Subject: Change of Employer - Procedures
November 28, 2013 Updated September 12, 2014
1.1. The purpose of this directive is to provide compensation advisors with information concerning the procedures to follow when processing movement of employees from a department where Treasury Board (TB) is the employer to an organization where TB is NOT the employer or vice-versa, or between organizations where TB is NOT the employer.
1.2. Please review the Treasury Board Secretariat listing of Government of Canada organizations under the Financial Administration Act (FAA) for a complete list of the departments and agencies for which TB is the employer and the organizations where TB is NOT the employer.
| 1.3. This directive should be read in conjunction with the ARCHIVED CD 2009-016 dated July 14, 2009.
2.1. This document supersedes Compensation Directive (CD) 2002-017 dated June 27, 2002.
3.1. Permanent or Temporary Change in Employment
A permanent change in employment between employers as defined above in section 1.1 does not constitute a transfer for pay administration purposes. Any movement between the above-mentioned employers must be processed by using the Struck off Strength (SOS)/ Taken on Strength (TOS) pay transactions. This means that the account must be SOS and TOS immediately upon notification by the employee of the change in employment.
A temporary movement between employers, where both receive pay services through the Regional Pay System (RPS), should be treated as a Temporarily Struck Off Strength (T-SOS) pay transaction with the original employer and a TOS pay transaction with the new employer as it is dual employment.
3.2. When individuals change employers, current legislation dictates that the Canada Pension Plan (CPP), Quebec Pension Plan (QPP) and Employment Insurance (EI) statutory deductions must recommence regardless of the previously deducted amounts. This means that even if the employee has already contributed the annual maximum amount with the previous employer, their annual contribution amount is reset to $0.00 and CPP/QPP and EI deductions continue to be taken until such time as the annual maximum amount is reached with the new employer. Employee contributions in excess of the annual maximum for CPP/QPP and EI will be refunded to the employee when they file their income tax return.
| 3.3. If the employer is subject to the Public Service Superannuation Act (PSSA), and the employee is a contributor, they remain a contributor as long as they continue to meet the eligibility requirements. For those cases please refer to section 4 of the ARCHIVED CD 2019-016.
A Pension Adjustment (PA) will be reported by each employer based on the number of pensionable pay periods under that employer. Please note that this will be done automatically for those clients serviced by the RPS. Special year-end procedures, as explained in ARCHIVED CD 1994-012, should be followed in these cases.
3.4. When an employee moves from a department where TB is the employer to an organization where TB is NOT the employer or vice-versa; or between organizations where TB is NOT the employer (TOS/SOS process), any Leave with Income Averaging (LIA) arrangement in place will cease.
4. Procedures and Instructions
4.1. Permanent New Employment
4.1.1. Immediately after being notified that an employee is permanently moving between employers, the compensation advisor with the former employer is required to action a T-SOS reason code Y (Pending SOS), finalize the account and then input an SOS with REASON code 19 - (Change of Employer). The compensation advisor must also update the free form text (FFT) screen to identify the new employer, pay office, paylist number and, if applicable, the new Personal Record Identifier (PRI), at the same time as the SOS transaction is created.
The compensation advisor with the new employer is required to action a TOS and commence all appropriate entitlements and deductions including temporary deductions for outstanding deficiencies, and recoveries of gross overpayments. The compensation advisor must also update the FFT screen to identify the former employer, the pay office, paylist number and, if applicable, the previous PRI.
Please note that these actions must be treated as urgent. Failure to process these transactions immediately will result in the creation of an overpayment, or a suspension of regular pay in the RPS which may require intervention by the pay office, and may result in the Statement(s) of Remuneration incorrectly reflecting the employee's earnings if there is no manual intervention. Compensation advisors are strongly encouraged to action the TOS and SOS immediately to avoid complications in the processing of the employee's pay that may adversely affect the employee.
4.1.2. Overpayment situations are most likely to occur when the compensation advisor with the former employer is too late to stop the pay process prior to the pay period in which the employee is commencing employment with the new employer. Overpayment may also occur when an employee is on Maternity Leave or Parental Leave and receiving an allowance, or when an employee is on LIA. Where the leave without pay portion of the LIA arrangement has already been taken by the employee, the originating employer will process a T-SOS reason code Y (Pending SOS) and wait for pay office to process the overpayment in RPS. In order to assist the pay office in creating the overpayment, the compensation advisor from the former employer should provide details in FFT screen. The SOS/TOS can then be processed between employers and the originating pay office will request that the overpayment be transferred to the new organization. Employees may seek recovery arrangements with the new employer over a period of time not to exceed the original LIA 12 month averaging period as prescribed in the LIA agreement with the originating organization.
Should there be any annual leave or severance pay that are payable to the employee at termination, those funds will be applied to the amount owing from any previous overpayment.
4.1.3. Upon notification that an employee is moving between employers, if there is sufficient time to recall regular pay, the compensation advisor must T-SOS the employee with reason code Y. The compensation advisor must then recall the payment. Once the payment is cancelled in the RPS and in the Standard Payment System (SPS) and the account is finalized, the compensation advisor must SOS the employee with reason code 19.
If there is not sufficient time to recall the regular pay, the compensation advisor should finalize the account and SOS the employee with reason code 19. This will create an overpayment in RPS.
When this is the case, immediately following the receipt of the Overpayment Notification message, the former employer's compensation advisor must communicate with the new employer for the recovery of the overpayment. The new employer will then contact the pay office to ensure that the overpayment is recovered from the first available funds.
When the former employer's compensation advisor is satisfied that the overpayment has been recovered, the compensation advisor formally advises the pay office to debit the net overpayment amount on the RPS Master Employee Record (MER). If this process is not followed and future entitlements become payable to the employee, the overpayment will be automatically recovered when the payment is issued.
4.1.4. The former employer is responsible for the recovery of insurance premiums from final salary and, if there is insufficient salary to recover these premiums, the compensation advisor must notify the new employer.
The new employer must then ensure that accurate insurance premiums are recovered based on the applicable regulations as well as any change in status that might have occurred with the new employer. These deductions should not overlap and should therefore be effective from the month following the TOS, if the deduction was taken at SOS.
The pay office where the account is now active will input any outstanding PSPF deficiencies and credit the MER element 798 to determine when the employee will reach the annual PSPF low threshold. If this process is not followed the employee's pension contributions will not be accurate.
4.2. Temporary Employment
4.2.1. In the event that the employee is on leave without pay (LWOP) and temporarily employed by a different employer which also receives pay services from RPS, for superannuation purposes only, this service is to be treated as a dual employment situation. This procedure also applies to an overlapping period of employment where the SOS date with the former employer is later than the TOS date with the new employer.
4.2.2. If the employee was a contributor to PSPF and T-SOS in the substantive position, the employee should be TOS as a contributor and the pay account identified as dual employment (13) in FIELD 39 - PENSION TYPE CODE.
If the employee was not a contributor in the substantive position, in order to determine their eligibility to contribute, their service in the substantive position must be included when computing the six (6) months qualifying service, as long as there is no break in service in excess of one day. (Refer to the Superannuation Administration Manual (SAM), Section 2.4.5 (SAM 2-4-5 - This information is only accessible to federal government employees, and only to federal departments and agencies.)).
4.2.3. Once the temporary employment is terminated, the employee must be SOS in the temporary position and ReTaken on Strength (RE-TOS) in the substantive position. The pay office where the account is now active will input any outstanding PSPF deficiencies and credit the MER element 798 to determine when the employee will reach the annual PSPF low threshold. If this process is not followed, the employee's pension contributions will not be accurate.
4.3. Dual Remuneration
4.3.1. An employee may work in two (2) positions with two (2) different employers.
4.3.2. In this situation, if both employers are clients of the RPS, the employee must be identified as being in a dual remuneration situation and FIELD 19 - DUAL REMUN. IND. must be changed to "1" for both positions. The employee should be TOS in the temporary position and identified as a temporary employee. If the employee was a contributor to PSPF in the substantive position, the accounts should be identified as dual remuneration "code 02" in FIELD 39 - PENSION TYPE CODE in both positions. If they were not a contributor, their eligibility must be established based on the service with both employers. The assigned working hours of each position are totalled (up to the full-time hours) and pensionable salaries and allowances are combined for purposes of calculating a pension benefit.
5.1. Any inquiries on the information contained in this directive should be addressed to your Public Works and Government Services Canada (PWGSC) Compensation Services Office.
Reference(s): CJA 9006-24-4
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