standards, including sick/family responsibility, pregnancy and parental, bereavement, and compassionate care leaves, among others.

For more information on leaves and labour standards in NL, visit: https://www.gov.nl.ca/ecc/files/Publications_Labour_Relations_At_Work_Updates_October-2022.pdf.

At Payworks, we’re all about helping Canadian businesses stay complaint when it comes to paying their staff accurately and on time. Simply put, we’re the payroll experts so you don’t have to be! To stay informed on payroll legislation and changes, download a free copy of our Payroll Guide: https://www.payworks.ca/landing-pages/campaigns/payroll-guide.