Canada: Compliance: British Columbia Employer Health Tax Update

Canada: Compliance: British Columbia Employer Health Tax UpdateThe employer health tax (EHT) is an annual tax on British Columbia (B.C.) remuneration paid to employees and former employees in a calendar year beginning on January 1, 2019.

According to the British Columbia government website, Employers with B.C. remuneration greater than $500,000 (exemption amount) in a calendar year must register for the employer health tax. ‘Employers’ include an individual, a corporation, a partnership, a trust, or a government.

Employers with B.C. remuneration:

  • Of $500,000 or less don’t pay employer health tax
  • Between $500,000.01 and $1,500,000 (notch rate amount) pay the reduced tax amount as calculated:
    • 2.925% x (B.C. remuneration – $500,000)

For more legislative updates for Canada and its provinces, read Asinta Partner Cowan Insurance Group’s full compliance update.

Global Benefits Benchmarking: Technology Industry

Global Benefits Benchmarking: Technology IndustryDid you know that tech employees in the United States don’t value vacation time all that much, but Germany’s tech employees do? Isn’t it curious that tech employees in both countries covet bicycles as a benefit?

In technology’s ultra competitive recruiting market make sure you have access to employee benefit benchmarking information like this. It’s one of the first things that Asinta Partner’s provide their clients with–market data that’s localized and industry specific to help you create competitive benefit and compensation packages.

Contact us to speak with an Asinta Partner about benefits benchmarking data for your industry in the countries where you do business.

Canada: Compliance: British Columbia Employer Health Tax Update

Canada: Compliance: British Columbia Employer Health Tax UpdateThe employer health tax (EHT) is an annual tax on British Columbia (B.C.) remuneration paid to employees and former employees in a calendar year beginning on January 1, 2019.

According to the British Columbia government website, Employers with B.C. remuneration greater than $500,000 (exemption amount) in a calendar year must register for the employer health tax. ‘Employers’ include an individual, a corporation, a partnership, a trust or a government.

Employers with B.C. remuneration:

  • Of $500,000 or less don’t pay employer health tax
  • Between $500,000.01 and $1,500,000 (notch rate amount) pay the reduced tax amount as calculated:
    • 2.925% x (B.C. remuneration – $500,000)

For more legislative updates for Canada and its provinces, read Asinta Partner Cowan Insurance Group’s full compliance update.

Canada: Retirement: Benefits Coverage for an Aging Population

Canada: Retirement: Benefits Coverage for an Aging PopulationMany thanks to our Canadian Partner, Cowan Insurance Group, for providing this article.

Canada’s aging population is not a new or unknown phenomenon—as of 2016, the proportion of Canadian citizens aged 65 and older has grown to 16.9% of the national population (Stats Canada)—and while the Ontario Human Rights Code prohibits employers from imposing mandatory retirement policies, it does grant employers the right to renounce certain group benefits for workers who are aged 65 and older.

The Human Rights Tribunal of Ontario case of Talos vs. Grand Erie District School Board in May 2018 was a precedent case challenging this policy. It argues that an employer’s decision to suspend health and dental benefits at the age of 65 is an act of age discrimination in violation of the Canadian Charter of Rights and Freedoms, and that cessation of benefits coverage for older workers should be based solely on ability and performance, and not on age.

There are many implications that organizations must consider when providing coverage for older workers—mitigating costs being just one of them. The tribunal in the Talos case ruled that the suspension of benefits was unconstitutional, and that continued provision of benefits is not cost-prohibitive, nor a financial disadvantage. The tribunal further disputed provisions could have been tailored to preserve the viability of workplace benefit plans without the “carve out” that left older workers vulnerable to a lessening of their compensation based solely on age [288]. All of this is under appeal and/or possible mediation.

Employers must consider the cost impact of having extended coverage past 65. The tribunal’s decision does not mean that employers must immediately amend their contracts to equate with the ruling, but perhaps continued coverage for older workers will lead to a future change in group benefits sponsorship.

India: PTO: Childcare: Compliance: “The Crèche” Has Big Implications for Employers

India: PTO: Childcare: Compliance: “The Crèche” Has Big Implications for EmployersMany thanks to Asinta’s Partner in India, Prudent, for providing this information.

Formally known as The Maternity Benefit Amendment Act of 2017, in human resources circles the law is known as “the crèche.” Translated it means childcare and daycare facilities.

Childcare benefits rival health care benefits for popularity in India, however it is the customary for babies and pre-school age children stay home with the mother or mother-in-law. This law is designed to help families where the mother decides to return to work.

The crux of the bill dictates that mothers must receive 26 weeks of paid maternity leave. After that a work-from-home option must be made available if possible. Also, employers with more than 50 employees have the duty to provide an on-site or near-site childcare facility, or a crèche. The law does not allow for outsourced childcare.

A crèche facility is typically the most challenging for employers to maintain. All the mandates for facilities is yet to be fully finalized, but these are the elements Prudent believes employers should expect:

  • The facility needs to care for children ages six months to six years.
  • There must be one crèche for every 30 children.
  • The crèche has to be open throughout the time women are working. This includes at night if a mother is working a night shift.
  • A playground must be close to the crèche.
  • Crèche staff must meet certain education levels (for example in come cases crèche employees need to be 30-years-old).
  • Mothers have the right to visit the crèche 4 times a day.
  • Employers must ensure the safety of the children.

A solution many employers found is to locate their office(s) in an Information Technology (IT) office park that has private daycare on-site already.

Note that it is very hard to get admission to these facilities. Families need to make a deposit to reserve a place for their child early in the mother’s pregnancy. This is why Prudent recommends employers consider maintaining their own crèche and make it a recruiting differentiator.

This article provides more background information on the law.

Canada: Retirement: Benefits Coverage for an Aging Population

Canada: Retirement: Benefits Coverage for an Aging PopulationMany thanks to our Canadian Partner, Cowan Insurance Group, for providing this article.

Canada’s aging population is not a new or unknown phenomenon—as of 2016, the proportion of Canadian citizens aged 65 and older has grown to 16.9% of the national population (Stats Canada)—and while the Ontario Human Rights Code prohibits employers from imposing mandatory retirement policies, it does grant employers the right to renounce certain group benefits for workers who are aged 65 and older.

The Human Rights Tribunal of Ontario case of Talos vs. Grand Erie District School Board in May 2018 was a precedent case challenging this policy. It argues that an employer’s decision to suspend health and dental benefits at the age of 65 is an act of age discrimination in violation of the Canadian Charter of Rights and Freedoms, and that cessation of benefits coverage for older workers should be based solely on ability and performance, and not on age.

There are many implications that organizations must consider when providing coverage for older workers—mitigating costs being just one of them. The tribunal in the Talos case ruled that the suspension of benefits was unconstitutional, and that continued provision of benefits is not cost-prohibitive, nor a financial disadvantage. The tribunal further disputed provisions could have been tailored to preserve the viability of workplace benefit plans without the “carve out” that left older workers vulnerable to a lessening of their compensation based solely on age [288]. All of this is under appeal and/or possible mediation.

Employers must consider the cost impact of having extended coverage past 65. The tribunal’s decision does not mean that employers must immediately amend their contracts to equate with the ruling, but perhaps continued coverage for older workers will lead to a future change in group benefits sponsorship.

France: Health Care: What will change with 100% reimbursement of hearing aids.

France: Health Care: What will change with 100% reimbursement of hearing aids.Many thanks to our French Partner, Gerep, for providing this article.

In the hearing aid industry, negotiations have been a bumpy ride. Hearing aid specialists feared that a Big Bang would undermine their business model. Discontent focused particularly on invoicing separately for the supply of devices and their on-going maintenance. None of this happened. On this point, discussions ended in a status quo: tomorrow as today the sale price of a hearing aid will also cover maintaining the device and professional advice throughout the warranty period. However, when it comes to reducing co-pay, the result of the negotiations is spectacular. “Zero co-pay” will come into effect from 2021 as a result of a drastic cut in pricing and a significant increase in the cover provided by first and second tier health insurers.

Co-pay will be squeezed out by price cuts and increased reimbursements from health insurance

Today 57% of the price of hearing aids remains for the customer’s account. Given the average price of €1,500 per ear to be correctly fitted out, an insured is left with a cost of €850 per ear, i.e. €1,700 in total. For many people with hearing problems, any financial effort is just out of the question.

Between now and 2021, the amount remaining for the patient’s account will be cut to zero in three stages: co-pay will be reduced to €1,300 (for the two ears) in 2019 and then to €800 in 2020 and finally to 0 in 2021. This benefit will be restricted to a “100% healthcare” basket comprising a number of types of device capable of providing at least 30 decibels of amplified sound output and 12 adjustment channels. Just as for dentistry and optical aids, the agreement provides for a further benefits category with price caps and another with prices fixed freely. What is different with hearing aids, compared to the other sectors, is the size of the reduction in price capping that has been negotiated with the industry. After capping at an average of €1,500 in 2019, the maximum sale price will fall to €950 in 2021. At the same time Social Security (the first tier system) will double its cover from €120 to €240, while second tier (complementary insurers) will gradually absorb the remaining co-pay.

Hearing aid specialists are banking on reduced prices boosting volumes

In France, while six million people suffer from hearing problems, only two million have the benefit of hearing aids. After the reform, it is estimated that the number of people fitted with devices could reach three million. Hearing instrument specialists are counting on volumes to compensate for reduced prices. Some manufacturers are, in fact, hoping for a market increase of 7% to 8% in volume per year.

After an effort on pricing comes prevention and communication

The benefits of the reform for people with hearing problems is just staggering. However, when it comes to hearing problems, price is not everything. A lot of people are reluctant to admit or show that they are hard of hearing. This is why the agreement also provides for a dose of prevention and communication. Pushing “zero co-pay” and breaking down the barriers to seeking help on hearing loss will be good for specialists’ business.

What about those who finance the system, who might fall victim to the success of this reform? The State authorities prefer pointing to the reduction in risk stemming from treating hearing loss: social alienation, depression, cognitive disorders or falling. On the other hand, complementary health insurers fear the effects of a reform that could not so much hit corporate group schemes as individual policies, much more frequent among retired people.

Spain: Labor Law: Could Government Changes Increase Employers’ Costs?

Many thanks to our Spanish Partner, SARE, for providing this article.

It has been a very short time since the new socialist government was elected in Spain. Some have been considering the impact on employer costs this change many cause, but it´s not easy to have a clear idea of what exactly any reform would bring.

 

It´s true that the new Labor Minister talks of a complete rethinking specially regarding collective bargaining and the unions’ roles, and Spain’s 2012 labor reforms could be overturned. If that happens, costs for employers could indeed increase. Labor reform and pensions specifically are two key issues for the new government to debate. However, with regards to pensions it is expected they will wait for the outcomes of the upcoming Toledo Pact Commission to avoid unnecessary challenges as long as possible.

 

With regards to the 2012 labor reform, the Prime Minister’s opposition to it was clear. However, the Prime Minister’s party is ruling in minority, and the supporting parties who helped the new Prime Minister get into office, may not clearly support him to modify a norm with good results.

If reform comes, it may look at two important areas: dismissal cost and collective negotiation (with various issues such as priority of Company Agreements over Sector Agreements or dropping out of Sector Agreements). Current dismissal costs of 20, 33 or 45 days per year generates great controversy, but if Trade Unions role under a collective agreement, this issue could become an even hotter topic.

 

In summary, with new government leadership some changes may occur to increase employers’ costs, but the scope is far from clear at this stage.

France: Retirement: Are changes afoot in buying extra pension entitlement?

France: Retirement: Are changes afoot in buying extra pension entitlement?Many thanks to our French Partner, Gerep, for providing this article.

Buying extra quarters is a most effective, tax-efficient way of taking control of one’s retirement date. Although it is quite simple to do, it does require some expertise in order to make the right strategic choices. Even more so, now that tax deduction at source and a bonus-malus system on second-tier pensions will make things more complicated. Here are some tips from us on making the most of pension buy-backs over the coming years.

Buying-back quarters to shorten the time to retirement

The Social Security scheme allows you to buy-back contribution quarters, i.e. make a cash payment to reduce the time to retirement on full pension. For example, a manager, born in 1960 earning a comfortable salary wishes to retire at 62, which is the minimum legal age in France at the moment. He or she realises that they are missing four contribution quarters to be able to retire in 2022 on full pension. He or she cannot wait to be spending their days playing tennis or gardening, so they contact Social Security. Based on actuarial tables, the scheme offers an earlier retirement date in consideration for payment of contributions ranging from €4,000 to €6,000 per quarter. The manager can then deduct this amount from taxable income. By buying-back one quarter each year, this manager could considerably reduce his or her income tax and hasten retirement in one fell swoop. Buying-back quarters is thus undoubtedly an efficient way to lever more retirement income in a short time.

No buy-backs in 2018?

2018 will not be a year like any other for taxpayers in France. The introduction of tax deduction at source on January 1, 2019 means that 2018 will be “tax neutral” since, from 2019 onwards, withholding tax will be levied on the current year and no longer on the previous year.

In view of this, it would be better to defer for one year any intention to buy-back quarters. Unless, of course, you have extraordinary income to declare in 2018! In order to avoid opportunistic tax optimisation (e.g. capital gains or dividend earnings), the law provides for such extraordinary income in 2018 to be taxed at one’s average tax rate. Any buying-back of pension quarters could then offset tax on such extraordinary income.

If you have no extraordinary income in 2018 and decide to defer any buy-back of quarters until 2019, you can deduct the full buy-back amount from your 2019 taxable income. No dissuasive measures have been put in place to penalise such timing. Amendment 467 only applies to payments into retirement savings plans.

Change of strategy in 2019

From 2019 onwards everything will be back to normal…or nearly. The temporary bonus-malus system on the Arrco and Agirc second-tier schemes comes into play on 1 January next. In a previous article, we took a look at the advantages of retiring now before reaching full pension, so as to avoid any “malus” (discount). When it comes to contribution buy-backs, however, the figures need to be done again. The manager we mentioned above may do well to buy-back one quarter less and so take retirement before reaching full pension and then avoid any discount (“malus”). On the one hand he/she avoids a 10% discount over 3 years on second-tier pension income and saves the cost of buying-back one quarter but does have to take a slight reduction in pension throughout retirement.

It is time to take out one’s calculator and make the best choices or, more prudently, to opt for a personalised retirement simulation! Gerep offers a scheme for carrying out such simulations, called Sapiendo.