ROE’s and Summer Students - What You Need to Know

An ROE must be issued by an employer even if the employee has no intention of filing a claim for EI benefits.

An interruption in earnings could be due to the employee's quitting or the employer terminating the employment, but only arises if it involves or is expected to involve 7 consecutive calendar days without work or insurable earnings from the employer.

An interruption of earnings also occurs where a salary falls below 60% of normal earnings due to illness, injury, quarantine, pregnancy, the need for a parent to care for either newly born or adopted children, or the need to provide care or support to a family member who is gravely ill with a significant risk of death.

Special rules apply to casual workers. When a part-time or casual worker has not worked for 30 days, is no longer on the employer's active employment list or the employee or the government requests an ROE form, a form must be completed by the payroll department.

FINAL PAY

Other than vacation pay and severance, an employee may be owed other amounts. The employee may earn incentive based bonuses through the course of employment. If an employee terminates, a prorated bonus amount may need to be calculated. If an employee terminates and does not work out the notice period, then pay in lieu of notice is paid if it is the employer's decision to not have the employee work out this time.

If the employee fails to complete the proper notice period, then the employer is not normally required to pay this amount to the employee.

These rules vary by province and therefore it is important to refer to provincial labour standards for the correct notice period rules.

An employee may owe amounts at the time of termination to the employer for a health plan, an RRSP plan or donation plan or any similar arrangement. These amounts must be deducted from the final pay.

A termination checklist is useful in helping the payroll department to determine that all payments and all deductions are captured for the final pay. It can also be used to ensure that all internal policies relating to a termination have been complied with.

When an employee is terminated a termination letter is usually prepared by the payroll or human resource department which outlines the reason for the termination, monies owing to the employee and continuation of any benefits or other coverage. The letter should also describe any non-competition agreement terms and any other actions required by both the employer and the employee.

An employee may or may not work their notice of termination period ñ the period from the announcement that employment is terminated until the last day of work.

As noted above, if an employee chooses not to work their notice period, the employer generally does not have to pay the employee for the notice period. On the other hand, if an employer chooses not to have the employee work out their notice period then the employer must pay the employee for this period. As mentioned earlier in the course, this payment is referred to as "pay in lieu of notice".

Notice period rules vary by province and can be found in provincial labour standards.

Educational Resources: Excerpted from Advanced Payroll for Professional Bookkeepers,  one of the courses that comprise the Bookkeeping Services Specialist program.