A Primer on Payroll in Canada If paying the retroactive payment outside of the normal pay period run (e.g. a manual cheque), the CPP or QPP contribution is calculated by multiplying the payment by the current year's CPP or QPP rate. Do not deduct a pay period exemption and do not use the tables (which have the pay period exemption built into them) as only one exemption can be applied for each pay period. Be sure not to deduct more than the maximum employee contribution for the year. EI FOR EMPLOYEES OUTSIDE QUEBEC The retroactive payment is included in the total insurable earnings being paid in the current pay period. The insurable earnings are multiplied by the current year's EI rate (1.58% for 2020) up to the maximum for the year ($ 856.36). Example: Retroactive payment $2,000 Regular bi-weekly salary $2,708 Insurable Earnings $4,708.00 2020 EI Rate EI premium 1.58% $ 74.39 Note: If paying the retro outside of the normal pay period run, the payment must be allocated to the closest pay period in which it falls for ROE completion. EI FOR EMPLOYEES IN QUEBEC The retroactive payment is included in the total insurable earnings being paid in the current pay period. The insurable earnings are multiplied by the current year's EI rate (1.20%) up to the maximum for the year ($ 650.40). Example: Retroactive payment $2,000 Regular bi-weekly salary $2,708 Insurable Earnings $4,708 2020 EI Rate x EI premium $ 1.20% 56.50 Note: If paying the retro outside of the normal pay period run, the payment must be allocated to the closest pay period in which it falls for ROE completion. © The Canadian Payroll Association/L'Association canadienne de la paie 2020 11-87