ARCHIVED CD 2002-017

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June 27, 2002

SUBJECT: Change of Employer -- Procedures

1. PURPOSE

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 A complete list of the departments where TB is the employer (Public Services Staff Relations Act , Schedule I, Part I) and the organizations where TB is NOT the employer (Public Service Staff Relations Act, Schedule I, Part II, Crown Corporations or other Government of Canada Entities) can be found in the Population Affiliation Report at the following Web site:

Population Affiliation Report

1.3 In this text, use of the masculine is generic and applies to both men and women.

2. POLICY

2.1 Permanent or Temporary Change in Employment

A permanent change in employment between employers as defined above in section 1.2 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 being notified by the employee of the change in employment.

A temporary movement between employers, that are both paid through the Regional Pay System (RPS) and where the assignment is not an Interchange, for pension purposes only , should be treated as a Temporarily SOS (T-SOS) pay transaction with the original employer and a TOS as a dual employment situation with the temporary employer.

2.2 When individuals change employers, current legislation dictates that the Canada Pension Plan (CPP), Quebec Pension Plan (QPP) and Employment Insurance (EI) statutory deductions will 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, his 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 he files his income tax return.

2.3 If the employer is subject to the Public Service Superannuation Act (PSSA), and the employee is a contributor, he remains a contributor as long as he continues to meet the eligibility requirements. The Public Works and Government Services Canada (PWGSC) Pay Office, where the account now resides, will credit Master Employee Record (MER) element 798 with the amount of Public Service Pension Fund (PSPF) low contributions 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.

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 Compensation Directive 1994-012, should be followed in these cases. This directive is available on the Compensation Sector site at COMPENSATION DIRECTIVE : 1994-012.

3. PROCEDURES/INSTRUCTIONS

3.1. Permanent New Employment

3.1.1 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 a SOS with REASON CODE 19 -- "Change of Employer. The compensation advisor must also update the Freeform Text (FFT) to identify the new employer, the Pay Office, the paylist number and, if applicable, the new Personal Record Identifier (PRI) and this, at the same time as the SOS transaction is created.

The compensation advisor with the new employer is required to action a TOS and commences all appropriate entitlements and deductions including temporary deductions for outstanding deficiencies, and recoveries of gross overpayments. The compensation advisor must also update the Freeform Text (FFT) to identify the former employer, the Pay Office, the paylist number and, if applicable, the previous PRI.

Please note that these actions must be treated on an urgent basis . Failure to process these transactions immediately will result in an excessive overpayment being created, or a suspension of regular pay in the RPS that may require intervention from the Pay Office and may result in the Statement(s) of Remuneration to incorrectly reflect the employee's earnings if manual intervention is not carried out. 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.

3.1.2 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 actually 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 Leave with Income Averaging.

If the employee chooses to pay off the overpayment by cashing out his unused annual leave (if applicable) or by applying his severance pay entitlement, no additional action is required on behalf of the former employer's compensation advisor. If the employee chooses to transfer his service for severance pay purposes and the new employer agrees with this request then the option of using the severance pay entitlement to repay the overpayment is not available. If the overpayment is cleared by a personal cheque from the employee, the compensation advisor reports a cash receipt transaction with deduction code 566 to debit the overpayment amount from the RPS Master File.

3.1.3 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. He then recalls the payment and once the payment is cancelled in the RPS and the Standard Payment System and the account is finalized, he 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 the RPS.

When this is the case, immediately following receipt of the Overpayment Notification message, the former employer's compensation advisor must communicate with the new employer for recovery of the overpayment. The new employer will then contact the Pay Office to ensure that the overpayment is recovered from first available money.

When the former employer's compensation advisor is satisfied that the overpayment has been recovered, he formally advises the Pay Office to debit the net overpayment amount on the RPS Master Employee Record. 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.

3.1.4 The former employer is responsible for the recovery of insurance premiums from final salary and if there is insufficient salary to recover these premiums, he 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 PWGSC Pay Office where the account is now active will input any outstanding PSPF deficiencies and credit Master Employee Record (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.

3.2. Temporary Employment

3.2.1 In the event that the employee is temporarily employed by a different employer and where the assignment is not an Interchange, 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.

3.2.2 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 he was not a contributor in the substantive position, in order to determine his eligibility to contribute, his 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, Section 2.4.5 at: SAM 2-4-5

3.2.3 Once the temporary employment is terminated, the employee must be SOS in the temporary position and RE-TOS in the substantive position. The PWGSC Pay Office where the account is now active will input any outstanding PSPF deficiencies and credit Master Employee Record (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.

3.3. Dual Remuneration

3.3.1 An employee may work in two (2) positions with two (2) different employers.

3.3.2 In this situation, if both employers are clients of the PWGSC 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 he was not a contributor, his 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.

4. INQUIRIES

4.1 Any request for information regarding the foregoing should be addressed to your Public Works and Government Services Canada (PWGSC) Compensation Services Office.

Original Signed by
R. Jolicoeur

R. Jolicoeur
Director General
Compensation Sector
Government Operational Service

Reference: CJA 9006-24-4