Below is a comprehensive list of terms related to your pay and employment. Exploring them will help you better understand your income and allow you to Own Your Pay.

The terms are sorted alphabetically, click on any of the letters below to jump to that section.

A    B    C    D    E    F    G    H    I    J    L    M    N    O    P    Q    R    S    T    U    V    W

A

Accommodation

• Modification of a work environment and the creation of a welcoming workplace for ill or injured employees so that they can stay at work or successfully return to work from an absence due to illness or injury, and perform job functions efficiently and safely.

Accrued payroll; accrued salary; accrued wages

• Salary and related expenses that have been earned by an organization’s employees but have not yet been paid.

Automobile and motor vehicle allowance; car allowance; company car; company-leased car; company-owned car

• Any payment that employees receive from an employer for using their own vehicle in connection with or in the course of their employment without having to account for its use. This payment is in addition to their salary or wages. An allowance is generally taxable unless it is based on a reasonable per-kilometre allowance.

B

Banking overtime

• Practice of allowing employees to defer the payment of overtime, or the taking of an equivalent time off, until a later date within a regulated period of time.

Benefits (employment)

•  Services provided by the employer, often in the form of insurance plans, social services, etc., which may be paid for in whole or in part by the employer, and which may be taxable.

Bi-weekly

• Occurring every two weeks.

Bonus

• Amount paid to an employee, over and above the usual earnings, normally at the discretion of the employer. Bonuses are usually based on some measure of performance, either by the employee, the division or the organization as a whole.

C

Calendar year

• The calendar year runs January 1 to December 31.

Canada Pension Plan (CPP)

• Almost all individuals who work in Canada contribute to the CPP. The CPP provides pensions and benefits when contributors retire, become disabled, or die.

Canada Revenue Agency (CRA)

• The CRA administers tax laws for the Government of Canada and for most provinces and territories, and various social and economic benefit and incentive programs delivered through the tax system. 

Cash benefits

• Benefits paid in cash.

Casual employee

• Person hired to do a job on a non-regular basis, normally paid an hourly or whole job rate, and not normally eligible for the organization’s benefit plan.

Clothing allowance

•  Amount paid or reimbursed to an employee by the employer for the purchase of a particular type of clothing required for work. The taxability of a clothing allowance is determined on the basis of whether the clothing is a required distinctive uniform, or is needed for protection from hazards associated with work.

Collective agreement

• Formal, legally binding document that details the terms and conditions of employment between the employer (or a group of employers) and their employees who are members of a union.

Commission

• An amount paid to an employee that either negotiates contracts or sells the employer’s goods or services. The calculation of the payment is at the discretion of the employer, but is generally based on a percentage or fixed dollar amount per sale.

Compensation

• Compensation is the total amount of the monetary and non-monetary pay provided to an employee by an employer in return for work performed as required.

Condition of employment

• An organization’s policy or union agreement may make it necessary for a prospective employee to agree to certain benefits, deductions or conditions before employment is confirmed. For example, signing a union card, authorizing a medical premium deduction, or supplying a bank account for direct deposit may be a condition of employment.

Contribution room

• The maximum amount that an individual can contribute to his or her Registered Retirement Savings Plan or Tax-Free Savings Account is limited by his or her contribution room.

D

Debt

• Any liability that requires a payment or payments of interest and/or principal by the debtor to the creditor at a date or dates in the future.

Deductions at source; withholdings; payroll deductions; source deductions

• Deductions the organization takes off the employees’ “source” of income, their pay, i.e., Canada Pension Plan/Quebec Pension Plan (CPP/QPP) contributions, Employment Insurance (EI) premiums, Quebec Parental Insurance Plan (QPIP) premiums, income tax, payroll tax, etc. Employers must remit these deductions, along with its share of CPP/QPP contributions, EI premiums and QPIP premiums.

Direct deposit

• Electronic transfer of funds directly deposited into a bank account.

E

Earnings (payroll)

• Dollar amounts the employer pays an employee for the work they perform.

Effective date of employment; hire date; start date

• Date on which the employee commences employment with the employer.

Employee

• Person who is hired to perform a function under direct or indirect supervision and is remunerated for the work done.

Employer

• Individual or organization who hires an employee.

Employment Insurance (EI)

• Social insurance program administered by Service Canada that provides financial assistance to employees who are temporarily unemployed. The plan also provides benefits for employees on sick, maternity, parental or compassionate leave for employees outside Quebec; Revenu Québec has its own program that offers maternity, paternity, and parental benefits. Employers and employees contribute to the plan.

Employment/labour standards

• Employment standards are covered under federal or provincial/territorial legislation which sets the minimum standards for certain aspects of employment. Areas covered include hours of work, leaves, minimum age, minimum wage, records retention, statement of wages, statutory holidays, terminations, the timing of payments, vacation time and pay, etc. Each jurisdiction (federal, provincial or territorial) act is unique in detail, but most cover the same topics.

Expense

• Expenses are costs incurred by an organization in the process of earning revenue during a given time period. Typical expense accounts related to payroll would include such items as wages, salaries, employer payroll costs, and group insurance benefits costs.

F

Fiscal year

• Tax year or financial year of an organization. It does not have to be the calendar year.

Full-time employee

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

G

Garnishment; garnishment order; order of garnishment; wage attachment

• Court order requiring an employer to deduct monies from an employee’s pay for the purpose of paying a debt to a third party.

Goods and services tax (GST)

• Canadian tax (5%) on most goods and services sold for domestic consumption. The Canada Revenue Agency is responsible for administering the GST except in Quebec; Revenu Québec is responsible for administering the GST in Québec.

Gratuity; tip

• A gratuity is an amount received by employees (usually in a service position) from someone other than the employer for the services they provide. Commonly called a tip, a gratuity is often paid in cash and should be included in the annual calculation of taxable income by employees when filing income tax returns.

Gross earnings

• All the amounts paid to an employee plus any taxable allowances, cash taxable benefits and/or expense reimbursements.

Gross taxable income

• All the taxable earnings and allowances being paid to the employee, plus the value of any cash and non-cash taxable benefits.

Group Registered Retirement Savings Plan (Group RRSP)

• Collection of individual RRSP contracts which an employer sponsors for its employees using payroll deductions.

H

Harmonized sales tax (HST)

• In some provinces, the provincial sales tax (PST) is harmonized with the goods and services tax (GST) to create the harmonized sales tax (HST). HST applies to the same base of goods and services as GST.

Hourly employee

• Employee hired by the hour and who receives remuneration based on an hourly rate.

I

Incentive pay; performance pay

• Remuneration awarded because of an employee’s work output, designed to promote productivity.

Income tax

• Amount which must be deducted from an employee’s earnings before payment is made to the employee. The deduction is mandatory by federal and provincial law, and the rates are changed annually (sometimes semi-annually) by legislation.

Insurable earnings

• Earnings considered insurable under the Employment Insurance Act.

J

Job sharing

• Occurs when two people voluntarily share the responsibilities of one full-time job. This arrangement provides flexibility for employees and allows employers to retain valued workers who do not want a full-time schedule.

L

Leave without pay; unpaid leave

• Temporary unpaid absence from work that, in most cases, is granted at the employee’s request.

Lump-sum payment

• Generally, a single payment by an employer to an employee, rather than periodic payments.

M

Maternity benefits

• Employment Insurance benefits payable to biological and surrogate mothers outside Quebec who cannot work because they are pregnant or have recently given birth. They must meet certain conditions to qualify.

Maternity leave

• Period of unpaid leave, legislated by employment/labour standards, available to biological and surrogate mothers who cannot work because they are pregnant or have recently given birth. They must meet certain conditions to qualify.

Minimum age

• Youngest age at which a person can be legally employed; it varies by jurisdiction.

Minimum wage

• Minimum hourly rate an employer can pay an employee. It varies by jurisdiction.

N

Net pay; take-home pay

• Employee’s gross earnings, less deductions, in other words, the amount of money the employee receives.

Notice of termination

• Notice given by an employer to an employee to advise that his or her employment is being terminated on a certain date.

• The amount of notice that must be given is legislated by employment/labour standards, and depends on the employee’s length of service and jurisdiction of employment.

• If the employer does not want the employee to work the notice period, the employee must be paid an amount equal to the wages that would have been earned during the notice period.

O

Occupational injury

• Any injury, disease or illness experienced by an employee resulting from the performance of, or in connection with, his or her work.

Old Age Security (OAS) pension

• Monthly payment available to most Canadians 65 years of age who meet the Canadian legal status and residence requirements. Individuals must apply to receive it.

Overtime

• Time worked beyond the normal working hours in a day or a week. Legislation sets the minimum requirements for the calculation of overtime payments.

P

Paid leave

• An absence from work which is paid by the employer.

Paid vacation

• Period of annual leave which is paid by the employer.

Parental leave

• Period of unpaid leave, legislated by employment/labour standards, available to new parents when caring for a newborn baby or after adopting a child. They must meet certain conditions to qualify.

Part-time employee

• Employee whose assigned hours of work are fewer than the scheduled standard weekly hours of work.

Pay in lieu of notice

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

Pay period

• Recurring length of time over which earnings are calculated and employees are paid.

Pay statement

• Document listing the employee’s earnings, deductions and net pay. Employment/labour standards legislation in each jurisdiction details the information that must be reported on the pay statement.

Pay week

• A period of seven consecutive days or any one of two or more such consecutive periods, the last of which ends on the employer’s payroll ending date.

Payroll savings program

• Program that allows employees to contribute to a Payroll Savings Plan at their place of work through automatic payroll deductions.

Payroll; payroll department

• Payroll can have several meanings, including a list of persons to be paid and the amount due to each; the department which administers the payroll; the total number of people employed by an organization; the sum total of amounts paid to employees; and the money paid out.

Pension plan

• Arrangement to provide periodic payments to individuals after their retirement in respect of services they rendered to employers or in respect of their tenure as holders of offices.

Probationary period

• Generally, a specified period of time set out in the employment contract that the employee has to work for the employer before becoming eligible for benefits

Province of employment

• An employee’s province of employment is either:

  o the province where the employee physically reports to work at the employer’s permanent or deemed establishment; or

  o the province where the business is located and from where the employee’s wages are paid when the employee does not physically report to an employer’s establishment.

Provincial sales tax (PST)

• PST applies to the same base of goods and services as GST in provinces and territories where HST/QST does not exist.

Q

Quebec Pension Plan (QPP)

• Compulsory public insurance plan for workers in Quebec aged 18 and over whose annual employment income is greater than $3,500. Its purpose is to provide persons who work or have worked in Quebec and their families with basic financial protection in the event of retirement, death or disability.

Quebec Sales Tax (QST)

• In Quebec, the provincial sales tax (PST) is harmonized with the goods and services tax (GST) to create the Quebec sales tax (QST). QST applies to the same base of goods and services as GST in Quebec.

R

Record of Employment (ROE)

• Provides information on employment history. It is the single most important document used by employees in establishing a claim for Employment Insurance (EI) benefits.

• Service Canada uses the information on the ROE to determine whether a person is eligible to receive EI benefits, what the benefit amount will be, and for how long the benefits will be paid.

Registered Retirement Savings Plan (RRSP)

• Retirement savings plan where the contributions and interest earned on the funds are tax exempt until they are withdrawn from the plan.

Regular employee

• Person who works full-time, during the regularly scheduled hours as defined by the organization.

Revenu Québec

• Department of the Government of Quebec that administers and receives remittances for Quebec provincial tax, Quebec Pension Plan contributions, Quebec Parental Insurance Plan premiums, Commission de la santé et de la sécurité du travail premiums, health services fund contributions and various employer taxes.

S

Salaried employee

• Employee whose basic remuneration is a fixed amount based on weekly, monthly, or annual rates.

Semi-monthly

• Time period that is one-half of a month in length.

Service Canada

• Federal agency that administers services such as Employment Insurance programs, Canada Pension Plan benefits, Old Age Security and Guaranteed Income Supplement programs, Social Insurance Numbers, passports and the Wage Earner Protection Program.

Severance pay

• Amount an employer pays to an employee at the time of an employer-initiated termination of employment. Employers regulated by either the Canada Labour Code or Ontario Employment Standards may be required to pay mandatory severance.

Social insurance number (SIN)

• Unique nine-digit number provided by Service Canada. All employees must provide their employer with their SIN within three days of employment.

Statutory deductions

• Deductions that must be taken from an employee’s pay as required by federal or provincial laws. These deductions take priority over all other payroll deductions.

Statutory holiday; public holiday; general holiday

• Legislated paid days off work that an employer must grant to employees.

T

Tax refund

• Repayment by the tax authority of tax overpayments.

Taxable benefit

• Benefit paid in whole or part by the employer and considered taxable under the federal Income Tax Act or Quebec Taxation Act.

Taxable earnings; taxable income

• Earnings on which income tax must be deducted; generally, all Canadian earnings are taxable after a minimum amount

Taxation year

• Canada’s taxation year is from January 1 to December 31.

Tax-Free Savings Account (TFSA)

• Flexible, registered, general-purpose savings vehicle that allows Canadians to earn tax-free investment income to more easily meet lifetime savings needs.

Termination of employment

• Severing of the employee-employer relationship.

Time sheet

• Sheet used to summarize the hours worked by each employee during a period of time.

U

Union dues

• Amounts for membership, levied by a union, which are deducted from payroll according to a schedule established in the collective agreement.

V

Vacation pay

• Amount paid pursuant to employment/labour standards legislation, an employment contract or a collective agreement that is earned/accrued during the vacation entitlement year. Vacation pay is calculated as a percentage or fraction of vacationable earnings.

W

Workers’ compensation

• Workers’ compensation is a provincial/territorial government insurance plan designed to provide compensation for loss of wages and other benefits to employees in the event of a work-related accident or illness.