Question

Greenland Papery is a stationary supply company with offices and boutiques in Ontario and Québec. The organization started operations in 1978 and currently has an approximate annual payroll of $12,000,000 in each jurisdiction.

The organization is considering terminating the employment of five employees in each jurisdiction. To assist with forecasting the budget for the balance of the year, Fadwa Simon, the Director of Finance has asked you, as the Payroll Supervisor, to provide her with the details on all legislated payments on termination of employment required for each jurisdiction. In addition to the required payments on termination, include any employer costs related to the employees’ statutory deductions.

Answer 1

An employee can be terminated by the organisation for multiple reasons such as:

1. Poor performance
2. Termination of contract
3. Disciplinary action
4. Permanent disability
5. Retirement
6. Voluntary retirement (VRS)

The amount of compensation differs according to the reason for termination of the employment. The different types of compensation are as follows:

1. If the employee has worked for 5 years or more he will be eligible for gratuity. Gratuity = Last salary drawn * number of years in service * (15/26)
2. Contribution made to pension fund or provident fund in case of employees who voluntary retire
3. Lump sum payment according Workmen Compensation Act or 60% of monthly wage * relevant factor with age reference in case of permanent disability
4. In case of termination of contract, the employer decides the compensation
5. When none of the above reasons is the cause for termination, the employee will be paid retrenchment compensation

Employer costs related to the employees’ statutory deductions are as follows:

1. Recovery of loan
2. Recovery of fine/ damages
3. Advance paid
4. Recovery of insurance or co-operative society schemes
5. Absences from the area
6. Any other services provided