Salary Adjustments for 2015

According to the Towers Watson 2014 General Industry Salary Budget Survey, employers are budgeting 3% for salary increases in 2015 for their non-management employees and 3.1% for executives.

This is an average and, as an example, in 2014 an employee who received a high performance rating received an increase of 4.7% while the employee with an average rating received a 2.7% increase. Employees with the lowest performance rating received 0.7%.

Another survey done by the Hay group suggests 83% of Canadian employers will provide their employees with increases in 2015. The highest increases continue to be in the Oil and Gas sector at 3.8% followed by Chemicals at 3.3%, and Financial Services at 3.0%.

Alberta and Saskatchewan lead the country compared to all other provinces and territories.

New Tax Deductions and Reporting on Disability Plans

Effective January 1, 2015, the Canada Revenue Agency will require all administrators of taxable disability plans to deduct and remit federal and provincial income tax on payments made after January 1, 2015. This will apply as well to insured Weekly Indemnity (short term disability) or Long Term Disability benefits.

An employer needs to communicate with their benefit administrator, e.g. an insurance company, to determine the level of tax that will be deducted as only the minimum allowable under the Income Tax Act is required. While this will not affect the total tax payable, it will reduce the amount of benefit received under the wage replacement plan at the time of payment however the individual will have tax reduced when filing their annual return.

EI Premiums Lower for Some Businesses

In 2015 and 2016, the federal government will reduce the employment insurance (EI) payroll taxes from the legislated rate of $1.88 to $1.60 per $100.00 of insurable earnings. This will apply to any firm that pays employer EI premiums equal to or less than $15,000.00 annually in those years.

Changes to New Brunswick Drug Plan

Commencing April 1, 2015, all employers with a place of business in New Brunswick must provide coverage equal to or better than the provincial plan. This will require each employer’s drug benefit to adhere to the minimum requirements under the new provincial drug formulary. Some of the other changes include:

• Plans must not state annual or lifetime caps on coverage
• Out of pocket expenses to plan members must not exceed $2,000.00 per year per member or a $30.00 co-payment per prescription (for those plans with co-payments only)
• Plans must include smoking cessation therapies (Champix and Zyban)

Employers should be in touch with their plan administrator to ensure the benefit complies with the new drug benefit requirements.