Your Nunavut payroll questions, answered!

If you’re a Nunavut-based business, or if you have employees who live and work there, you’ve probably had territory-specific questions about payroll legislation at one point or another. After all, opening a business or hiring an employee doesn’t usually come with a manual – but wouldn’t it be great if it did?

We may not have a manual for you, but we do have the next best thing: a quick guide to much of the Nunavut workforce legislation of which you need to be aware. Below you’ll find answers to some of the most frequently asked questions regarding employment standards, prescribed zones, payroll taxes, and more!

What employment standards in Nunavut do I need to be aware of?

Great question. There are a few, such as the minimum pay period frequency, required minimum wage, overtime rules, and how to properly pay vacation and statutory holidays. Let’s get into the details:

• Pay Period Frequency: Federally, and within each province and territory, the region’s Employment and Labour Standards determine the minimum pay period frequency, meaning the minimum period of time within which an employee’s wages must be calculated. It’s always a good idea to double check this with the region’s Labour Standards regulations, to ensure compliance.
• Minimum Wage: Minimum wage is the lowest rate that an employer can legally pay their employees, and it’s set by the federal or provincial/territorial legislation. To determine the current minimum wage set by the Territory of Nunavut, you can always check out its Labour Standards Website.
• Overtime: In Canada, any hours worked in excess of the standard hours of work are considered overtime hours. In Nunavut, the employer is required to pay for these hours at 1.5 times the employee’s regular rate of pay. For an overview of overtime and the steps to consider in making a strategic plan that clearly defines it, visit: https://blog.payworks.ca/overview-of-overtime-employers-should-have-a-strategic-plan-that-clearly-defines-overtime.
• Vacation: Every employee is entitled to an annual vacation and vacation pay. Typically, the length of time an employee’s worked for the employer determines eligibility for the amount of vacation the employee receives. In Nunavut, vacation pay is paid by either a percentage of 4% or 6% on the employee’s gross wages. Once an employee has been employed by the same employer for one year, they are eligible for two weeks’ vacation (which equates to 4% of their gross wages). After six years of employment, the employee is then eligible for three weeks’ vacation (or 6% of their gross wages).
• Statutory Holidays: According to Nunavut’s Labour Standards Act, the following days are considered General Holidays, otherwise known as Statutory Holidays:
  • New Year’s Day (January 1).
  • Good Friday (always on the Friday prior to Easter Sunday).
  • Victoria Day (always on the Monday prior to May 25).
  • Canada Day (July 1).
  • Nunavut Day (July 9).
  • The First Monday in August (the date varies year to year).
  • Labour Day (always on the first Monday of September).
    • National Day for Truth and Reconciliation (September 30).
  • Thanksgiving Day (always the second Monday in October).
  • Remembrance Day (November 11).
  • Christmas Day (December 25).

For Statutory Holidays, employees who are considered eligible by the Labour Standards Act receive a day off with pay. There are some exceptions wherein an employee wouldn’t receive a day off with pay, such as:

• • If the employee hasn’t worked for the employer for a total of 30 days during the 12 months prior to the holiday.
  • If the employee didn’t report to work on the General Holiday when they were scheduled or required to work.
  • If the employee didn’t receive consent from their employer to be absent on the days preceding or following the general holiday, and were subsequently absent.
  • If the employee is on parental leave.

In general, if an employee doesn’t work on the holiday date, they’re entitled to a regular day’s pay. If they did work on the holiday date, they’re then eligible for either a day off work with pay or a normal day’s pay plus 1.5 times their regular rate of pay for all hours worked on the holiday.

What do I need to know about employment standards records, and issuing ROEs?

There are many types of records that businesses need to maintain, and each province or territory has legislative standards for the length of time for which those records must be kept. It’s important for employers in Nunavut to be aware of what records they’re required to maintain and for how long.

• In Nunavut, the required minimum period is no less than two years after the time that each record was made.
• These records include information such as an employee’s name and address, their daily hours worked, wages paid (gross and net), as well as further details such as rate of pay, vacation pay given, amount of deductions, and copies of notices of termination of employment.
• For a full breakdown of what’s required, employers are encouraged to review the Labour Standards in their jurisdiction, as well as the Workers' Safety & Compensation Commission (WSCC) website.

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 or not the employee intends to apply for EI benefits.
• 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 clients’ behalf once they’re ready to go!

What are prescribed zones, and how do they apply to my business and my employees?

When it comes to statutory deductions, Canadian businesses should be aware of prescribed zones. Nunavut (as well as Yukon and the Northwest Territories) is considered a “prescribed northern zone.” Here’s why it’s important to understand what this means:

• When employees fill out their TD1 forms, employees may claim a deduction for living in a prescribed zone. This will be used to determine the amount of federal and territorial tax to deduct from their pay. Psst: TD1s are tricky – here’s how you can help your new hires navigate their TD1 forms!

“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 the prescribed zone payroll legislation, make sure to take note of whether or not the employee’s employment periods extend into the six-month period.
• The employment period can also affect the TD1 in respect to the employee’s tax province/territory (AKA the province of employment), as well.

Does Nunavut have a payroll tax?

Yes, as per the Payroll Tax Act, Nunavut has a 2% payroll tax on employee gross remuneration. This means that:

• Employers are required to withhold a 2% payroll tax from the gross pay (including salary, wages, allowances and other benefits) of all employees for work performed within the territory. Note that an employee’s eligibility for this tax is dependent upon whether their normal hours of work take place within or outside of Nunavut.
• This tax is remitted to the Government of Nunavut.

What do I need to know about the Worker’s Safety and Compensation Commission (WSCC) in Nunavut?

• All businesses operating within Nunavut must report their payroll to the WSCC.
• The WSCC calculates the rate a business pays based on its payroll and industry subclass.
• To ensure compliance, it’s important to annually review the year’s Maximum Insurable Remuneration, which can be found on the WSCC website: https://wscc.nt.ca/employer-services/employer-rates.
• The WSCC requires employers to report payroll figures annually, with a deadline of February 28 each year.

Payworks pro tip: Through Payworks’ Payroll application, you can easily calculate WSCC Nunavut amounts each pay period and create reports to ensure compliance with premium remittances.

What’s recall pay, and when do I apply it?

• The Labour Standards Act stipulates that when an employee is called back to work by an employer, and the recall wasn’t scheduled in advance, the employee is entitled to a minimum of four hours of pay at their regular rate of pay.
• It’s important to note that these wages must be paid for this minimum, even if no work is performed!

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 by offering the industry’s best service through unlimited, dedicated and National Payroll Institute-trained support. We also offer insights for 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.