Question

In your own words, explain how legislated wages in lieu of notice are treated for statutory deduction purposes in all jurisdictions in Canada.

Answer 1

When Employer pays an employee an amount of wages in lieu of notice under the terms of an employment contract or federal, provincial or territorial employment labour standards, the amount is considered employment income, whether or not it is paid in lieu of notice.

Deduct Canada Pension Plan (CPP) contributions, employment insurance (EI) premiums, and income tax. To determine the amounts to deduct, wages in lieu of notice is the regular income for the pay period.