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COMPENSATION DIRECTIVE: 2003-010
July 18, 2003 (Revised October 21, 2003)
SUBJECT: |
Pay Procedures for Employees Approved for Disability Insurance
(DI), Long-term Disability Insurance (LTD) Benefits and/or Participating
in an Approved Rehabilitation Program
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1
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PURPOSE
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1.1
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The purpose of the directive
is to inform departments of the pay procedures that apply when an employee
is participating in an approved rehabilitation program under the Disability
Insurance (DI) or the Long-term Disability Insurance (LTD) plans or in
another approved rehabilitation program such as departmental progressive
return to work programs (e.g. Workers' Compensation Board (WCB), Société de
l'assurance automobile du Québec (SAAQ), etc.)
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This directive will also provide
information relating to the creation of three new status codes, as per
the following, and also a clarification of status Code 62 under Field
39 (Pension Type Code).
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Field 37 - Code 4: Death Benefit
Eligibility - Premiums temporarily suspended, Rehabilitation Program
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Field 47 - Code 8: DI Participant
- Premiums Waived
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Field 47 - Code 9: LTD Participant
- Premiums Waived
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1.2
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In this text, use of the masculine is generic and applies to both men
and women.
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2
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BACKGROUND
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2.1
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The purpose of an approved rehabilitation
program is to provide an employee, who returns to work after a period
of sick leave without pay (LWOP) or injury on duty leave, with the opportunity
to gradually increase his hours of work until he is medically fit to
resume his former work schedule. These procedures will apply to employees
who are approved for DI, LTD, WCB, SAAQ benefits, etc.
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3
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PROCEDURES/INSTRUCTIONS
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3.1
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Where an employee returns to
work under an approved rehabilitation program and is temporarily working
reduced hours because of illness, it may be necessary to modify certain
status fields and voluntary pay deductions for this period. It should
be noted that statutory and voluntary deductions may be impacted by the
reduced hours of work.
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3.2
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In the past, pension type Code
59 was used in cases where an employee opted not to pay his current
superannuation deductions when he returned to duty under an approved
rehabilitation program. Unfortunately, this pension type code did not
reflect the contributor's status while on the rehabilitation program.
There has now been a change made to this code. Pension type Code 62 that
is defined as "full-time indeterminate employee or term employee of more
than six months temporarily working reduced hours", will ensure that
this period of employment remains pensionable, but that no superannuation
contributions (or deficiencies) are deducted during the rehabilitation
period.
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3.3
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In addition to indicating the
appropriate pension type code for employees participating in an approved
rehabilitation program, compensation advisors must adhere to the following
pay procedures so that the Regional Pay System reflects the correct data
relating to DI/LTD insurances and Public Service Superannuation Act (PSSA)
(Part II) Supplementary Death Benefit (SDB).
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3.4
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PSSA
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A Miscellaneous
Staffing Action (MSA) transaction will be required to modify Field
39 - (pension type code) to Code 62 effective the date of return
to duty for employees who choose not to pay current superannuation
deductions (and deficiencies) from their reduced pay.
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When an employee resumes his
regular scheduled hours of work, the pension type code in Field 39 must
be reverted back to the original code effective the same date that was
initially reported to temporarily suspend the current deductions (and
deficiencies). This will produce a message to the pay office to
calculate the PSSA deficiencies for both the temporarily struck off strength
(T-SOS) period and the rehabilitation period (based on the regular hours
of work). The recovery period will extend over a period equal to twice
the entire period of LWOP (T-SOS and rehabilitation period).
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Departments must ensure that
all current LWOP under an ongoing rehabilitation program are amended
to reflect the new PSSA code. This is very important in order to ensure
that the employee's pensionable service reflects the accurate situation.
The Contributor System and the Regional Pay Salary Service History records
should be reviewed for all employees who have been and are still on a
rehabilitation program to ensure that the pension type code does not
reflect Code 59 at all and instead reflects Code 62 if the employee
is still working reduced hours.
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3.5
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SDB
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A Status
Change (STC) transaction will be required to modify the Death Benefit
Eligibility in Field 37 (SDB) effective the first day of the month
of return to duty on an approved rehabilitation program.
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In the past, Field 37 (SDB)
offered two options: 1 (yes - contributor) and 2 (no - non-contributor).
When this field was modified to Code 2, the employee's status reflected
that he was not covered under the SDB when in fact he should remain covered.
Therefore, status indicator Code 4 has been created to indicate that
the employee remains covered even though the SDB premium is temporarily
suspended during the rehabilitation period. Please note that the term "contributor
and non-contributor" will be changed to "participant and non-participant" in
the Personnel-Pay Input Manual (PPIM).
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When an employee resumes his
regular scheduled hours of work, the SDB indicator (Field 37) must
be modified to a Code 1 effective the first of the month that the rehabilitation
period commenced in order to reinstate the premium deductions from
the employee's pay for the T-SOS period and the rehabilitation period.
The pay office will calculate the deficiencies and recover the premiums
over twice the period of LWOP including the rehabilitation period.
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3.6
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It must be noted that pension
type Code 62 and SDB Indicator 4 are used only for the purpose of suspending
deductions. When the rehabilitation period is finished the codes must
be revised to reflect the actual contributor status.
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3.7
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DI/LTD
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An employee who becomes entitled
to LTD or DI benefits is not required to pay any premiums in the following
situations:
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a) any full month of LWOP during
which he is in receipt of such benefits; and
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b) any full month of the qualifying
period for such benefit during which he is on LWOP.
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A person engaged in a rehabilitation
program who is in receipt of LTD or DI benefits is considered on LWOP.
Therefore, he would not be required to pay premiums while on a rehabilitation
program for any full month he receives rehabilitation benefits.
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Employees in receipt of other
disability benefits such as WCB, SAAQ, etc, for which the insurer, Sun
Life Assurance Company of Canada or National Life Assurance Company of
Canada, has been asked to adjudicate the DI or LTD claims and has determined
that the employees are totally disabled, will also have their DI or LTD
premiums waived.
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In order to properly identify
an employee who does not have to pay premiums, a Status
Change (STC) transaction will be required to modify Field 47 - DI
or LTD indicator code to either a Code 8 (DI Participant - Premium Waived)
or a Code 9 (LTD Participant - Premium Waived), effective the first of
any full month for which he is not required to pay any premiums. Please
note that employees currently entitled to a waiver of premiums should
also have Field 47 modified to reflect the new codes.
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The above process eliminates
the need for compensation advisors to communicate with pay offices in
order to advise them NOT to recover premiums for periods for which an
employee is in receipt of DI or LTD benefits or for periods for which
the insurer, Sun Life Assurance Company of Canada or National Life Assurance
Company of Canada, has adjudicated the claim of an individual in receipt
of other types of disability benefits such as WCB, SAAQ, etc. and has
determined that the employee is totally disabled.
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3.8
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When an employee resumes his
regular scheduled hours of work, the DI or LTD indicator Field 47 must
be modified to either Code 1 (DI) or Code 2 (LTD) effective the first
of the month for which he was not in receipt of DI or LTD benefits for
the FULL month.
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Example a)
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- Rehabilitation period ends
June 27th;
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- the DI/LTD indicator Field
47 must be changed to a "1" or a "2" effective June 1st.
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Example b)
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- Rehabilitation period ends
June 2;
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- the DI/LTD indicator Field
47 must be changed to a "1" or a "2" effective June 1st.
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3.9
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Other voluntary deductions may
be amended or stopped by completing, either a Deduction
Amend (DEA) or Deduction
Stop (DES) transaction. Compensation advisors should first determine
that the regular cheque (for the reduced hours) will have sufficient
monies available to allow for the employee's deductions. Second, compensation
advisors should consult with the employee to determine whether some or
all of the voluntary deductions should be amended or ceased. It should
be noted that the statutory deductions for income tax, Canada Pension
Plan or Quebec Pension Plan contributions, and Employment Insurance premiums
cannot be ceased. When the rehabilitation period ends, compensation advisors
must ensure that all other mandatory (e.g. PSSA, SDB) or voluntary deductions
are resumed accordingly.
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3.10
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During a rehabilitation period,
all LWOP must be reported by completing a Reduction
Commence (REC) transaction. Departments have an option of reporting
these hours on an ongoing basis using Code 383 or reporting hours not
worked using Code 301. Please note that the reason for the LWOP Code "C" (illness
and disability) should be used as the LWOP reason. If the employee is
paid on a 7A frequency for the hours worked, then no REC
transaction is required.
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You will find enclosed appendices "A", "B" and "C" that
outline the procedures to follow for rehabilitation cases and the appropriate
reporting methods for each specific employee situation.
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3.11
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The PPIM will be updated to
incorporate all related information contained in this Compensation Directive.
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4
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INQUIRIES
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4.1
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Any inquiries on the information
contained in this directive should be addressed to your Public Works
and Government Services Canada (PWGSC) Compensation Services Office.
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Original Signed by
G. Blacker |
R. Jolicoeur
Director General
Compensation Sector
Accounting, Banking and Compensation
Reference(s): CJA 9021-1 and 9006-15
APPENDIX "A"
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Scenario:
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The employee will be returning to a reduced
work week that is more than one-half of his scheduled work week (SWW).
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OPTION 1
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Employees in this situation would have the
option of continuing current deductions for superannuation and the Supplementary
Death Benefit (SDB) and would pay regular deductions (on ten days of
pay) as well as deficiencies for the temporarily struck off strength
(T-SOS) period and for the reduced hours. The pension type
code would remain unchanged and the SDB code would reflect "1" as
well. Reduction
Commence (REC) transactions (PAC15C301, PPIM
4-4-15 and PPIM
4-4-18 "R" applies) would be reported for the days (or hours) not
worked as per normal processing. Please keep in mind that the Master
Employee Record (MER) has a limit as to the number of allowance/deduction
transactions per pay period (including the normal ongoing deductions
and recoveries); therefore, this method of reporting is NOT appropriate
for employees with allowances who are working reduced hours each day.
The number of transaction input lines required to report the necessary
recoveries will likely exceed the available space on the allowance/deduction
block. In addition, the total number of recovery days input per pay period
should never exceed six to ensure that a regular pay cheque can be produced.
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As soon as the insurer confirms that the
claim has been approved, the Disability Insurance (DI) or the Long-term
Disability Insurance (LTD) indicator should ALWAYS be changed to indicate "8" or "9" for
the period during which the employee is receiving benefits.
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OPTION 2
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These employees also have the option of
deferring the current superannuation deductions as well as the deficiencies
for the T-SOS period and in this case, the pension type, SDB and DI or
LTD indicators should be changed to reflect the rehabilitation codes
(i.e. for pension type Code 62, SDB Code 4 and DI Code 8 or LTD Code
9, as applicable). All superannuation deficiencies (for the T-SOS period
and for the rehabilitation period) will be collected when the rehabilitation
period ends and the pension type code and SDB indicator have been
reversed using the same effective date that was initially reported
to temporarily suspend the deductions.
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As soon as the insurer confirms that the
claim has been approved, the DI or LTD indicator should ALWAYS be changed
to indicate "8" or "9" for the period during which the employee is receiving
benefits.
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Note
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Automated Retroactivity
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There will be no impact on automated
retroactivity as the T-SOS periods and leave without pay (LWOP) periods
(REC transactions) will be automatically adjusted if the collective agreement
is signed after the employee has returned to his or her regular work
schedule.
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If the retroactivity payment is prior to
the end of the rehabilitation period, the pay office must ensure that
the correct rates are used for the superannuation recovery, i.e. old
salary rate up to the rehabilitation period, the rate when the employee
was retaken on strength (RE-TOS) and the new salary rate from the effective
date of the RE-TOS depending on how the retroactivity for the T-SOS
period is paid.
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APPENDIX "B"
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Scenario:
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The employee will be returning to a reduced
work week that is less than one-half of his SWW or for which Appendix "A" is
not appropriate and the rehabilitation period will be prolonged.
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OPTION 1
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When an employee returns from his period
of T-SOS in rehabilitation status and will consistently work the
same number of hours in a two week period, the ongoing LWOP reporting
process is appropriate. Again the employee has options concerning his
superannuation current deductions and deficiencies. Deduction Code 383
resides on the allowance/deduction block of the MER and reduces the gross
pay for the number of hours reported until the rehabilitation period
is over and the ongoing recovery is stopped. If superannuation is to
continue while the employee is on rehabilitation status, then the pension
status fields remain unchanged. Superannuation will be deducted based
on the assigned work week (AWW) and the deficiencies for the T-SOS period
will be recovered from the reduced salary.
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As soon as the insurer confirms that the
claim has been approved, the DI or LTD indicator should ALWAYS be changed
to indicate "8" or "9" for the period during which the employee is receiving
benefits.
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OPTION 2
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The same process as above, but the pension
indicator and the SDB code are adjusted to reflect the rehabilitation
status and neither current superannuation deductions nor the deficiencies
for the T-SOS period will be recovered until the rehabilitation period
ends and the employee returns to his regular work schedule.
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As soon as the insurer confirms that the
claim has been approved, the DI or LTD indicator should ALWAYS be changed
to indicate "8" or "9" for the period during which the employee is receiving
benefits.
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Note
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Adjustment of Hours
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It is suggested that instead of offsetting
deduction Code 383 as currently proposed in the PPIM, more LWOP hours should
be reported via a Reduction
Commence (REC) transaction, and if additional hours are worked
during a pay period they should be reported using Entitlement
Commence (ENC) transaction Code 049 (additional hours). When the
rehabilitation schedule of work is changed, an Ongoing
LWOP Stop (OLS) transaction Code 383 and a new REC transaction must
be commenced with the effective date of the start of the current pay
period. When reporting more LWOP transactions, caution should be used
to ensure that the total recovery will not exceed six days.
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Note
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Automated Retroactivity
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Since there is no indication of specific
hours not worked, only a reduction of hours for the pay period, a close
verification of the automated retroactive payment is required.
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The following example may help in completing
the required transactions based on the above information.
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Employee was on paid sick leave from February
10, 2003, and began his LWOP on March 31, 2003. The employee was in receipt
of DI benefits from May 12, 2003, to July 2, 2003. This person returns
to work under a rehabilitation program effective July 3, 2003. This employee
works three days a week: Tuesday, Wednesday and Thursday, (3 days @ 7.5
hours = 22.5 hours), so every two weeks the employee works 45 hours and
is on LWOP for 30 hours.
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The following transactions would be required:
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RE-TOS (RET) effective July 3, 2003,
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Miscellaneous Staffing Action (MSA) to change
Field 39 to "62" effective July 3, 2003,
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Pay Status Change (STC) to change Field
37 (SDB) to "4" effective July 1, 2003,
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Pay Status Change (STC) to change Field
47 (DI) to "8" effective April 1, 2003,*
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Reduction Commence (REC) using Code 383
(Ongoing LWOP) to recover 30 hours per pay period using reason Code "C" (illness
and disability). If the employee's new schedule is not as precise as
in this example, then use Code 301 to recover the additional days of
LWOP.
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Once the above transactions have been processed,
compensation advisors must look at any voluntary deductions that the
employee may have. With this reduced schedule, the employee may not have
enough earnings to cover all voluntary deductions. Care must be taken
to ensure that you do not exceed six days of LWOP to be recovered in
any particular pay period, and that you do not exceed the allowable number
of transactions per pay period.
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* This transaction would not be required,
upon RE-TOS, if the compensation advisor had already changed the employee's
DI indicator to an "8" when he was informed by the insurer that the employee
was approved for receiving benefits.
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APPENDIX "C"
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Scenario:
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The employee will be returning to a reduced
work week that is not immediately determined or the employee is unsure
of the hours that will be worked. Employee's hours of work will be reported
by a Time
Summary (TIM) transaction.
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In these instances, it is mandatory to change
the Superannuation, SDB and DI or LTD indicators to reflect the
rehabilitation codes and modify the employee's pay cycle to a 7A pay
frequency. Hours worked will be reported via TIM input. This will enable
the employees to be paid and when they return to their former status,
the superannuation deficiencies and DB are calculated as usual, the status
codes are revised to reflect contributor status and the pay frequency
is changed to 7C.
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As soon as the insurer confirms that the
claim has been approved, the DI or LTD indicator should ALWAYS be changed
to indicate "8" or "9" for the period during which the employee is receiving
benefits.
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Note
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Automated Retroactivity Impact
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A close verification of the automated retroactive
payment is required.
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Any automated retroactivity will revise
the hours reported via time summary reporting; therefore, the department
must process Entitlement
Adjustment (EAJ) 202 transactions to adjust the superannuation
for the unreported hours while the employee was on the 7A pay frequency.
The compensation advisor must input these transactions to coordinate
with the retroactive payment or via memo after the retroactive payment
to enable the pay office to adjust the superannuation for the hours not
worked via deductions from regular pay.
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