Questions about Québec payroll legislation? We’ve got you covered!

If you’re a Québec-based business, or an organization with employees in Québec, you likely have questions about a few provincially-specific payroll legislative components. We get it! Payroll isn’t the only task on your to-do list even under the most straightforward circumstances, and when an irregular scenario pops up it can lead to extra time spent sifting through and trying to understand the legislation to ensure it’s applied exactly right.

Legislative requirements differ between provinces and territories in Canada, but centralized info can help Canadian businesses stay compliant. Today, we’re here to answer some of the questions most commonly asked of our own payroll pros, including minimum wage, overtime, public holidays (and public holiday pay), Québec Pension Plan (QPP), Québec Parental Insurance Plan (QPIP), and more. Plus, we dive into some recent legislative changes for 2024 that you won’t want to miss.

Minimum wage

Federal and provincial legislation dictates that all employees are entitled to receive minimum wage, which is the lowest rate an employer can legally pay its employees, but the minimum wage itself differs across the country. In Québec, there are different minimum wage rates depending on the type of work an employee does, such as for those receiving tips.

Here’s what employers need to know about minimum wage in Québec:

• Most employees receive the general minimum wage rate, which includes those receiving commission-based wages and a piece work wage.
• Employees receiving tips have a different minimum wage rate to the general minimum wage.

For more information about wages in Québec, including minimum wage, visit: https://www.cnesst.gouv.qc.ca/en/working-conditions/wage-and-pay/wages.

Overtime

Typically, when an employee works additional hours beyond their standard schedule, they qualify to be paid overtime. However, the threshold of hours worked to be eligible for overtime differs between provinces and territories. In Québec, overtime is based on a 40-hour workweek, meaning that an employee has to work in excess of 40 hours to qualify for overtime rates (for which the rate is 1.5 times the rate they’re paid for regular hours).

Here’s what employers need to know about overtime calculations in Québec:

• Night or evening shift premiums added to an employee’s hourly wage are not included in overtime calculations.
• Statutory general holidays are considered days worked when calculating overtime; however, this doesn’t apply if the employee doesn’t normally work on the day on which the holiday falls.
• Annual vacation is considered days worked when calculating overtime.

In Québec, it’s also permissible for an employee to request that their overtime be banked or for banking overtime to be a part of a collective agreement. In this scenario, employees are to receive 1.5 hours of banked time for each hour of overtime worked, which would be paid out at a later date at the regular rate of pay.

For more information on overtime and overtime calculations in Québec, visit: https://www.cnesst.gouv.qc.ca/en/working-conditions/wage-and-pay/wages/overtime.

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.

Paid statutory holidays

In Québec, there are eight paid statutory holidays where eligible employees are to receive the day off and an indemnity. Employers are unable to choose a different day to observe the holiday.

Québec’s eight paid statutory holidays are:

1. New Year’s Day
2. Good Friday or Easter Monday
3. National Patriot’s Day
4. Saint-Jean-Baptiste Day (or Québec’s National Holiday)
5. Canada Day
6. Labour Day
7. Thanksgiving
8. Christmas Day

There are two noteworthy provisions of which employers should be aware for the paid statutory holidays in Québec. The first is that employers have the option to observe either Good Friday or Easter Monday. The second is the special provision for Québec’s National Holiday. Employees are eligible to receive the day off and an indemnity if they are employed on the date of Québec’s National Holiday. In comparison, all other paid statutory holidays in the province, employees are not eligible to receive the day off and an indemnity if they are absent from work the day before or after the statutory holiday without a valid reason or without the employer’s authorization.

Day After New Year’s Day

Day After New Year’s Day is not one of the eight paid statutory holidays in Québec; however, it’s considered a banking holiday in the province, meaning that banks and government offices are typically closed on this day or a day in lieu if it falls on a non-working day. Québec businesses in particular should be aware of this day and how it could impact their payroll processing and payment dates, and adjust accordingly if their banking institution is affected by this holiday.

For more information on statutory holidays in Québec, visit: https://www.cnesst.gouv.qc.ca/en/working-conditions/leave/statutory-holidays/list-paid-statutory-holidays.

New! Changes to the Québec Pension Plan (QPP)

The Québec Pension Plan (QPP) is unique to the Province of Québec. Eligible employees, employers, and self-employed persons in Québec contribute to the QPP retirement pension, whereas individuals in all other provinces and territories contribute to the Canadian Pension Plan (CPP). Up until 2024, eligibility to contribute to QPP included employees ages 18 and older, and extended from there onwards until that employee’s retirement or death. Now there are additional age eligibility requirements for QPP, including that Québec employees stop QPP contributions the year they turn 73 and employees aged 65 or older can choose to opt out of QPP contributions.

For 2024, there’s also been the introduction of a second earnings ceiling for QPP. In previous years, the government had set a maximum QPP contribution (or earnings ceiling) for the calendar year, referred to as the Year’s Maximum Pensionable Earnings (YMPE). Going forward, there will be two earnings ceilings as opposed to just one: the YMPE and the Year’s Additional Maximum Pensionable Earnings (YAMPE). Québec employees who have an income that exceeds the first earnings ceiling will then contribute an additional percentage until they’ve surpassed the second earnings ceiling. To have a more in-depth look at QPP’s second earnings ceiling legislation, visit: https://blog.payworks.ca/heads-up-important-cpp-qpp-legislation-changes-effective-january-2024.

It’s important for Québec employers to be aware of both of these changes to QPP because it’s the responsibility of the employer to deduct and remit all QPP contributions correctly. As an example, QPP overages could occur if the new age eligibility parameters are not applied, or QPP shortages could occur if the second earnings ceiling is not applied. Québec employers can also expect that year-end reporting requirements for 2024 will see additional boxes to report the second earnings ceiling for QPP on employee tax forms.

For more information on QPP, visit: https://www.rrq.gouv.qc.ca/en/programmes/regime_rentes/Pages/regime_rentes.aspx.

Québec Parental Insurance Plan (QPIP) and Employment Insurance (EI)

Another unique element to payroll legislation in Québec in comparison to other provinces and territories in Canada is the Québec Parental Insurance Plan (QPIP). QPIP was first introduced in 2006 and is an income replacement program applicable to Québec employees. Generally, it applies to any person taking maternity, paternity, parental, or adoption leave who meets the eligibility criteria.

Similar to QPP (mentioned above), there are QPIP premiums for employees, self-employed persons, and employers, which are the responsibility of the employer to deduct and remit to Revenu Québec. As such, there’s legislation to adhere to regarding the annual maximum employee/employer contribution, employee/employer contribution rates, and annual maximum insurable earnings.

For more information on QPIP, visit: https://www.rqap.gouv.qc.ca/en/about-the-plan/general-information/premiums-and-maximum-insurable-earnings.

It’s also important for Québec employers to know that QPIP doesn’t negate Employment Insurance (EI) deductions. In fact, the EI legislation regarding the annual maximum employee/employer contribution, employee/employer contribution rates, and annual maximum insurable earnings differs for Québec employees in comparison to other provinces and territories in Canada.

For more information about EI in Québec, visit: https://www.revenuquebec.ca/en/businesses/source-deductions-and-employer-contributions/special-cases-source-deductions-and-employer-contributions-in-certain-situations/employment-insurance-benefits

CNESST

CNESST is a mandatory remittance for Québec employers. A third-party payroll provider like Payworks can help simplify this process.

Payworks pro tip: By using Payworks’ Payroll application, CNESST premiums are calculated and then remitted on our client’s behalf to Revenu Québec.

Québec employers should also be aware of the many labour standards applicable under CNESST. While not all-encompassing, we’ve highlighted a few below alongside paid and unpaid leaves.

Wage disparity

Legislation dictates that employers cannot offer an employee a lower hourly wage compared to another if they perform the same tasks and that decision is based specifically on whether or not the employee is full time, part time, on call, permanent, or casual. Employers can pay employees who perform the same tasks a different wage if that distinction is because of either seniority or experience.

Rest periods

Each week, employers are required to allot employees a rest period of 32 consecutive hours at a minimum. There’s an exception for farm workers – if mutually agreed upon, the rest period can be deferred to the following week.

Leaves – paid and unpaid

Under CNESST, family leaves include adoption, maternity, paternity, special leave during pregnancy, family or parent obligations, weddings or civil unions, death and funeral, suicide, and disappearance of a child (a minor).

There are also leaves for specific situations under CNESST, such as leaves for termination of pregnancy, for reservists, organ or tissue donation, victims of domestic or sexual violence, and victims of crime.

Employees are also entitled to two paid days off for non-work-related accidents or illnesses per calendar year if they’ve worked continuously for their employer for three or more months.

For all types of leaves listed above, it varies whether these leaves are paid or unpaid.

For more information on the type of leaves under CNESST, visit: https://www.cnesst.gouv.qc.ca/en/working-conditions/leave.

New! Changes to the personal income tax threshold

Québec’s personal income tax table saw a single percentage-point decrease in the first two brackets on July 1, 2023. There was also a single percentage-point decrease in tax rates for bonuses, retroactive payments, and similar lump-sum payments for lower wage earnings (under $17,183). For more information on this legislative change, visit: https://blog.payworks.ca/dig-into-the-qu%C3%A9bec-budget-plan-whats-in-place-whats-coming-soon.

Payworks pro tip: The Payworks Payroll application is set up to automatically make the basic income deductions for each employee every pay run. This means that the new rates mentioned above were automatically applied within our Payroll solution, saving our clients time and the stress of potential retroactive corrections during year-end. If additional deductions are requested, admins can enter those values into the system and the calculations will adjust going forward. To ensure that deduction amounts are correct, our in-house payroll experts recommend that employers have any employees who claim anything other than the basic deductions redo their TD1 forms every year to ensure that deduction amounts are correct.

Bonus – Payworks also remits the federal and provincial tax deducted on our clients’ behalves. For Québec employers, that means federal tax and EI are remitted to the CRA, and provincial tax, QPP, QPIP, QHSF, and CNESST are remitted to Revenu Québec.

New! Changes to determining province of employment

Another change that came into effect on January 1, 2024 and affects Québec employers surrounds province of employment reporting requirements. A new administrative policy aligns the requirements of Revenu Québec with the Canada Revenue Agency (CRA), and these changes are particularly centred around employees who aren’t required to report to a physical location (the employer’s establishment) for work.

For more information about this change, visit: https://www.revenuquebec.ca/en/press-room/tax-news/details/2023-11-14/administrative-policy-on-determining-the-province-of-employment-for-quebec-source-deductions-and-employer-contributions/.

Québec's Health Services Fund (HSF)

In the other four jurisdictions in Canada with similar payroll taxes – including British Columbia, Newfoundland, Ontario, and Manitoba – this type of tax is called the Employer Health Tax (EHT) or the HE Levy. In Québec, it’s known as the Health Services Fund (HSF) and “the purpose of the contribution to the health services fund is to ensure that everyone helps finance Québec’s health services,” reads Revenu Québec’s website.

Here’s what Québec businesses need to know about HSF:

• HSF is an employer paid contribution, which is remitted to Revenu Québec.
• The amount paid is dependent on the business’ total remuneration for the year and what type of industry within which the business operates.
• The rate at which HSF is calculated is based on the business’ total payroll for the year, of which there are three thresholds.

For more information on HSF calculations, visit: https://www.revenuquebec.ca/en/businesses/source-deductions-and-employer-contributions/calculating-source-deductions-and-employer-contributions/employer-contributions-to-the-health-services-fund/total-payroll-threshold-and-health-services-fund-contribution-rate/.

Revenu Québec

When looking at the unique elements of payroll in the Province of Québec in comparison to the rest of the country, we’d be remiss not to touch upon Revenu Québec, which is the governing body that collects income taxes (among other mandates). Québec employers are required to remit to Revenu Québec as well as the Canada Revenue Agency (CRA). Federal tax and EI are to be remitted to the CRA, while provincial tax, QPP, QPIP, HSF, CNESST, and CNT are to be remitted to Revenu Québec.

For more information on remitting to Revenu Québec, visit: https://www.revenuquebec.ca/en/businesses/source-deductions-and-employer-contributions/remitting-source-deductions-and-employer-contributions/.

At Payworks, we want to help Canadian businesses stay informed on payroll legislation and changes so they can continue to pay their staff on time and with confidence. That’s why our Payroll Guide is free for all to download: https://www.payworks.ca/landing-pages/campaigns/payroll-guide.