Question

Greenland Papery is a stationary supply company with offices and boutiques in Ontario and Québec. The organization started operations in 1978 and currently has an approximate annual payroll of $12,000,000 in each jurisdiction.

The organization is considering terminating the employment of five employees in each jurisdiction. To assist with forecasting the budget for the balance of the year, Fadwa Simon, the Director of Finance has asked you, as the Payroll Supervisor, to provide her with the details on all legislated payments on termination of employment required for each jurisdiction. In addition to the required payments on termination, include any employer costs related to the employees’ statutory deductions.

Prepare your response (350 – 500 words) using your name, correct spelling, grammar and punctuation. You will be penalized if you are excessively over or under the suggested word count. Your response must be stated in your own words and should be based on the course material, your experiences, knowledge gained through the course and at least one external government resource.

canada payroll

Answer 1

To,

The Finance Director

This is in response to your request to provide the details on all legislated payments on termination of employment required for each jurisdiction including any employer costs related to the employees’ statutory deductions. First of all I would like to mention that termination of an employee is an extremely litigative subject and should be for a valid reason such as termination due to disciplinary action, poor performance, contract termination etc. If there is no valid reason and the company still wants to downsize, then it can make use of the Last In First Out Rule.

While downsizing the firm by terminating 5 employees form each region, it is essential to consider the following types of compensation to be paid on account of termination :

-> Gratuity : An employee is eligible for gratuity if he has worked for a period of 5 years or more. This component can involve huge payments. It is generally calculated by the following formula : (15 X last drawn salary X tenure of working) divided by 26.

-> Statutory deductions to be considered on part of employer include Employee Pension fund or provident fund to which the employee is entitled on termination and also any professional tax depending on which state we are referring to.

-> In case of contract termination, compensation as determined on basis of negotiation of company with employee.

-> Retrenchment compensation is required to be paid in case of Last In First Out Rule.

-> Any advances which are pending and payable to employee for any kind of work performed for the company or any other reimbursement of expenses.

Now that I have mentioned the legislative payments to be made on account of termination of employees, I will also let you know about the deductions that an employer will get from the employee costs :

-> Set-off of any advances paid during the employment which are outstanding as on date of termination.

-> Recovery from various insurance schemes.

-> Recovery of any loan provided during the employment of any kind along with the accumulated interest.

Hope you will find this response helpful. Let me know in case of any further clarifications.

(354 words)