Payroll Burden

Good day Brothers and Sisters

At the last General Membership Meeting I was asked about the history and the reason for the pension payroll burden that is retained by the contractor when the pension contributions are added to the members pay cheques.

Originally, when a member was drawing their pension through Local 110 and returned to work, the pension contributions were remitted to the plan as normal, as per the Provincial Collective Agreement. However, due to Canadian pension law, the member received no gain to their monthly pension because you are not allowed to both contribute to a plan and draw a pension at the same time. As a result, the money served no benefit to the members who were working for the contributions. Currently, this is still the practice of most trade union pension plans in Alberta and across Canada.

In the mid 2000’s Local 110 was successful in bargaining into the Provincial Collective Agreement the ability for a member who was drawing a Local 110 pension, to have the contributions added to the hourly pay. At this time the pension contribution was five dollars per hour worked that was directly added to the member’s base rate of pay before taxes and benefits were paid. Shortly after the ratification of the Agreement it was brought forward to the Union and the Contractors by one of our Industrial Clients, that due to the five dollar per hour being moved from a nontaxable benefit, such as a pension plan to a taxed benefit such as wages, the company was paying a total of six dollars instead of the negotiated five dollars in pension contributions. The reason for this increase is due to the added cost of WCB coverage, Employment Insurance payments, Canada Pension Plan contributions and the ten percent Statutory Holiday and Vacation pay, which are all based on taxable wages for each individual, so with the change to the base rate all these costs to the contractor were also increased.

When this was discovered, the offer was made to reopen the Agreement and rectify this error. However, the contractors refused to reopen the Agreement at that time and took on the additional costs of the “payroll burden” for the duration of the Agreement, even though in most cases the contractors were unable to recoup these additional costs from the Clients.

In the next round of bargaining language was added to the Provincial Collective Agreement to have twenty percent of the listed pension contribution held to cover the additional costs resulting from pension money being added to the base rate for members who are drawing their Local 110 pension. At that time the Agreement was ratified first round and has been ratified in every Agreement up to and including our current Agreement signed in 2015.

Some members have questioned the base wage amount listed for our pension members, the Agreement states that the “payroll burden” is twenty percent of the listed pension contribution. Currently the listed pension contribution is $6.25 per hour, twenty percent of that is $1.25. So $4.55 is added to the base rate and the remaining 45 cents is added to the Statutory Holiday and Vacation pay which gives us the total $5.00 per hour added to the members pay cheque per hour.

I hope that this information clarifies the “payroll burden” issue. In close I would ask that any member who is currently having the pension contributions added to their pay contact Local 110 pension administrator and review the other options that are now available.

In Solidarity

Kevin Lecht