Northwest Territories payroll legislation FAQs (and answers!)

If your business is based in the Northwest Territories or you have employees who live and work there, you know that payroll legislative information for your region is rarely consolidated into one handy reference. Payworks is here to support Canadian businesses like yours – and today, that means providing a centralized breakdown of the legislative info you need to know now!

For a closer look at prescribed zones, WSCC requirements, and legislation surrounding the payroll tax, statutory holidays, minimum wage, overtime, and more in the Northwest Territories, read on…

Prescribed zone & TD1 forms

For the purposes of statutory deductions, Canadian businesses should be aware of prescribed zones. While other areas of the country have specific communities categorized as prescribed zones, all of the Northwest Territories (as well as the Yukon and Nunavut) is considered a “prescribed northern zone.” This is particularly relevant for employers to keep in mind as employees fill out their TD1 forms, which are used to determine the amount of federal and territorial tax to deduct from their pay.

“Employees who live in a prescribed zone during a continuous period of at least six months (that begins or ends in the tax year) may be entitled to claim a residency deduction when they file their income tax or benefit return,” reads the Government of Canada’s website. “Employees may claim a deduction for this on Form TD1. The deduction will reduce the remuneration on which you withhold income tax.”

To ensure you’re adhering to prescribed zone payroll legislation, make sure to take note of whether or not employment periods extend into the six-month period mentioned above. The employment period also can affect the TD1 with respect to the employee’s tax province/territory (known as province of employment).

For more information on the deduction for living in a prescribed zone, visit: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4001/employers-guide-payroll-deductions-remittances.html#P787_82252.

Workers’ Safety and Compensation Commission (WSCC)

The Workers’ Safety and Compensation Commission (WSCC) is the entity that provides no-fault insurance to employers and cares for injured workers in both the Northwest Territories and Nunavut. This means that all businesses operating within either territory must report their payroll to WSCC.

The rate these businesses pay to the WSCC depends on two factors: their payroll and industry subclass. This is why it’s important for businesses to keep accurate records – especially when it comes to remuneration paid to contractors, subcontractors, and self-employed operators. Good news: a third-party payroll provider like Payworks can help simplify this process!

Payworks pro tip: Through Payworks' Payroll application, not only can you keep accurate records of all things payroll; you can also easily calculate WSCC amounts each pay period – all of which ensures compliance.

For more information on WSCC in the Northwest Territories, visit: https://wscc.nt.ca/.

Payroll tax

There are five provinces that impose a “payroll tax,” where businesses operating in those jurisdictions are legislatively required to pay tax on the total remuneration paid to their employees. The Northwest Territories also has a payroll tax; however, it differs from those other jurisdictions in that it’s imposed on the employees under the Payroll Tax Act.

“The Payroll Tax applies to all employees who work, perform duties, or provide services in the NWT, regardless of the province or territory of residence of the employee or employer or the employee’s age,” reads the Northwest Territories government website.

What employers need to know about the Northwest Territories Payroll Tax:

• Businesses should register with the Treasury Division of the Northwest Territories Department of Finance so they can remit the payroll tax they collect from their employees. Note: businesses are required to register within 21 days after they pay their first remuneration to an employee.
• Deductions for the payroll tax include many income types such as salary/wages, bonuses, gratuities, commissions, stock options, vacation travel assistance, retiring allowances, and more.
• There are different reporting requirements based on your business’ total remuneration for the calendar year, and the reporting requirement dictates your remittance schedule.
• Penalties can be levied if a business fails to collect and/or remit the payroll tax.
• Businesses are required to keep all records and supporting documents for at least six years.

To learn more about employer requirements when it comes to the payroll tax in the Northwest Territories, visit: https://www.fin.gov.nt.ca/en/services/licences-taxes-et-droits/payroll-tax-employers.

Employment standards records & ROEs

There are many types of records businesses need to maintain – all of which come with federal and/or provincial/territorial legislative standards for the length of time for which they must be kept. Examples vary from income tax records and payroll records to occupational health and safety and employee standards records.

It’s important for businesses to be aware of what records they’re required to maintain and for how long. In the Northwest Territories, businesses are required to keep employment standards records for two years – including pay stub details and information about employees’ protected leaves – while in other jurisdictions that same requirement can span between three to six years.

For more information on record keeping in the Northwest Territories, visit:

• Employment Standards: https://www.ece.gov.nt.ca/en/employment-standards.
• Occupational Health and Safety: https://wscc.nt.ca/sites/default/files/documents/OHS-Plans-Records-Logs%20Eng.pdf.
• The Government website for Fuel Tax, Payroll Tax, Tabacco Tax, and more: https://www.fin.gov.nt.ca/en/services/licences-taxes-and-fees.

Speaking of employment records, our in-house experts often receive questions surrounding Records of Employment (ROEs). An ROE is a mandatory document within Service Canada’s Employment Insurance (EI) program. Employers must complete and submit this form (in digital or paper format) for each departing employee, regardless of whether the employee intends to apply for EI benefits or not. ROEs include an employee’s work history at a company, as well as their insurable earnings and insurable hours. The deadline by which businesses need to submit an ROE is dependent on whether they’ll be submitting an electronic or paper copy.

Payworks pro tip: Using Payworks’ Payroll solution, you can create new ROEs, edit drafts, complete submissions, or review and amend rejected ROEs. By selecting an employee (or group of employees), our system automatically populates the employee information, insurable earnings and insurable hours, and all other necessary data. All you have to do is select the appropriate ROE "Reason for Issuing" code (Block 16) and confirm that no information is missing or needs to be updated. Our Payroll system also has a built in compliance check for ROEs, which detects errors that would cause rejection by Service Canada. We even submit ROEs on our client’s behalf once they’re ready to go!

For more information on ROE requirements, visit: https://blog.payworks.ca/the-abcs-of-roes-what-when-why-and-how-we-can-help.

Minimum wage

Federal and provincial/territorial legislation determines the lowest rate at which an employer can legally pay its employees – otherwise known as minimum wage. This rate isn’t impacted by whether the employee has full-time, part-time, or casual employment status, or if they’re paid by salary, commission, or a flat piece or hourly rate.

When it comes to minimum wage in the Northwest Territories, businesses should mark their calendars now… because the general rate is adjusted annually on September 1!

Payworks pro tip: When changes to minimum wage occur, Payworks’ clients receive an in-app warning (on the Reports and Violations report) before finalizing their payroll if there are any staff being paid below the minimum rate. Our Payroll solution also allows for mass pay adjustments, which is particularly handy when a business has multiple employees impacted by a change to the minimum wage rate.

For more information on minimum wage in the Northwest Territories, visit: https://www.ece.gov.nt.ca/en/minimum-wage. 

Overtime

Like minimum wage, the parameters to qualify for overtime and the overtime rates in Canada vary by province and territory. A worker qualifies for overtime when they exceed a legislative threshold for hours worked in a specific period. In the Northwest Territories, the standard hours of work is eight hours per day and 40 hours per week.

Payworks pro tip: For an overview of overtime and the steps to consider in making a strategic plan that clearly defines overtime, visit: https://blog.payworks.ca/overview-of-overtime-employers-should-have-a-strategic-plan-that-clearly-defines-overtime.

Here’s what employers in the Northwest Territories need to know about overtime:

• The overtime rate is a minimum of 1.5 times a worker’s regular rate of pay.
• An Overtime Averaging Order can be applied for (by the employer) if employees work irregular hours; however, this has its own associated legislative requirements (see Sections 7-10 of the Employment Standards Act).
• Banking overtime is permitted; however, this also has its own associated legislative requirements (see Section 12 of the Employment Standards Act).

Employers in the Northwest Territories should also be aware of the parameters surrounding hours of work because employees are not permitted to work more than 10 hours per day or 60 hours per week. However, similar to the Overtime Averaging Order mentioned above, employers can apply for an Extended Hours Order. If granted, employers are still obligated to pay overtime to their workers who qualify.

Payworks pro tip: Using Payworks’ Time Management solution, break and shift rules can be set up to ensure the correct overtime calculations are being applied. Organizations can also leverage our Human Resources solution for better document management: housing, distributing, and getting employees to Read and Acknowledge or e-sign important Company Documents and policies such as Overtime Averaging Orders or Extended Hours Orders.

For more information on overtime and hours of work in the Northwest Territories, visit: https://www.ece.gov.nt.ca/en/services/employment-standards/frequently-asked-questions.

Statutory holidays

Across the country, it’s common that both the statutory holidays themselves and the regulations under which employees qualify for general holiday pay differ between regions. In the Northwest Territories, there are 11 statutory holidays, including:

1. New Year’s Day.
2. Good Friday.
3. Victoria Day.
4. National Indigenous Peoples Day.
5. Canada Day.
6. The first Monday in August.
7. Labour Day.
8. National Day for Truth and Reconciliation.
9. Thanksgiving Day.
10. Remembrance Day.
11. Christmas Day.

Businesses operating in the Northwest Territories should know that eligible employees are entitled to receive the day off with general holiday pay for statutory holidays. If an eligible employee works on a statutory holiday, they’re entitled to receive either another day off with pay or general holiday pay plus overtime for hours worked.

For more information on statutory holidays in the territory, visit: https://www.justice.gov.nt.ca/en/files/legislation/employment-standards/employment-standards.a.pdf.

One of the (many) benefits of choosing Payworks as your organization’s third-party payroll provider is that we’re payroll experts… so you don’t have to be! We help our clients with the industry’s best service through unlimited, dedicated and National Payroll Institute-trained support. We also offer insight into payroll legislation and changes to all Canadian businesses looking to stay informed on payroll legislation and changes, which is why our Payroll Guide is free for all to download – no strings attached: https://www.payworks.ca/landing-pages/campaigns/payroll-guide.