Your guide to unique and tricky-to-navigate Alberta payroll legislation
Sep 05, 2023Resources
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Calling all Alberta-based businesses – or organizations with employees in Alberta! If you’re looking for straightforward and centralized information on some of the province’s more unique and tricky-to-navigate payroll legislation, read on… because we’ve got you covered.
Legislative requirements differ between provinces and territories in Canada, and they can – and do – change. Below we explore provincial tax exemptions, minimum wage, overtime, general holidays and general holiday pay, vacation pay and sick/personal days, and Workers’ Compensation Board (WCB) of Alberta premium calculations. Let’s get into it…
Alberta’s provincial tax exemptions
Provincial tax exemptions might seem straightforward, and they can be... but according to our in-house payroll experts, they become more complex when employees within the same organization report to different office locations in other jurisdictions.
For Alberta-based businesses or organizations with employees in Alberta, one of the most notably different elements of payroll legislation compared to the rest of the country is that the province has the highest provincial tax exemption for employees. As an employer, it’s important to ensure you’re using the Alberta TD1 form for any employees based there, as this form indicates the correct amount to withhold from their employment income.
To download TD1 forms for 2023, visit: https://www.canada.ca/en/revenue-agency/services/forms-publications/td1-personal-tax-credits-returns/td1-forms-pay-received-on-january-1-later.html.
Payworks pro tip: The Payworks Payroll application is set up to automatically make the basic income deductions every pay run for each employee. If an employee has requested for more than the basic amounts to be deducted, admins can enter those values into the system and the calculations will adjust for future years. Our in-house payroll experts recommend that employers have their employees redo their TD1 forms every year if they claim anything other than the basic deductions to ensure that deduction amounts are correct.
Bonus – Payworks also remits the federal and provincial tax deducted on our clients’ behalves!
Federal and provincial legislation determines that all employees are eligible to receive minimum wage, which is by definition the lowest rate at which an employer can legally pay its employees. Like other payroll legislation, minimum wage rates vary 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 Alberta, there are different minimum wage rates.
Here’s what employers need to know about minimum wage in Alberta:
- Most employees receive the general minimum wage rate.
- Students under the age of 18 have their own minimum wage rate, which applies to the first 28 hours worked in a week when school is in session. For all hours worked beyond that point, students must receive the general minimum wage rate. When school is not in session, the student minimum wage rate applies to all regular hours worked. Employers can also choose to pay students more than this minimum wage rate.
- There’s a minimum wage rate for salespersons, which is a per-week rate.
- There’s a minimum wage rate for domestic employees living in their employer’s home, which is a per-month rate.
For more information on the above-mentioned minimum wage rates and which employees qualify for each, visit: https://www.alberta.ca/minimum-wage.aspx.
… and overtime
Employees qualify for overtime rates when they exceed their normally-scheduled hours, although these parameters vary by province and territory. We’re going to explore overtime rates in Alberta in detail, as there are exceptions within the province.
Generally, an exception to the basic rules of qualifying for overtime in Alberta occurs when there’s a specific stipulation outlined in a collective/written agreement between the employer and employees. The only exception to paying overtime to qualifying employees is offering time off with pay – otherwise known as banked overtime – which would be part of the above-mentioned collective/written agreement. The rate for banked overtime is typically one hour banked for each hour of work. It’s also legislatively required that employees use up banked overtime within six months of the pay period ending date within which it was earned (unless the collective/written agreement states differently). For more information on overtime agreements, using overtime hours, and overtime owed at termination in Alberta, visit: https://www.alberta.ca/overtime-hours-overtime-pay.aspx#jumplinks-7.
Here’s what Alberta employers need to know about industry exceptions to overtime rules:
There are some industries and/or occupations that have exceptions to the basic overtime rule, like:
- Ambulance attendants and firefighting services
- Geophysical exploration
- Irrigation districts, logging and lumbering
- Oilwell servicing
- Trucking, field catering or land surveying, highway and railway construction and brush clearing, road maintenance activities, and taxicab industry
Each of the above has different daily, weekly, and monthly hours before overtime is calculated. For more information, visit: https://www.alberta.ca/overtime-hours-overtime-pay.aspx#jumplinks-4.
Here’s what Alberta employers need to know about who’s not eligible to receive overtime hours and overtime pay:
Another exception to overtime is that there are some positions which are not eligible, like:
- Managers, supervisors, and other roles employed in a confidential capacity
- Waged ranch employees and non-family farm employees
- Lookout observers
- Agrologists, architects, certified or chartered accountants, chiropractors, dentists, denturists, engineers, geoscientists, information systems professionals, lawyers, students-at-law, optometrists, podiatrists, psychologists, and veterinarians
- Automobile salesperson (trucks, buses, farm machinery, road construction equipment, heavy-duty equipment), salespersons of manufactured homes or residential homes, licensed salespersons of real estate and securities, licensed salesperson of insurance who are paid entirely by commission income, and salespersons (16 years or older) who are engaged in direct selling for licensed direct sellers
- Licensed land agents
- Extras in video or film productions
- Counsellors and instructors at a camp that is operated for children, persons with disabilities, or religious purposes
- Domestic employees (however, they are not exempt from rest periods and days of rest legislation)
To read more on which employees qualify for overtime in Alberta, visit: https://www.alberta.ca/overtime-hours-overtime-pay.aspx#jumplinks-4.
General holidays and general holiday pay
General holiday pay comes into play when an employee qualifies to be compensated for working on or in lieu of a public holiday designated by the province’s or territory’s legislation. Across Canada, it’s common for both the general holidays themselves and the legislation for which employees qualify for general holiday pay to differ. In Alberta, there are nine general holidays:
- New Year’s Day
- Alberta Family Day
- Good Friday
- Victoria Day
- Canada Day
- Labour Day
- Thanksgiving Day
- Remembrance Day
- Christmas Day
There are also four optional general holidays in the province, where some employers will grant their employees the day off; however, this is done of their own accord. As an employer, if you do engage in one of these optional general holidays, all employment standards for general holiday pay apply. Optional general holidays in Alberta include:
- Easter Monday
- Heritage Day
- National Day for Truth and Reconciliation
- Boxing Day
To determine the general holiday dates are for 2023 and 2024, visit: https://www.alberta.ca/alberta-general-holidays.aspx#jumplinks-2. To download a free copy of Payworks’ Payroll Calendar for Canadian Business, which includes important dates and bank closures for the year ahead, visit: https://www.payworks.ca/landing-pages/campaigns/payroll-calendar.
Lastly, we’ll explore what employee eligibility surrounding general holiday pay looks like in Alberta, because there are more detailed requirements in comparison to other jurisdictions in Canada.
What Alberta employers need to know about the basic employee eligibility for general holiday pay:
- The employee has to have worked a minimum of 30 working days in the 12 months prior to the general holiday for the same employer.
- If the general holiday is a regular working day or if an employee has worked on a general holiday that’s not a typical working day, they’re entitled to general holiday pay.
To determine if the general holiday is a regular working day, “the five of nine rule” is applied. For instance, if the employee has worked five of the same weekdays – for instance, the past five Mondays – in the last nine weeks before a general holiday that falls on a Monday, that day is then considered a regular day of work for which they’re entitled to general holiday pay. For more information on employee eligibility, visit: https://www.alberta.ca/general-holidays-pay.aspx#jumplinks-2.
Another unique element to general holiday pay that Alberta employers should be aware of is how the average rate is calculated. This is important because general holiday pay is calculated using an employee’s average daily wage and in many jurisdictions across Canada there’s only one calculation, but for Alberta there are two.
What Alberta employers need to know about the average rate calculation:
The average daily wage is determined by dividing an employee’s wages by the number of days they worked. In Alberta, employers can choose between the following two options:
- Four weeks or 28 days before the holiday, or;
- Four weeks or 28 days ending on the last day of the previous pay period that preceded the holiday.
For more information on calculating general holiday pay in Alberta, visit: https://www.alberta.ca/general-holidays-pay.aspx#jumplinks-2.
Vacation pay and sick/personal days
Our in-house payroll pros receive a number of inquiries regarding vacation pay in Alberta. With that in mind, we’ll explore vacation pay calculations and when vacation pay is paid out.
Here’s what Alberta employers need to know about calculating vacation pay:
- If vacation pay is paid frequently – like every pay period – employers do not have to calculate vacation pay on the previously paid vacation.
Here’s what Alberta employers need to know about paying out vacation at termination:
If there’s vacation pay owed when employment is terminated, there’s a legislative requirement surrounding the timing of that payout. Unless otherwise agreed upon by both the employer and the employee, vacation cannot be requested to be used during the termination notice period. Employers can instead choose one of the following two methods of payment:
- Within 10 calendar days after the end of the pay period, or;
- Within 31 calendar days after the last day of employment.
For more information about vacation pay, visit: https://www.alberta.ca/vacation-pay.aspx#jumplinks-3.
Bearing in mind the different types of time off during employment, there are many to consider beyond just vacation. For Alberta employers, there are no legislative minimum requirements for sick or personal days. However, there are a number of job-protected leaves that range from bereavement, maternity and parental, to personal and family responsibility and compassionate care leave. For more information on job-protected leaves in Alberta, visit: https://www.alberta.ca/job-protected-leaves.aspx.
Alberta employers are subject to Workers Compensation Board (WCB) premiums, which function as a provincial wage loss replacement plan. According to WCB, “the premiums you pay help fund the workers' compensation system, protecting you and your workers against the impacts of workplace accidents and injuries.” The rate at which WCB is calculated “is the cost coverage per $100 of assessable earnings and is based on the claims experience of your rate group. Your rate group is made up of industries with employers that have similar businesses activities as you.”
Payworks pro tip: A third-party payroll provider like Payworks can help simplify this process. WCB account numbers can be entered into our Payroll application and we’ll remit those premiums on behalf of our clients.
Payworks has you covered so you can stay informed on payroll legislation to remain compliant. Plus clients love our one-to-one service model and being assigned a dedicated, NPI-trained rep who’s there to answer the call.
To stay informed on payroll legislation changes, download the Payworks Payroll Guide: a comprehensive resource that contains both legislative and regulatory information to keep you up to date on the payroll information needed to pay employees accurately. Get your free copy by visiting: https://www.payworks.ca/landing-pages/campaigns/payroll-guide.