When Changes Keep Changing

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Imagine that you have lived with that ugly, out-of-date bathroom in your house for the past 20 years.

The eyesore tiling from the ‘80s is chipped, the toilet overflows from time to time, and the bathtub drains keep clogging. So, you finally pull the plug, get your finances together, and hire a contractor to renovate it.

It eventually gets done. The new bathroom looks a lot better, although a few things did not get finished and the cost was much more than you had anticipated. Granted, it is finally an improvement from what you had before. Suddenly, the contractor you hired to do the work is replaced with a new contractor who tells you that the bulk of the completed work is wrong. The new contractor begins to rip out items that were just installed. The new contractor tells you that you have to re-renovate the bathroom by finding and putting back many of the broken items that you were happy to have removed. Also, the things that you had planned to keep working on to continue the bathroom improvements are just not going to happen. Of course, you have to pay for it all over again. Throughout all of this you realize you have no choice other than to keep trying to figure out what and how to proceed because it is the only bathroom you’ve got.

This little analogy can be applied to what has happened in Ontario as a result of the continuing changes to the provincial Employment Standards Act. Under the previous government, Bill 148 began to be implemented in January 2018. The changes under this bill were significant, given that no amendments had been made for over twenty years. The primary impact included ongoing increases to the minimum wage, scheduling, vacation and holiday pay changes, along with other amendments impacting compensation plans across the province. A new government was voted in and introduced Bill 47 for immediate implementation. By January of 2019, Bill 47 had repealed and/or replaced many of the aforementioned changes, some of which included the requirement for employers to revert back to pre-Bill 148 practices.

Click here to read a summary of the changes from Canadian HR Reporter.

Click here to refer to the updated guide to the Employment Standards Act.

While there are many opinions on whether or not the impact of Bill 47 is good for employees or employers or both or none, the bottom line is that HR practitioners across the province have had to deal with all of it. Anecdotally, it has not been a smooth transition. An HR colleague, who works in compensation and didn’t want to be named, described her departments’ reaction as follows: “We were in shock. I could feel myself shaking when the new changes were announced. We had absolutely no idea what we were supposed to do. What would happen to our employees and their wages? What would happen to all of the work and changes we needed to put into place over the past year? It was all gone. We had to start all over again. Trying to figure out what was new and what we had redo has been a nightmare.”

As she turned away, she left with saying how lucky she was to work with a team of HR professionals because they would get it done.

Perhaps, upon reflection, all of this represents the challenge and the opportunity of working in Human Resources. No matter what happens on the political, legal and implementation landscape, sometimes our job is simply put – just get it done.

Discussion Questions:

  1. How will you work through implementing changes that you may or may not agree with on behalf of your employer as an HR professional?
  2. Review the changes to the Employment Standards Act and identify three areas that have a direct impact on compensation planning.
  3. How will you calculate wage increases (including minimum wages) for the next five years?

 

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?