Pre-Paid Leave
Plans A "four-for-five" arrangement allows employees to receive 80% of their earnings for four years while "banking" the remaining 20% of their earnings to take as income during the fifth year which they take as a one year leave.
For HOOPP purposes, even though the member is only receiving 80% of their normal earnings during the first four years, contributions should be deducted based on 100% of the member's earnings. This means that the member will accrue full contributory service during the first four years, just as they would if they were not taking a leave in the fifth year. You must also contribute based on the member's full earnings during the first four years. You must also report a pension adjustment (PA) based on 100% of what the member earns in each year (not the 80% the member actually receives). There are two ways in which members can build pension service for the fifth year, while they are away from work - they can contribute for the fifth year, or they can buyback this period.
Contributing for the Fifth Year of a Four-For-Five Plan
The member can contribute for the fifth year through regular contributions, or as a lump sum within the timeline set by HOOPP to make contributions for a leave after the end of the leave, if your organization (who must also contribute) agrees to allow the contributions to be made. Contributions are based on 100% of what the member would have earned had they worked their usual hours. Contributions are not based on the "banked" income (20% × four) the member collects, as contributions have already been made based on the member's full earnings during the four years prior to the leave.
Buyback for the Fifth Year of a Four-For-Five Plan
If the contributions are not received within the timeline set by HOOPP to make contributions for a leave after the end of the leave, or if you do not allow contributions for the leave, the member may buy it back through HOOPP's past service provisions any time after they return to work. If the member does not contribute for the fifth year or purchase the period of service, they will not receive contributory service or eligibility service for the year. Additionally, contributions made in the fifth year while the member is on a leave, will apply against a member's prescribed compensation limits as set out in the ITA, and a PA or PSPA may apply. For more information please refer to Temporary Periods of Reduced Earnings in section 4.7. A four-for-five plan has been used as an example but the same rules would apply for other similar arrangements such as a three-for-four leave plan.
Leaves Due to Temporary Layoff
There are two types of layoffs – permanent and temporary.
When a permanent layoff occurs, the employment relationship has been severed and the member must terminate their membership in HOOPP. When a temporary layoff occurs, the member has a reasonable chance of being permanently recalled to work. Therefore, a temporary layoff is treated as an employer approved leave if it lasts for 31 days or longer. In addition to the usual conditions under which an approved leave ends (i.e. the member returns to work), a leave due to temporary layoff ends when the member subsequently terminates employment voluntarily or when their recall rights have expired as set by you, the employer, or specified in a collective agreement, and the member has not resumed work for your organization.
If the member is recalled to work, member and employer contributions to HOOPP must resume immediately. The only exception to this is if the member returns to work on a contract or fee-for-service basis and is not an employee.
If the member is laid off a second or subsequent time after being recalled to work, you must decide whether they are being permanently or temporarily laid off. If the layoff is temporary because the member has a reasonable chance of being permanently recalled to work, a new leave begins. If the member has recall rights, member and employer contributions can be made during this period. A non-unionized employee whose employer has temporarily reduced or eliminated their hours of work because of COVID-19 may qualify for a job-protected Infectious Disease Emergency Leave under the ESA for the period from March 1, 2020 to January 2, 2021. For more information please refer to the Declared Emergency and Infectious Desease Emergency Leaves During COVID-19 section below.
Unpaid Sick Days
When an employee takes an unpaid sick day you must decide whether to classify the time off work as an employer-approved health leave, an employer-approved leave or you may decide not to approve the leave.
If you approve the time off work as a health leave please see section 7 Disability Benefits, for further details on how to handle health leaves.
If you approve the time off work as an employer-approved leave and it is for a period of less than 31 days, the short term leave rules set out above apply and therefore contributions are mandatory.
If you do not recognize the day off as an employer-approved leave then the period should be treated as an absence and contributions cannot be made while the member is off work. Please remember that if you do not approve these days as a leave then the member will lose contributory service and they will not be able to purchase this service under HOOPP’s buyback provisions.
Members on a Leave When a New Employer Joins HOOPP
Any employee who is hired by an employer before the employer’s participation effective date has the option to join the Plan on the employer’s participation date or on any subsequent date. This applies to employees who are employed on a full-time or less than full-time basis.
If the member is on a health leave when their employer joins HOOPP, it is the employee’s decision whether or not to join the Plan. However, if such an employee joins HOOPP, they are not eligible to apply for or receive HOOPP disability benefits in relation to that health leave. Members must have made required contributions to the Plan before commencing a health leave in order to qualify for disability benefits from HOOPP.
Temporary Periods of Reduced Earnings
Members can choose to "top up" their contributions during a temporary period of reduced earnings (also referred to as an Approved Work Schedule Reduction), subject to your approval, as long as they have been employed by your organization for at least 36 months prior to the start of the period. The 36 month minimum employment requirement is waived for the year 2020 only, due to COVID relief measures provided under the ITA Regulations. Examples of a temporary period of reduced earnings include; participation in a temporary job-sharing program, or a decision by a member to work fewer hours each week for a temporary period of time.
For further information about temporary periods of reduced earnings/approved work schedule reduction and reporting requirements, please refer to Temporary Periods of Reduced Earnings in 4.7 Contributions in Other Situations
Declared Emergency and Infectious Disease Emergency Leaves during COVID-19
The Ontario state of emergency order due to the COVID-19 pandemic came into effect on March 17, 2020 and ended on July 24, 2020. Members who are placed on an unpaid Declared Emergency or Infectious Disease Emergency Leave during the period of the Ontario-declared emergency for COVID-19 will be provided with contributory service for the period of their unpaid leave that coincides with the declared emergency. If you have granted either of these types of leave for a member, please use the category “Emergency Leave” when you submit the leave information to HOOPP.
This will also apply to members who are within the first 15 weeks of an unpaid health leave during this period. Neither the member nor the employer will need to make contributions for these eligible periods. The process for reporting a health leave remains unchanged.
Update to the ESA for Non-unionized Employees on Leave
A non-unionized employee whose employer has temporarily reduced of eliminated their hours of work because of COVID-19 may qualify for a job-protected Infectious Disease Emergency Leave under the ESA for the period from March 1, 2020 to January 2, 2021.
Any non-unionized members that you have now placed on an Infectious Disease Emergency Leave may also qualify to receive contributory service at no cost to the member or employer, as noted above. Additional information regarding process details is available on the Employer Learning Centre.
Health Leave/Disability Pension
Please refer to section 7. Disablity Benefits