Key payroll terms to help you understand:

Allowances

Payments for the use or anticipated use of an employee’s personal property, subsidies for expenses made necessary by the type of employment, or maintenance of employer-supplied clothes and equipment. Taxability depends on the type of allowance and the reason for receiving it.

Bonus

Additional payment to an employee, above their usual earnings, usually based on performance by the employee, division, or organization as a whole.

Canada Pension Plan (CPP)

Almost all individuals who work in Canada contribute to the CPP, which provides pensions and benefits for retirement, disability, or death.

Company-Compulsory Deductions

Deductions required by company policy as a condition of employment, but still requiring the employee’s written permission before making any deductions.

Deferred Profit-Sharing Plan (DPSP)

Plan through which an employer shares a portion of the company’s profits with employees at a later date.

Employment Insurance (EI)

Social insurance program that provides financial assistance to temporarily unemployed employees, as well as benefits for sick, maternity, parental, or compassionate leave. Employers and employees both contribute.

Full-time employee

Person who works a full schedule as defined by the company, receives full-time benefits, and is covered by employment laws.

Garnishment

Court order requiring an employer to deduct money from an employee’s pay to pay a debt to a third party.

Group Registered Retirement Savings Plan (Group RRSP):

Collection of individual RRSP contracts sponsored by an employer and funded through payroll deductions.

Legal Deductions

Deductions required by law other than statutory deductions, such as garnishment or support orders. The employee’s consent is not required.

Minimum wage

Minimum hourly rate an employer can pay an employee, varying by jurisdiction.

Non-Cash Benefits

Benefits provided in a manner other than cash.

Parental Leave

Period of unpaid leave available to new parents for caring for a newborn or adopted child, subject to certain conditions.

Pay in Lieu of Notice

Amount paid to an employee whose employment has been terminated without notice, instead of working the notice period.

Pay Statement

Document listing the employee’s earnings, deductions, and net pay, as required by employment/labor legislation.

Payroll Deductions Online Calculator (PDOC)

Online tool used to calculate payroll deductions for any pay period, province (except Quebec), and territory.

Pension Adjustment (PA)

Value of the benefits earned by an employee under an employer’s Registered Pension Plan, Deferred Profit-Sharing Plan, and possibly unregistered retirement plans or arrangements.

Record of Employment on the Web (ROE Web)

Secure web-based application for creating, submitting, amending, and printing 53-week Records of Employment electronically.

Registered Retirement Savings Plan (RRSP)

Retirement savings plan with contributions and interest earned on funds being tax-exempt until withdrawn from the plan.

Retiring Allowance

Amount paid to an employee upon or after retirement in recognition of long service or loss of employment.

Social Insurance Number (SIN)

Unique nine-digit number provided by Service Canada, which must be provided by employees to their employer within three days of employment.

Statutory Deductions

Deductions required by federal or provincial laws that take priority over all other payroll deductions.

T4 Statement of Remuneration Paid (slip)

Form completed by employers for all individuals who received remuneration and had CPP/QPP contributions, EI premiums