How to handle a Salary Continuance in ZonePayroll (Canada)

Audience: Payroll Administrators, HR Managers

Applies To: ZonePayroll for NetSuite (Canada Region)

Overview

When ending an employment relationship, an employer may agree to continue paying an employee’s regular salary for a specified duration after active duties cease. This arrangement—known as Salary Continuance—typically maintains active benefits and pension plan contributions.

Because the employment relationship remains legally active during this period, salary continuance is classified as regular employment income.

Statutory Deductions

Salary continuance payments are treated like standard earnings and remain subject to all statutory withholdings:

• CPP / QPP contributions

• EI / QPIP premiums

• Federal and Provincial Income Tax

• NWT / Nunavut Payroll Tax (where applicable)

💡 Example Scenario:

An employer ends an employee’s role but agrees to pay their regular monthly salary for four additional months. The employee no longer reports to work, but benefits and pension contributions stay active. Because the employment relationship remains active throughout those four months, all payments are processed as regular employment income with standard statutory deductions.

Important Compliance Considerations

• Legislated Minimums: The continuance duration and total pay must meet or exceed the employee’s minimum statutory notice entitlement under applicable provincial or federal employment standards.

• Written Agreement: Ensure the employee agrees in writing that salary continuance is accepted in lieu of standard formal statutory notice.

• Vacation Accrual (Hours & Dollars): Depending on your jurisdiction's labor standards and the specific termination agreement, vacation pay (dollars) and vacation time (hours) may or may not continue to accrue. Verify your local labor laws before configuring your payroll setup.

System Setup Steps in ZonePayroll

Because ZonePayroll automatically calculates leave accruals and vacationable earnings on standard pay runs, follow these steps to configure salary continuance and control accrual behavior.

Step 1: Adjust the Vacation Policy (To Stop Hour & Dollars Accruals)

If vacation time (hours) should not accumulate during the continuance period:

1. Navigate to the Employee Profile and click Edit.

2. Go to the Leave Info subtab > Leave Entitlement.

3. Change the active policy to None AL (this stops automated leave hour accruals).

💡 Important System Behavior: Changing the entitlement policy to None AL stops both Leave Hour and Vacation Dollar accruals across the board for this employee during payroll processing.

⚠️ Before Updating the Policy:

• Open the employee’s Leave History tab and save a copy or take screenshots of all prior transactions for audit purposes.

• Note the current verified leave balance.

Note: If accruals calculated incorrectly on a prior pay run, navigate to Leave History and create a manual balance adjustment record to correct the balance.

Step 2: Determine Pay Component Setup (Decision Tree)

Before processing payments, determine whether your salary continuance terms can use the standard Base Salary setup or require a custom Pay Component Subtype (PCST).

                  ┌──────────────────────────────────────────────┐
                  │ Does the salary continuance require a        │
                  │ different setup than of the regular salary  │
                  │ (e.g., custom WCB, or accruing dollars while │
                  │ halting hours)?                              │
                  └──────────────────────┬───────────────────────┘
                                         │
                   ┌─────────────────────┴─────────────────────┐
                   │                                           │
                ▼ YES                                       ▼ NO
┌───────────────────────────────────────┐   ┌───────────────────────────────────────┐
│ • Create new PCST Subtype             │   │ • Continue using existing Base        │
│   "Salary Continuance"                │   │   Salary / Normal Time component      │
│ • End-date regular Salary/Wages code  │   │ • Set End Date matching the end of   │
│ • Assign new PCST with Start/End dates│   │   the continuance period              │
│ • Proceed to Step 3                   │   │ • Skip Step 3                         │
└───────────────────────────────────────┘   └───────────────────────────────────────┘

Step 3: Configure Canada PCST Attributes (Only if New Subtype Created)

If you created a dedicated Salary Continuance pay component in Step 2, update its attribute settings:

1. Open the PCST Canada Attributes subtab on your new Salary Continuance pay component.

2. Confirm that all statutory taxes (CPP, EI, Income Tax) are set to Subject.

3. Navigate to the Vacationable section:

   • Uncheck / Exclude vacation accrual if salary continuance should not accumulate vacation pay dollars.

   • Check / Include vacation accrual if local legislation or agreement terms require vacation pay to continue accumulating.

4. Verify all required fields within the Canada configuration subtab are fully populated, then save.

Configuration Summary Checklist

Need assistance? Contact your ZonePayroll Support Team or submit a ticket through the Help Center.