Adoption:
Date: January 26, 2023
Instance of Approval: Vice-President Finance and Administration
Responsible Service: Human Resources
1 PURPOSE:
This Procedure establishes the terms, conditions, and processes for the implementation of University Policy 46a – Self-Funded Leave and is intended to outline the operational means by which Human Resources administers Self-Funded Leaves.
2 DEFINITIONS:
Capitalized words or expressions that are not defined in this Procedure are defined in Policy 46a.
3 SCOPE & APPLICATION:
3.1 This Procedure applies to Regular staff members who have been employed by the University for a minimum of four continuous years of active employment or a tenured professor at the time of the leave request.
3.2 This Procedure is to be read and applied in conjunction with Policy 46a.
4 CANADA REVENUE AGENCY RULES:
4.1 The Canada Revenue Agency salary deferral rules and regulations need to be followed when implementing a Deferred Salary and Self-funded Leave.
4.2 Canada Revenue Agency stipulates that the actual Self-Funded Leave Period must begin after a period not exceeding six years from the date on which the Deferred Salary Period began. A period of five years for the Deferred Salary Period is recommended by the University to allow for unforeseen circumstances. For more information please see:
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-deductions-contributions/special-payments/prescribed-salary-deferral-plans-arrangements.html
5 DEFFERED SALARY:
5.1 The Deferred Salary in any year during the Deferred Salary Period may be any
amount of up to and including 33 1/3 percent of the staff member's regular base salary.
5.2 The amount of the Deferred Salary will remain the same during the Deferred Salary Period unless the staff member submits a written request to the Human Resources Payroll Sector to change the Deferred Salary, in which case the Human Resources Payroll Sector will provide the staff member with a revised written Self-Funded Leave calculation sheet.
6 INCOME TAX AND OTHER DEDUCTIONS:
6.1 During the Deferred Salary Period, all regular deductions will continue to be deducted from the total salary except for deductions for income tax and those related to pension. See Appendix A at the end of this Procedure.
6.2 During the Self-Funded Leave Period, deductions will be made from the Deferred Salary that is paid to the staff member for income tax and other purposes. See
Appendix A at the end of this Procedure.
7 ADVANCEMENT OR POSTPONEMENT OF THE LEAVE PERIOD:
7.1 The staff member may request that the commencement of the Self-Funded Leave Period be advanced or postponed by up to six months.
7.2 The staff member’s manager will, based on operational requirements, make a reasonable effort to accommodate the staff member's request to advance or postpone the commencement of the Self-Funded Leave Period having regard to ensuring that the advancement or postponement is not detrimental to the operational requirements within the unit. Where such a request would result in a Deferred Salary Period beyond the maximum six-year limit under applicable law, then the request must be denied.
7.3 If unforeseen and justifiable operational circumstances arise and no other feasible option exists, the Dean, Vice-Provost, or Associate Vice-President may decide to postpone the commencement of the Self-Funded Leave Period, except if the Deferred Salary Period would exceed the maximum six-year limit under applicable law.
8 CANCELLATION:
8.1 The staff member may request to cancel the Self-Funded Leave in any one of the following circumstances: financial hardship, medical reasons, transfer to another position within the University in which the Self-Funded Leave is not approved or other extenuating circumstances.
8.2 If the staff member decides to cancel the Self-Funded Leave, it could have considerable personal tax consequences for the staff member. It is recommended to contact the Payroll Sector before making this decision to fully understand the impact.
8.3 Human Resources or the relevant Dean, Vice-Provost, or Associate Vice-President may cancel the Self-Funded Leave in any one of the following circumstances: termination of the staff member, transfer of the staff member to another position within the University in which the Self-Funded Leave is not approved or other extenuating circumstances.
9 PROCESS:
9.1 Request for a Self-Funded Leave
9.1.1 Eligible staff members must submit a Self-Funded Leave application form to their Dean, Vice-Provost, Associate Vice-President, for approval. The Dean, Vice-Provost, Associate Vice-President will consider the application having regard to ensuring that the staff member’s Self-Funded Leave is not detrimental to the operational requirements within the unit.
9.1.2 The staff member must forward the approved application to the Human Resources Payroll Sector.
9.1.3 The Human Resources Payroll Sector calculates the Deferred Salary based on assumptions related to the staff member’s salary as of the commencement of the Deferred Salary Period, the length of the Deferred Salary Period, and the Self-Funded Leave and provides the staff member with a written Self-Funded Leave calculation sheet that sets out the staff member’s options for the Deferred Salary. The Human Resources Payroll Sector also sends the staff member the approved Self-Funded Leave form and a written agreement detailing the specific terms and conditions that the staff member will be required to sign and return to the Human Resources Payroll Sector.
9.2 Request for a Change
9.2.1 The staff member may request in writing a change to the Deferred Salary provided that the Human Resources Payroll Sector receives such requests at least 2 months before the date on which the change is to take effect and no later than six months before the date the Self-Funded Leave Period begins. The Human Resources Payroll Sector will prepare an agreement to reflect the change and the staff member will be required to sign and return the agreement to the Human Resources Payroll Sector.
9.3 Payment during the Self-Funded Leave
9.3.1 Once the Self-Funded Leave Period begins and continues until it ends, the Deferred Salary (with applicable deductions) is paid to the staff member in accordance with the normal pay periods and with the signed agreement.
9.4 Process for Cancellation
9.4.1 If the staff member wishes to cancel the Self-Funded Leave, the staff member must submit a written request to the relevant dean, Vice-Provost, Associate Vice-President for approval detailing the reason for the cancellation. When the request for cancellation is approved, the staff member sends the approved request to the Human Resources Payroll Sector. The Human Resources Payroll Sector shall pay the staff member a lump sum equal to the amount deferred plus interest accrued with applicable tax adjustments to the date of the cancellation.
9.4.2 Should the staff member die during the Deferred Salary Period or Self-Funded Leave Period, any Deferred Salary and interest accrued at the date of death shall be paid to the staff member’s estate.
Appendix A - Deductions
Canada Pension Plan (CPP) and Employment Insurance (EI) Deductions
CPP premiums are calculated as follows:
a) during the Deferred Salary Period, according to the staff member’s salary less the Deferred Salary.
b) during the Self-funded Leave, according to the Deferred Salary paid to the staff member.
EI premiums during the Deferred Salary Period are deducted and calculated based on the staff member’s salary before the commencement of the Deferred Salary Period. No EI premiums are deducted from the Deferred Salary paid to the staff member during the Self-Funded Leave Period.
ACCRUED INTEREST PAYMENTS
On the following dates, the University shall pay to the staff member the accrued interest on their Deferred Salary:
a) December 31 of the calendar year in which the staff member commences the Self-Funded Leave Period.
b) each December 31 during the Deferred Salary Period; and
c) the next pay following the last day of the Self-Funded Leave Period, or when the University cancellation or death of the staff member,
Interest paid shall be considered as employment income under the Income Tax Act and must be reported on a T5.
PARTICIPATION IN STAFF MEMBER BENEFIT
During the Deferred Salary Period and during the first three months of the Self-Funded Leave Period, the staff member shall continue to participate and receive all staff member benefits to which they are eligible to receive and their position normally entitles them to on a cost sharing basis.
Staff members may continue to take part in the University's group insurance benefits after the third month of the Self-Funded Leave Period by advising Human Resources Service in writing at least thirty days before the Self-Funded Leave Period begins and provided that the staff member pays both the total amount of the staff member and the employer contributions to such benefits.
During the Self-Funded Leave Period, the staff member may continue to contribute to the University of Ottawa pension plan provided that the staff member pays both the total amount of the staff member and the employer contributions (including the Provision for Adverse Deviation) to the pension plan for the entire leave period.
During the Self-Funded Leave Period, the staff member is not entitled to accumulate vacation leave, years of service, or seniority and is not entitled to earn progress through the rank.