Questions and answers on the tentative agreement with CRA
We have been hearing a lot of questions concerning our new agreement with CRA. Below you will find answers to some of the most common ones. Please contact your UTE/PSAC local president if you need answers that are not in this document. We will continue to update this post in the coming weeks.
On the “re-opener” clause:
Could you clarify how the re-opener clause will work?
Our new agreement provides for a wage re-opener for the 2014 and 2015 wage rates. This gives our union the ability to negotiate increases above those provided for under the agreement for the 2014 and 2015 rates. These discussions would take place no later than October 2017. Should the parties not reach an agreement in these talks, the dispute would be submitted to arbitration for binding resolution consistent with the Public Service Labour Relations Act. These talks would be subject to no preconditions and would be undertaken like any other wage negotiation.
On retroactivity:
When can I expect the employer to pay the retroactive pay?
The employer has 150 days from the date of signing to implement the provisions of the new collective agreement, including adjusting rates of pay and issuing retroactive pay.
On severance pay:
When will I receive my severance pay and how much will it be?
- If the tentative agreement is ratified, severance pay for retirement or resignation will cease to accumulate for employees in this bargaining unit as of October 31, 2016.
- Everyone, including term workers, with at least one year of continuous employment will be entitled to one week’s pay for each completed year of continuous employment. Indeterminate employees will also be entitled to a pro-rated week for a partial year of employment.
- Everyone, including term workers, with at least one year of continuous employment will be able to choose what to do with their accumulated severance:<
- immediately cash out the severance they have accumulated, or
- keep their accumulated severance and have it paid out when they actually resign or retire, or
- immediately cash out part of the accumulated severance and keep the rest of it to be paid when they resign or retire.
- No one has to resign or retire to receive the cash out right away.
- Everyone has time to decide. Employees will have up to six months after October 31, 2016 to decide which of the options they will choose – cash it all out, bank it until they resign or retire, or cash out some now and bank the rest to cash out when they resign or retire.
- No one will be forced to take the cash out immediately. But if you decide to cash out all of your severance right away, you will not receive a payment when you resign or retire later.
- Accumulated severance that is banked and not cashed out immediately will be paid at the salary rate that applies when you actually resign or retire.
- Under the new agreements, severance pay will no longer accumulate in the case of resignation or retirement.
- Severance pay will continue to accumulate for employees who are forced to leave the public service due to layoff, death, termination on probation or because of incapacity or incompetence.
What did we get in exchange for severance?
The bargaining team fought hard to ensure that the trade-off for severance was fair. In addition to base economic increases, our team negotiated additional increases in consideration for the elimination of severance pay accrual for the purposes of retirement and resignation:
- November 1, 2012: 0.25%
- November 1, 2013: 0.5%
- November 1, 2014: 0.25%
- November 1, 2015: 0.25%
This means a total of 1.25% over the life of the agreement. The increased wages will accumulate as pensionable earnings and employees will enjoy the benefits of that when they retire. These wage increases benefit everyone equally and because salaries are compounded over time, the increase in wages will have an upward effect on pensions and overtime.
In addition, some concrete victories on longstanding demands were also achieved, including:
- the removal of the minimum six-week period for acting pay increment;
- increased bereavement leave;
- more flexibility in the ability to access family-related responsibility leave; and
- a one-time vacation of one week for all employees in lieu of marriage leave (while the current marriage leave remain in effect until signing of the next collective agreement).
On severance for part-time employment
I have been working half-time for 10 years but worked full-time for 16 years before that. Will my severance be calculated as half-time employment or will my past full-time years be taken into account?
For part-time employees, the years of continuous employment are calculated in such a way that they total full time equivalent. This is covered by Article 62 – Part-Time Employees in the collective agreement.
In this case, with 16 years of full-time employment and 10 years of half-time employment, you would have your continuous employment calculated at 16 years + 5 years (1/2 x 10 years) = 21 years.
If this was your status on October 31, 2016, you would be entitled to a severance benefit of 21 weeks to be paid at the rate of your substantive classification at the rate effective on October 31, 2016, if you cash it out immediately, or at the rate of your substantive position when you retire if you choose to bank your accumulated severance. The weeks would be multiplied by the full-time salary to determine the benefit.
On retirement or resignation
What does this mean for employees who were thinking of resigning?
Under the current contract, employees who resign before reaching 10 years of employment are not entitled to a severance payout. Those with between 10 and 26 years of employment are entitled to only a half-week of pay for each year of employment. We negotiated that all employees with at least one year of employment would receive a cash-out of one week of pay for each year of employment. For employees with 10 years or more who would have resigned before retirement, this represents a doubling of their accumulated entitlement.
Does the timing of my retirement or resignation make a difference?
If the tentative agreement is ratified, the accumulation of severance for resignation or retirement ends on October 31, 2016. Until that time, the current contract provisions remain in place.
There is no reason to delay retirement until the new provisions are in place because severance pay for retirement is paid on the basis of one week for each year of employment.
However, an employee who is considering resignation will benefit from waiting until after October 31, 2016. Currently, the severance pay for resignation provides for no severance if you resign before 10 years, and one-half week pay for each year of employment if you have between 10 and 26 years of employment. Therefore, waiting to resign until after October 31st 2016 increases your severance pay to one week per year of employment.
Is early retirement considered as a resignation or as retirement under the new severance provisions?
There is no difference if you resign or retire. Under the new agreement, as long as you have at least one year of continuous service, you are entitled to one week’s pay for each year of continuous employment for all years up to October 31, 2016. The one week’s pay per year of continuous employment applies to both resignation and retirement.
Options for cashing out severance
What are my options for the severance cash-out?
Every employee with at least one year of continuous employment will have three options for the cash-out of accumulated voluntary severance calculated at the rate of one week of pay for each year of employment:
- Immediately cash out their severance at their substantive position’s rate of pay, as of October 31, 2016.
- Retain the accumulated weeks of severance with a payout on termination or retirement at their exit substantive position’s rate of pay.
- Cash out some of their severance (a “round” number of weeks) at their substantive position’s rate of pay, with the remainder to be paid upon termination or retirement at their exit rate of pay.
What is the value of the cash-out for me?
The monetary value of the severance cash-out varies considerably from person to person, depending on their years of employment, their career plan, and the option they choose for their cash-out. Under what PSAC/UTE has negotiated, all employees (including term employees with at least one year of continuous employment) will have a calculation made of total years of continuous employment as of October 31, 2016. The following chart shows the before tax value of the cash out by years of continuous employment and annual salary.
|
Yrs |
Annual salary |
|||||||||||
|
30,000 |
35,000 |
40,000 |
45,000 |
50,000 |
55,000 |
60,000 |
65,000 |
70,000 |
75,000 |
80,000 |
85,000 |
|
|
1 |
575 |
671 |
767 |
862 |
958 |
1,054 |
1,150 |
1,246 |
1,342 |
1,437 |
1,533 |
1,629 |
|
2 |
1,150 |
1,342 |
1,533 |
1,725 |
1,917 |
2,108 |
2,300 |
2,492 |
2,683 |
2,875 |
3,067 |
3,258 |
|
3 |
1,725 |
2,012 |
2,300 |
2,587 |
2,875 |
3,162 |
3,450 |
3,737 |
4,025 |
4,312 |
4,600 |
4,887 |
|
4 |
2,300 |
2,683 |
3,067 |
3,450 |
3,833 |
4,216 |
4,600 |
4,983 |
5,366 |
5,750 |
6,133 |
6,516 |
|
5 |
2,875 |
3,354 |
3,833 |
4,312 |
4,791 |
5,271 |
5,750 |
6,229 |
6,708 |
7,187 |
7,666 |
8,146 |
|
6 |
3,450 |
4,025 |
4,600 |
5,175 |
5,750 |
6,325 |
6,900 |
7,475 |
8,050 |
8,625 |
9,200 |
9,775 |
|
7 |
4,025 |
4,696 |
5,366 |
6,037 |
6,708 |
7,379 |
8,050 |
8,720 |
9,391 |
10,062 |
10,733 |
11,404 |
|
8 |
4,600 |
5,366 |
6,133 |
6,900 |
7,666 |
8,433 |
9,200 |
9,966 |
10,733 |
11,500 |
12,266 |
13,033 |
|
9 |
5,175 |
6,037 |
6,900 |
7,762 |
8,625 |
9,487 |
10,350 |
11,212 |
12,075 |
12,937 |
13,799 |
14,662 |
|
10 |
5,750 |
6,708 |
7,666 |
8,625 |
9,583 |
10,541 |
11,500 |
12,458 |
13,416 |
14,374 |
15,333 |
16,291 |
|
11 |
6,325 |
7,379 |
8,433 |
9,487 |
10,541 |
11,595 |
12,649 |
13,704 |
14,758 |
15,812 |
16,866 |
17,920 |
|
12 |
6,900 |
8,050 |
9,200 |
10,350 |
11,500 |
12,649 |
13,799 |
14,949 |
16,099 |
17,249 |
18,399 |
19,549 |
|
13 |
7,475 |
8,720 |
9,966 |
11,212 |
12,458 |
13,704 |
14,949 |
16,195 |
17,441 |
18,687 |
19,933 |
21,178 |
|
14 |
8,050 |
9,391 |
10,733 |
12,075 |
13,416 |
14,758 |
16,099 |
17,441 |
18,783 |
20,124 |
21,466 |
22,807 |
|
15 |
8,625 |
10,062 |
11,500 |
12,937 |
14,374 |
15,812 |
17,249 |
18,687 |
20,124 |
21,562 |
22,999 |
24,437 |
|
16 |
9,200 |
10,733 |
12,266 |
13,799 |
15,333 |
16,866 |
18,399 |
19,933 |
21,466 |
22,999 |
24,532 |
26,066 |
|
17 |
9,775 |
11,404 |
13,033 |
14,662 |
16,291 |
17,920 |
19,549 |
21,178 |
22,807 |
24,437 |
26,066 |
27,695 |
|
18 |
10,350 |
12,075 |
13,799 |
15,524 |
17,249 |
18,974 |
20,699 |
22,424 |
24,149 |
25,874 |
27,599 |
29,324 |
|
19 |
10,925 |
12,745 |
14,566 |
16,387 |
18,208 |
20,028 |
21,849 |
23,670 |
25,491 |
27,311 |
29,132 |
30,953 |
|
20 |
11,500 |
13,416 |
15,333 |
17,249 |
19,166 |
21,082 |
22,999 |
24,916 |
26,832 |
28,749 |
30,665 |
32,582 |
|
21 |
12,075 |
14,087 |
16,099 |
18,112 |
20,124 |
22,137 |
24,149 |
26,161 |
28,174 |
30,186 |
32,199 |
34,211 |
|
22 |
12,649 |
14,758 |
16,866 |
18,974 |
21,082 |
23,191 |
25,299 |
27,407 |
29,515 |
31,624 |
33,732 |
35,840 |
|
23 |
13,224 |
15,429 |
17,633 |
19,837 |
22,041 |
24,245 |
26,449 |
28,653 |
30,857 |
33,061 |
35,265 |
37,469 |
|
24 |
13,799 |
16,099 |
18,399 |
20,699 |
22,999 |
25,299 |
27,599 |
29,899 |
32,199 |
34,499 |
36,799 |
39,098 |
|
25 |
14,374 |
16,770 |
19,166 |
21,562 |
23,957 |
26,353 |
28,749 |
31,145 |
33,540 |
35,936 |
38,332 |
40,728 |
|
26 |
14,949 |
17,441 |
19,933 |
22,424 |
24,916 |
27,407 |
29,899 |
32,390 |
34,882 |
37,374 |
39,865 |
42,357 |
|
27 |
15,524 |
18,112 |
20,699 |
23,287 |
25,874 |
28,461 |
31,049 |
33,636 |
36,224 |
38,811 |
41,398 |
43,986 |
|
28 |
16,099 |
18,783 |
21,466 |
24,149 |
26,832 |
29,515 |
32,199 |
34,882 |
37,565 |
40,248 |
42,932 |
45,615 |
|
29 |
16,674 |
19,453 |
22,232 |
25,011 |
27,791 |
30,570 |
33,349 |
36,128 |
38,907 |
41,686 |
44,465 |
47,244 |
|
30 |
17,249 |
20,124 |
22,999 |
25,874 |
28,749 |
31,624 |
34,499 |
37,374 |
40,248 |
43,123 |
45,998 |
48,873 |
Here are some examples:
- An employee that would have resigned after nine years would have received zero severance pay. Under these payout provisions, if that employee is making $70,000 per year, he or she will be entitled to an immediate cash pay-out of $12,075 before tax.
- An employee with 20 years of employment making $70,000 per year who resigns would have previously been entitled to 10 weeks’ severance ($13,416). This employee now is entitled to double that payout – a full 20 weeks, or $26,832 before tax.
- Note that the payouts will actually be calculated at the rate of pay in effect on October 31, 2016, after all annual increases negotiated in the new collective agreement have been applied.
If I take the cash out now, will I still be entitled to severance pay if I were to be laid-off sometime in the future?
Yes. But any weeks of severance you have taken under the cash-out will be subtracted from the number of weeks of severance you are entitled to under the lay-off provisions of the severance article.
If I take a full or partial payout of my severance will the number of years of severance I cash out reduce my vacation leave entitlement?
No. The tentative agreement contains language to clarify that the cas- out does not reduce the amount of vacation leave that you earn.
If the tentative agreement is ratified, how soon can I expect to get the cash out of my accumulated severance if I choose to take some or all of it right away?
The employer has three months from October 31, 2016 to notify employees as to how much severance pay they have accumulated. As an employee, you will have six months from October 31, 2016 to make a decision. Depending on the number of employees who choose to cash out some or all of their accumulated severance, it could be some months before cheques are actually issued.
What are the advantages of waiting to cash out until I resign or retire?
If you take the voluntary severance cash out now, each week of severance pay will be calculated on the substantive rate of pay in effect on October 31, 2016, after all the new wage increases takes place. If you cash it out when you resign or retire, it will be paid at your exit rate of pay. For employees who expect to be promoted throughout their career, their exit rate of pay could be considerably higher than their current position’s rates of pay.
Are there any restrictions on a partial cash-out of severance?
You must take a round number of weeks, e.g. 1, 2, 3, 4 etc; no fractions of a week.
If choose not to cash out my severance now, will it continue to accumulate until I retire?
On retirement, you will be entitled to receive whatever weeks you had accumulated up to October 31, 2016, multiplied by your rate of pay at the time of retirement. There is no further accumulation of severance after October 31, 2016 for cases of resignation or retirement.
Is the severance cash-out considered as pensionable earnings?
No. Severance pay has never been considered as pensionable earnings and this hasn’t changed.
Is the bilingual bonus calculated as part of the salary for the severance payment?
The bilingual bonus does not count as part of salary for severance payment
Can I roll my cashed-out severance into an RESP as opposed to an RRSP?
You may do whatever you wish with your cashed-out severance. Any choice of investment is up to you.
I want to place money into a Tax Free Savings Account. What do I do?
Contributions to a TFSA are not tax deductible. Any contribution to a TFSA must be made using net income.
What happens if I do not take the cash-out, but then later resign before I could retire? Does it mean I won’t get any severance pay?
You will receive your accumulated severance pay. You have the option of banking your accumulated severance and it is payable either when you retire or when you resign.
What will be the rate of pay for an employee on income averaging who chooses to cash out their severance?
The severance calculation will be based on the employee’s substantive position’s rate of pay. If the period of leave with income averaging is more than the months, it will be deducted from their years of continuous employment.
Do I still get severance if I am laid off?
Yes. Severance for involuntary departure, including lay-off, continues to accumulate under the new agreements. In addition, members with over 10 years of employment will get an additional week’s pay of severance in the event of lay-off, and members with over 20 years of employment will get two additional week’s pay of severance on lay-off.
On the timeline
Why does the severance pay-out take effect on October 31, 2016?
By taking place on October 31, 2016, it means that the severance payouts will be based on the rates of pay in effect after all of the annual increases contains in the agreement are in effect.
When do you have to be “on strength” to qualify to receive the severance termination benefit?
You must be employed by the CRA on October 31st 2016, the day the new severance provisions come into effect.
How long do I have to make my choice?
Employees will have six months from October 31, 2016 to make their choice for the cash out.
On employment status
Do the changes negotiated affect my total period of continuous employment?
No. We have not negotiated changes to the definition of continuous employment. The employer will notify each employee of their total period of continuous employment within three months of the signing of the collective agreement.
What is the definition of continuous employment?
In our collective agreement, continuous employment has the same meaning as specified in the Employer’s Terms and Conditions of Employment Policy. For most employees, the most relevant part of the definition is:
In respect of a person appointed to the Canada Revenue Agency as a permanent employee or a term of three months or more:
- immediate prior service in the public service on a permanent basis, or on a specified term basis for three months or more;
- a combination of prior service in the public service on a permanent basis, or on a specified term basis for three months or more;
- immediate prior service in the Canadian Forces or the Royal Canadian Mounted Police, provided that the person was honourably released and has made or makes a valid election to contribute for that service under the Public Service Superannuation Act (the effective date will be the date the election is completed) provided that these periods of service are not separated by more than three months;
- service other than as a person appointed for a term less than three months or a casual worker in the office of a minister or leader of the opposition in the House of Commons, and service in any portion of the public service immediately prior to such service provided that such person ceased to be employed in such office because the person holding such position ceased to hold it; and
- immediate prior service in the public service as a person appointed for a term less than three months or a casual worker, provided that such service is not separated by more than five working days.
What is included in continuous employment?
As outlined in the definition, continuous employment includes your current period of employment as well as several forms of previous employment, provided that these are not separated by more than three months.
An employee with less than 10 years of continuous employment is leaving CRA. Will they be entitled to severance pay?
An employee who resigns with less than 10 years of continuous employment any time before October 31, 2016 would not be entitled to severance pay. If the employee leaves after that date, she/he will be entitled to the severance termination benefit of one week’s pay for each year of continuous employment.
An employee with more than 10 years of continuous employment resigns before October 31, 2016. Will they be entitled to severance pay?
Any employee who resigns with more than 10 years of continuous employment would receive half a week of severance pay per year of continuous employment. If the employee leaves after that date, she/he will be entitled to the severance termination benefit of one week’s pay for each year of continuous employment.
Which leaves without pay are deducted from continuous employment?
Our collective agreements state that leaves without pay of greater than three months for reasons other than illness are to be deducted from continuous employment. This is found at 33.02 in the “Leave General” article of the collective agreement:
33.02 Except as otherwise specified in this Agreement:
(a) where leave without pay for a period in excess of three (3) months is granted to an employee for reasons other than illness, the total period of leave granted shall be deducted from “continuous employment” for the purpose of calculating severance pay and “service” for the purpose of calculating vacation leave;
(b) time spent on such leave which is for a period of more than three (3) months shall not be counted for pay increment purposes.
What if I have been working at the CRA for less than a year?
Indeterminate employees with less than one year of continuous employment are entitled to a pro-rated week for their partial year of employment.
All recently-hired indeterminate employees that are part of the bargaining unit will receive a severance cash-out payment that corresponds to the time they worked up to October 31, 2016.
I have worked for the CRA for 10 years. Halfway through, I took a one-year leave without pay for spousal relocation. How many years of severance would I get?
Continuous employment is based on your start date and the current date. In your case, that is 10 years. The period of leave without pay is deducted from this. Your total period of continuous employment for the purposes of severance is nine years.
I was off on extended sick leave without pay for a year. Will severance be subtracted from this?
No. As per the definition, only leave without pay of over three months “for reasons other than illness” is deducted.
I took a year of maternity and parental leave. Does that reduce my period of continuous employment?
No. Under the maternity and parental leave language negotiated in our collective agreements by the PSAC/UTE, periods of maternity and parental leave are not deducted from the period of continuous employment. The wording is in clause 38.01 (g) of the collective agreement:
(g) Leave granted under this clause shall be counted for the calculation of “continuous employment” for the purpose of calculating severance pay and “service” for the purpose of calculating vacation leave. Time spent on such leave shall be counted for pay increment purposes.
I took a year of leave without pay for the care of immediate family. Is the entire year subtracted from my period of continuous employment?
Yes, the entire year will be deducted from your period of continuous employment, as per the wording of the Leave General article shown above.
Does an indeterminate employee with less than one full year of employment receive severance at a pro-rated amount?
Yes.
I changed departments without a break in service. Does all my service, regardless of department count for severance?
Yes.
Acting in another bargaining unit
Would a member acting in a position outside the bargaining unit be entitled to cash out their severance?
A member acting in a position in another bargaining unit would fall under that contract and will not be entitled to cash out severance unless the “acting” bargaining unit has signed similar language. When the acting period ends and the member returns to their own bargaining unit, the provisions of the new contract will apply. The member returning to the bargaining unit would have access to the same three options and would have three months to choose.
On pensionable service
Can I use my severance payout to buy back service for my pension? Will taxes be deducted?
If you would like to buy back previous service, you need to be in contact with the Public Service Pension Centre that can provide all the necessary information.
I am currently buying back some pensionable service. Will this count toward the calculation of my severance pay?
Severance pay is based on your total period of continuous employment, not pensionable service. Although the two concepts often add up to the same amount of time, they are separately defined and calculated. Generally speaking, buying back pensionable service does not increase the calculation of continuous employment.
On tax deductions
What is deducted from the severance cash-out payment?
The severance cash-out payment is not subject to PSSA pension contributions. EI and CP/QPP may be deducted from the severance payment, if the employee has not yet reached their maximum annual contribution limit at the time the payment is made.
What is the roll-over process for payments into RRSPs?
There is a process through the employer for rolling over payments in lieu of severance pay into RRSPs. This process involves a blanket tax waiver with the Canada Revenue Agency for those rolling over less than $10,000.
- The employer will provide all employees with a copy of the form required to be completed and returned to the employer if they want to proceed with the roll-over
- If you are anticipating rolling over more than $10,000 into a RRSP, you will need to contact the CRA or Revenue Québec and request a tax waiver.
- Once the appropriate form is completed, you will receive a notification from CRA/Revenue Québec. This will need to be attached to whatever documents are required by your compensation section.
- Only in cases of deferring the severance payment until retirement, an employee may benefit from a special RRSP contribution, which is not affected by your RRSP cap, of an additional $2,000 for each year of employment up to and including 1995. This special provision can only be used upon termination and cannot be used for a payment in lieu of severance. Please contact the CRA for more information.
Protection for employees on maternity, parental and other leaves without pay
At the request of the PSAC/UTE, a special arrangement has been put in place for employees who are on leave without pay where they may be in receipt of EI benefits. This includes maternity and parental leave, illness, relocation of spouse and compassionate care. This arrangement was put in place because the payments in lieu of severance pay could impact Employment Insurance benefits.
If you are on one of these types of leave, you will be able to defer your choice of payout option you wish to receive. If you defer, you will have to make your choice within three months after the end of your leave period, or three months after your Employment Insurance benefits cease, whichever comes first.