Time for Baby

There are so many challenges and opportunities that come with the joyful arrival of a baby. People become parents, single or couple units suddenly become a family, and life changes dramatically for everyone involved.

yavi/Shutterstock

Along with all of these changes, a new parent must also choose whether or not to take time off from work in order to care for their child. This may seem like a straightforward decision, especially for mothers who give birth and are caring for a newborn child along with their own post-birth recovery.

However, there are two challenging considerations that all new parents must face. First, whether or not they can afford to the take time off from work financially; and second, whether or not they can afford to step off their personal career trajectory for an extended period time.

There is no doubt that taking time off from work to have a child is costly. As the cost implications impact both the individual employee and the employer, Canadians can access childcare related benefit programs offered by the federal government. These benefit programs provide both financial subsidies and time-related provisions that allow new parents to spend more time at home. Recently, the federal government introduced new provisions that allow parents to extend their time at home from twelve to eighteen months. There is also a new benefit offering an additional five weeks of leave for those choosing to share parental leave benefits. These are federal government programs for which new parents must apply and meet eligibility requirements order to receive the monetary benefits.

An extensive review of the impact of maternity and parental leave benefits is provided in a recent article published by Benefits Canada.

Click here to read the article.

Click here to read about the additional five week parental leave plan.

As noted in the article by Benefits Canada, with the new 18-month extended benefit for parental leave, the monetary payments are at 33% for the duration of the leave in comparison to the traditional twelve month leave during which time the parent can receive a maximum of 55% of their total salary. The article notes that the uptake for Canadians accessing the 18-month benefit is slower than anticipated, which may not be surprising if individuals simply cannot afford either the reduced benefit and/or the increased time away from work.

The additional five weeks of parental leave benefits also comes with a catch. New parents must decide whether to use it or they will lose it, based on their eligibility requirements and by determining which parent will be able to access this new benefit.

In order to alleviate some of these financial impacts, employers can choose to offer a financial top-up for employees who are in receipt of federal parental leave benefits. Again, this is a cost decision that an employer can make based affordability.

All of these considerations must be taken into account in the context of thoughtful compensation planning when determining how much support in terms of time and money can be provided for new parents.

New parents do need all of the support that they can get, so they can focus on what is truly important – their new child.

Discussion Questions:

  1. Do you agree with the use-it or lose-it requirement for non-birthing parents eligible to take the new the five weeks of parental leave? Explain your rationale.
  2. In your opinion, why is the uptake for new parents taking maternity and parental leave time in Canada so low?
  3. Identify three barriers and three benefits to the employer who provides top-up provisions to maternity and parental leave plans.

How Do You Show Your Employees You Care?

Be Panya/Shutterstock

How do you show your employees you care? You care for your employees’ children.

All employers are looking to use perks and other benefits to create sustainable bonds and lasting connections with their employees. Throwing more money at employees may seem like an easy way to improve employee workplace satisfaction but it is not they only retention tool out there. Employees stay with a company because they believe the company cares about them and their well-being.

If they really want to show employees they care, perhaps more HR departments should follow Starbucks’ lead and provide child care—not full-time child care, but a service many would consider almost as valuable—back up child care when an employee needs it the most.

Starbucks in the United States has partnered up with a company called Care@Work. Each eligible Starbucks employee will receive a free premium membership to access Care@Work services including subsidized day care at a cost of $1 per hour for up to 10 backup care days.

This isn’t only for child care, however. Starbucks realizes that many of their employees are in the sandwich generation and are looking after children as well as dependent adults. This benefit perk applies to both dependent groups.

Click here to read about Care@Work’s services.

With the tight labour market in North America, employers are looking for ways to stand out and attract prospective employees, while retaining existing ones. Providing subsidized child and adult care may be a key factor in helping your organization stand out.

Click here to read more about Starbucks’ innovative benefits.

Starbucks has been a leader in the service industry, which traditionally treats its employees as low-skill, entry level, transient workers. Starbucks has done the opposite by providing its employees with the full spectrum of benefits including medical, education, stock options, and even pensions.

Cynics might argue that Starbucks is adding all these benefits just to retain employees; however, it’s worth noting that the Starbucks mission statement highlights a desire to “inspire and nurture the human spirit”, and that among the company’s core values are commitments to foster a sense of belonging, to find new ways to take the company forward, and to “challenge the status quo”. Others might argue that in providing backup care for its employees’ loved ones, Starbucks is doing an admirable job of living up to this mission statement and these core values—that it is doing business “through the lens of humanity”.

Click here to read Starbucks’ mission and values statement.

Discussion Questions:

  1. Research two other service industry companies. What types of employee benefits do they offer their employees?
  2. Why don’t more service companies take the Starbucks approach to employee benefits?

CPP: Time for Change

According to an often used saying, there are only two things that are certain: death and taxes.

The former usually comes as a result of aging. The latter comes as a result of working.

As Canadians, we live in a society that uses taxes or income deductions from those who are working in order to provide financial support for those who are aging and moving into retirement. Much has been written about the impact of the baby boomer generation (those that were born between the early 1950’s to the early 1960’s) on the economy. As the people from this age group start leaving the workforce, they will need to have saved earnings in order to support themselves financially.

Unfortunately, many Canadians do not have enough money set aside for this purpose, nor do all Canadian employers offer a pension plan that allows workers to save for their retirement. In order to supplement income for aging Canadians, the federal government provides financial support through Old Age Security (OAS) payments and the Canada Pension Plan (CPP). It is a known fact that the number of Canadians approaching retirement over the next ten to twenty years exceeds the amount of funding that is available to support them. These factors have all come into play and have resulted in significant changes to the Canada Pension Plan, which will require more funding in order to provide for ongoing financial support to our fellow aging Canadians.

The changes to the CPP are being implemented well into the mid 2020’s. As the payments for CPP are processed through employer payroll deductions, all Canadian companies and employees will be impacted. Canadian HR reporter provides us with an overview of the upcoming changes. The video clip below includes practical advice on how to prepare for tracking the financial impact on both the organization and its employees as follows:

[embedyt] https://www.youtube.com/watch?v=6JWLjskiFDc[/embedyt]

Even though the changes to the CPP program are intended to be gradual, both employers and employees will be impacted by the increased amounts that will, over time, appear to reduce the amount of an individual’s take-home pay. As such, another certainty will be the obligation of those responsible for compensation management, to ensure that all employees understand why these changes have been put into place.

Discussion Questions:

  1. As the Compensation Manager, prepare a brief communication to employees explaining how their pay will be impacted by changes to the CPP.
  2. How do the changes to the CPP benefit Canadian workers?
  3. In addition to the CPP, what types of pension or retirement plans would you advise an employer to put into place?
  4. Take a look at a recent pay stub from your current employer. How are the mandatory deductions identified? How are the CPP deductions calculated?

You Gotta Pay!

Brian A Jackson/Shutterstock

Even lawyers get it wrong sometimes.

A recent case heard by the Alberta Court of Queen’s Bench provides an excellent summary of the critical importance of processing vacation and holiday pay in compliance with the law. In this case, law firm Stringer Delecky LLP was found to be liable for $19,746.32, representing two years of unpaid holiday pay, and $33,280.14 for unpaid vacation pay, to a former employee. The ex-employee, David Kusick, was a lawyer who resigned from the firm and subsequently filed a complaint under Alberta’s employment standards legislation for unpaid vacation and holiday pay.

Click here to read a summary of the case.

As noted in the case, Kusick had an employment contract which provided for the ‘inclusive’ payment of vacation and holiday pay. The employer argued that vacation and holiday pay were interchangeable which is, according to the law, wrong. Further, the employer did not keep accurate records for calculating vacation pay and holiday pay separately.

More importantly, it seems that the employer relied upon the fact that the original employment contract would be upheld because both the employer and the employee agreed to it and signed it.

What this case reinforces for us is the concept that employers, in the creation of the employment contract, cannot abdicate their responsibility to the law. When the employment contract is found to be incorrect or unlawful the statutory provisions, such as the relevant employment standards legislation, will prevail. Employment standards legislation typically provides for the minimum requirement that an employer must include vacation and holiday allocations when it pays its employees. The legislation also provides strict and prescriptive processes for tracking and maintaining compensation-related records. These factors are not negotiable, nor do they fall into an ‘opt-out’ category for an employer. An employer can provide a better benefit to its employees, such as vacation time or pay that is more than the minimum legislated requirement, but less than the minimum is not an option. The expensive and very public lesson Stringer Delecky LLP learned from this case, is that an employer cannot ignore the requirements of the law.

 

Discussion Questions:

  1. How many paid vacation days and statutory holidays do you earn in your current workplace?
  2. Looking at a pay stub/pay record from your employer, how is the information on it formatted? Does the pay stub clearly identify vacation pay as a separate item? What other information is included on the pay stub for record keeping purposes?
  3. If you were the compensation manager for the law firm noted in the article, how would you have processed the vacation and holiday pay differently?
  4. How would you use clear language in an employment contract that identifies entitlements for earned vacation (time or pay), holiday pay, and other paid or unpaid leaves of absence?

A Tiny Insight Into Executive Pay

Pranch/Shutterstock

As we study the multiple concepts that go into the development of a company’s compensation strategy, we do not often have an opportunity to delve into the complexities of how executive level compensation is determined.

A recent announcement by the shareholders of Canadian Pacific Railway Limited (CP)provides us with an opportunity to dig a little deeper into how executive compensation is either curtailed or increased.

Click here to read the article.

A number of compensation-related questions arise from the reading of this announcement. Who determines the executive levels of compensation? How are the levels determined in a pay-for-performance strategy? How does the shareholder influence executive compensation? Why is there a need to focus on safety as part of a pay-for-performance strategy?

Some of the answers to these questions may be found in CP’s public documents, such as the April 2016 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT. This document is available in the public domain. It provides us with an opportunity to explore, just a little bit, the role of governance structures and shareholder decision making linked to the determination of changing executive-level pay metrics.

Click here to read CP’s shareholder document.

CP also posts executive-related metrics as part of its fiduciary responsibilities as a publicly traded company.

For the 2016 Executive Compensation metrics linked to stock valuations, click here.

As the shareholder document was issued prior to the decision to curtail the levels of executive compensation, it provides us with clear expectations of the pay-for-performance philosophy, which was identified as part of the organization’s governance structures and metrics. Further, this public report offers insight into the levels of compensation structures for both internal executives and shareholders benefiting from the ongoing profitability of the company. Profitability came from effective operations, according to the 2016 report. The posted pay metrics were linked to stock values. These documents confirm that pay-for-performance was directly linked to profit levels and both executives and shareholders benefited accordingly.

We can only surmise that, as a result of the information provided in these documents, along with other internal sources, shareholders made the decision to re-shape the performance drivers by introducing ‘safety and operating income’ as metrics for determining compensation levels and rewards.

This appears to reflect a shift in focus. One wonders if the compensation and performance levels will shift accordingly. The results from the next set of public documents will tell that tale.

Discussion Questions:

  1. After reading the CP shareholder document, identify the compensation strategies that link pay for performance.
  2. What benefits do shareholders who serve as directors for CP receive?
  3. From a compensation analyst perspective, how could the decision to cut executive-level perks influence compensation planning for the rest of the organization?
  4. As a consumer, what do you think about the changes to executive-level compensation for CP?