What employers need to know about Manitoba payroll legislation – including important changes for 2024!

Paying employees accurately sounds like it should be a straightforward task… but complex legislation can make it trickier to navigate than expected, especially if you don’t currently have an efficient way to understand and apply these requirements.

If you’re a Manitoba-based business or an organization with employees in Manitoba, get ready to breathe a sigh of relief – we’ve got you covered with a centralized breakdown of legislation relevant to your region. Including recent changes to the Manitoba Health and Post-Secondary Education Tax Levy (HE Levy) exemption for 2024 (more on that below!). For a closer look at compliance in Manitoba, read on.

When to pay employees in Manitoba

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 Manitoba, it’s also required for employees to be paid a minimum of twice per month. Payment also has to occur within 10 working days of the pay period end date.

Payworks pro tip: One simple way to remain compliant under the legislation outlined above is to set up a biweekly or semi-monthly payroll schedule.

According to our in-house payroll experts, these requirements can be particularly tricky for certain industries, such as those with a lot of contract workers, salespeople, or other occupations where flexible hours and/or commissions would make it more accurate and efficient to pay the employee on a monthly basis. With that in mind, one simple way to remain compliant is to set up a monthly payroll accompanied by a mid-month advance. Using our Payroll application, administrators have the capability to pay employees a set dollar amount as a mid-month advance and, after the full scope of employee earnings for the month have been determined, the advance can be deducted from the monthly payroll run.

Changes to bereavement leave legislation

Manitoba’s Employment Standards Act (ESA) outlines various types of leaves – like maternity, parental, critical illness, compassionate care leave and many more.

It’s important for Manitoba businesses to be aware that the legislation for bereavement leave in the province changed in May 2023. Bereavement leave includes:

• Employee eligibility for up to five (previously three) days of unpaid leave for the death of a family member.
• Newly added eligibility for unpaid leave when an employee or their partner (spouse/common-law) experiences the loss of a pregnancy.

For more information on employment leaves in Manitoba, visit: https://www.gov.mb.ca/labour/standards/category,leaves,factsheet.html.

Notice of termination

The period of time prior to ending employment that either an employer or an employee is legislatively required to provide is known as notice of termination. Typically, the length of the notice is determined by how long the employee has been employed by that employer.

What’s unique about Manitoba’s legislative requirements is that, if the employer is the one giving notice and the employee has worked at least 30 days, a minimum of one week of notice is required. It’s also important for Manitoba employers or Manitoba-based businesses to understand that they can allow their employee to work out the notice period, choose to pay wages in lieu, or elect for a combination of the two.

Overtime and vacation pay

When a worker exceeds the legislative threshold for hours worked within a certain timeframe, they qualify for overtime rates. Like minimum wage, the rate at which overtime is paid varies by province and territory across Canada. In Manitoba, the overtime rate is 1.5 times the regular hourly wage for each half hour or hour worked. Employees qualify to receive overtime when they’ve worked over eight hours per day or 40 hours per week.

What Manitoba businesses or Manitoba employers need to know about overtime:

• When calculating overtime, hours worked on a general holiday are included.
• Paid vacation or sick days are not legislatively required to be included when calculating overtime hours.
• There are exceptions to overtime legislation, including within the construction industry (see the section below) and workplaces with collective or averaging agreements in place.

Looking for more information about banking overtime? Visit: https://blog.payworks.ca/the-ins-and-outs-of-banking-overtime-in-canada. Spoiler alert: employees in Manitoba can arrange to bank overtime and take time off later.

What Manitoba businesses or Manitoba employers need to know about vacation pay:

• Vacation pay is calculated on gross earnings, including salary, hourly wage, commissions, and non-discretionary bonuses (essentially, any wages paid as compensation for regular hours worked).
• For the first four years of employment, the vacation pay rate is 4%, which is the equivalent of two weeks’ vacation. For years of employment five years or longer with the same employer, the vacation pay rate is 6%, which is the equivalent of three weeks’ vacation.

For more information about vacation pay, visit: https://www.gov.mb.ca/labour/standards/doc,vacations,factsheet.html.

Special circumstances within the construction industry

Legislative exceptions can add an extra layer of complication to paying employees accurately (and also in ensuring compliance). In Manitoba, there are a few legislative components for which the construction industry has different requirements, ranging from terminations and general holidays to minimum wage.

Our in-house payroll experts say that, of all the exceptions for the construction industry, these are the most pertinent for Manitoba businesses or Manitoba employers to know:

• There are various minimum wages within the construction industry, and the minimum rate of pay is dependent on the employee’s job classification. These wage rates are determined and listed in the Construction Industry Wages Act.
• Referring to the “When to pay employees in Manitoba” section above, there’s an exception to that legislation within the construction industry. Those working in construction are to be paid within five calendar days of the pay period ending date, as opposed to the 10 calendar days as stated above.
• We’ll talk more about general holiday pay (and general holidays) in the next section; however, for individuals in the construction industry, it differs. They earn 4% general holiday pay each pay period on their regular earnings and vacation pay (but not on overtime earnings). The general holiday pay that’s been earned can be paid to the employee in full at the end of the year or each pay period. And when construction employees work on a general holiday, the overtime wage rate is applied.
• Referring to the “Notice of termination” section above, those requirements differ in the construction industry as well. There’s no notice of termination required, regardless of whether it’s the employer or employee that ends employment and regardless of the number of years worked.

For more information on payroll legislation within the construction industry in Manitoba, visit: https://www.gov.mb.ca/labour/standards/doc,construction,factsheet.html.

General holidays

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

• New Year’s Day
• Louis Riel Day
• Good Friday
• Victoria Day
• Canada Day
• Labour Day
• Orange Shirt Day (National Day for Truth and Reconciliation) 
• Thanksgiving Day
• Christmas Day

What Manitoba employers need to know about paying employees for general holidays

In Manitoba, a business can either close on a general holiday (with their employees receiving the day off with pay), or remain open with the employees working and receiving general holiday pay. Referencing the “Special circumstances within the construction industry” section above, there are different general holiday parameters for general holiday wages in the construction industry.

In Manitoba, Easter Sunday, Terry Fox Day, Remembrance Day, and Boxing Day are not general holidays. Typically this means that employees don’t receive general holiday pay if they don’t work on these days (Remembrance Day being – you guessed it –an exception).

What Manitoba employers need to know about Remembrance Day

There are restrictions for operating and paying staff on Remembrance Day, despite it not being a general holiday.

Manitoba has separate legislation for Remembrance Day, called the Remembrance Day Act. This legislation prohibits most industries from operating on this day, and restricts most retail businesses from operating between 9am-1pm.

Aspects of business operations on Remembrance Day that are at the employer’s discretion are:

• Whether or not to pay employees who don’t work on Remembrance Day.
• Whether or not employees receive a day off in lieu if November 11 falls on a day when the employee wouldn’t normally work, like a Saturday or Sunday.

If November 11 falls on a Sunday, Manitoba businesses should be aware that they are to adhere to both the Remembrance Day Act legislation and the local municipal by-laws, such as if the municipality has restricted retail hours on certain days of the week.

For more information on Remembrance Day legislation in Manitoba, visit: https://www.gov.mb.ca/labour/standards/doc,remembrance-day,factsheet.html.

Manitoba Health and Post-Secondary Education Tax Levy (HE Levy)

In the other four jurisdictions in Canada with similar taxes - including British Columbia, Québec, Newfoundland, and Ontario – this type of tax is called the Employer Health Tax (EHT). In Manitoba, it’s known as the HE Levy and is often referred to as “the Manitoba payroll tax”, “the payroll tax” or “the health and education tax”. In Manitoba, the HE Levy is “a tax imposed on remuneration that is paid to employees. The HE Levy is paid by employers with a permanent establishment in Manitoba.”

An important component of the HE Levy for employers to know is that the exemption for the HE Levy increased in 2023, and it has increased again in 2024 (more on that below!).

Here’s what Manitoba-based businesses or businesses with employees in Manitoba need to know about the HE Levy:

• Some examples of the pay elements used to calculate the remuneration for the HE Levy include salary, hourly wages, bonuses, commissions, taxable allowances, and benefits.
• The HE Levy applies to employers that have a permanent establishment in Manitoba. The remuneration to calculate the HE Levy is for employees who either report to that location or are paid from that establishment. For those who report to a physical location outside the province, their remuneration is not included within those calculations.

As an example, if a business does not have a permanent establishment in the province with an employee based in Manitoba who’s paid through the Alberta head office, that employee would fall under payroll legislation in Alberta and therefore not subject to the Manitoba payroll tax.

• If your business has only had a permanent establishment in the province for a portion of the past year, the HE Levy exemption will be pro-rated to reflect the number of days of the year during which there’s been a permanent establishment. This is applicable to both new and seasonal businesses.
• The HE Levy does not apply to businesses with $2.25 million or less in Manitoba payroll remuneration – those businesses are exempt from the HE Levy.

In 2023, the exemption threshold was $2 million and as of January 1, 2024 it has increased to $2.25 million.

• The rate at which the HE Levy is calculated for businesses in excess of $2.25 million up to $4.5 million in Manitoba payroll remuneration is 4.3%. Those businesses also receive a HE Levy exemption on the first $2.25 million of their payroll.

For example, if a business has $2.50 million in Manitoba payroll remuneration, it would receive a $2.25 million exception and would pay 4.3% on $250,000.

In 2023, the reduced rate threshold was $4 million and as of January 1, 2024 it has increased to $4.5 million.

• The rate at which the HE Levy is calculated for businesses with more than $4.5 million in Manitoba payroll remuneration is 2.15%, and those businesses do not receive the $2.25 million exemption outlined above. In other words, those businesses would pay 2.15% on the total remuneration.
• There are several filing and reporting requirements for the HE Levy. Businesses in excess of $2.25 million up to $4.5 million in Manitoba payroll remuneration are required to file a monthly return by the 15^th of every month. An annual report for the previous year is also required by March 31 each year.

Payworks pro tip: Look at your year-end reports or the Business Numbers page within the Payworks application. If your Manitoba payroll remuneration is close to reaching $2.25 million, you can register for a TAXcess account. When your business reaches the threshold to pay the HE Levy, you’ll already be set up! Payworks can also collect and remit the HE Levy on your business’ behalf! If you need any assistance, your dedicated Client Service Representative (CSR) would be happy to walk you through the process.

For more information, visit: https://www.gov.mb.ca/finance/taxation/pubs/bulletins/001he.pdf.

With Payworks, you can keep breathing those sighs of relief when it comes to legislative compliance for your organization’s payroll. Simply put, we’re payroll experts so you don’t have to be. We want to help Canadian businesses stay informed on payroll legislation and changes, which is why our Payroll Guide is free for all to download: https://www.payworks.ca/landing-pages/campaigns/payroll-guide.