Pay (Remuneration)

It is the moment you have been waiting for: your first paycheque. You think to yourself, “I’m finally going to be able to spend all the money I’ve earned and go on a shopping spree!” But then, you realize that the amount deposited into your account is not the same as the total pay for the hours you worked.

You try to figure it out by looking at your first pay slip, but it seems so complicated. Where did your money go? How can you understand this document?

In the deductions or source deductions section, you will find all the contributions, both mandatory and not.

The Net Pay section shows the amount of money left after deductions are taken from the gross pay. The net pay is the amount you are paid. 

In short: Gross Pay - Deductions = Net Pay

As you have seen in the pay stub examples, there is a difference between net pay and gross pay. The difference comes from source deductions, commonly known as deductions or contributions. Some contributions are mandatory while others are optional, depending on the employer and the type of employment. Here is a table that shows the possible source deductions:

Once you start working, you financially contribute to society. Your financial contribution helps pay for government programs and services such as health care and education.

Federal tax contributions are mandatory if you earn more than the basic amount annually. In 2020, this amount was $13,229. If you earn less than that amount, you will not have to contribute.

Provincial tax contributions are also mandatory if your income is above the annual basic personal amount. In 2020, this amount was $15,532. If you earn less than that amount, you do not have to contribute.

If you earn more than $3,500 a year and are 18 years of age or older, you will contribute to the Quebec Pension Plan. This plan provides basic financial security at retirement to people who have contributed to it, as well as providing financial protection in case of disability, should a contributor be unable to work. It also offers various amounts to loved ones if the contributor dies.

In 2020, workers and employers contributed to the plan at a rate of 5.7% of the employee’s earnings. For example, an employee earning $500 a week pays $28.50 to QPP and their employer pays the same amount.

The Quebec Parental Insurance Plan offers maternity, paternity and adoption benefits to employed and self-employed parents upon the birth or adoption of a child. This contribution is mandatory for everyone. In 2020, the contribution rate for an employee was 0.494% of gross income, while the employer’s contribution rate was 0.692% of the employee’s gross income.

This last contribution is also mandatory, and its rate varies according to income. This program provides a basic income to people who are unemployed.

In addition to the mandatory contributions, there may be other source deductions on your pay slip, depending on your work situation. For example, an employer could offer a pension plan to its employees for their retirement. It could also offer group insurance to cover various expenses such as dental care or medical expenses. In a unionized company, you also have to pay union dues. This is mandatory, although there are a few exceptions.

In 1996, the Quebec National Assembly adopted the Pay Equity Act. Companies with 10 or more employees must verify whether female-dominated jobs, meaning jobs done mainly by women, are paid less than male-dominated jobs. Nursing is an example of a female-dominated job.

The main idea of the law is “equal pay for equal work,” but also “equal pay for different but equivalent work.” Qualifications, responsibilities, efforts required and the conditions under which the work is performed are taken into consideration for this evaluation.

According to Statistics Canada, female employees between the ages of 25 and 54 earned an average of $4.13 less per hour than men in the same age group in 2018, a 13.3% gap. It means a female employee will earn $0.87 on average for every dollar earned by a male employee. Although the gap has decreased since 1998 in Canada, more action is needed to support pay equity.