If you want to change how often you pay your staff or move staff from one frequency to another - please note the following:
Do not change payroll frequency until you have read and understood this article.
Changing the payroll frequency requires a good understanding of your CPP contributions (specifically CPP over/under exempting) as well as issuing ROEs for all employees. We do not recommend changing the frequency for these reasons.
CPP/QPP Over/Under Exemption
If you want to change pay frequencies part way through a year then an employee could receive more than their allotted $3500/year exemption or less than it. In either case you could end up with a PIER Report at year end from CRA/MRQ for over or underpayments, which may be subject to fines or interest. If you decide to go ahead with this decision to change pay frequencies we highly recommend you do it between payroll years. This will mitigate the CPP/QPP issue. If you insist on doing this part way through a year please be sure to have your accountant review your CPP/QPP amounts before/during your final payrun of the year and you can make any adjustments at that point to attempt to resolve any over or underpayments before year end.
Terminating and Issuing ROEs for all employees
Before you change your pay frequency in the program it is a requirement of Service Canada that you issue ROEs for all of your employees you wish to change.
Why do I have to issue a ROE? See the Service Canada article here and note the section, “When the pay period type changes,” under the section for “When Do I Have to Issue an ROE?”
How do I issue a ROE? Follow this article on how to issue ROEs in the system. Your reason for termination in this case is “code K- Other” and then please enter “Change in Pay Period Type” manually in block 18 of each ROE.
Starting the new pay frequency
Once you have issued the ROE and sent them in for each employee you can now REHIRE all employees with new hire date (usually the day after your termination date on the ROE you just created). This will start a new EI history period for each employee on the new pay frequency.
For each employee go to EDIT>PAYROLL DETAILS AND RULES and change the PAYS PER YEAR and click SAVE.
Then go to COMPANY SETTINGS>PAYROLL OPTIONS and change the default for the company Number of Pays Per Year. This will make all new employee default to the new frequency.
IMPORTANT: Don’t forget if you did this part way through the year (again, we strongly recommend that you do NOT do this) you will need to have your accountant or bookkeeper review the amounts before you finish your last pay of the year to make sure you don’t over or under pay CPP/QPP because of the change in the exemption amounts.