Overtime Pay

Source deductions of income tax

If you pay an employee for overtime done during a pay period, and the amount is paid along with the employee's salary or wages for the period, add the amount to the salary or wages and calculate the source deduction of income tax using the usual method.

However, if the overtime is paid in a pay period other than the period in which it was earned (in other words, if you are paying the employee for accumulated overtime), use the method applicable to gratuities to calculate the source deduction of income tax.

Québec Pension Plan (QPP) contributions

If you pay an employee for overtime done during a pay period, and the amount is paid along with the employee's salary or wages for the period, add the amount to the salary or wages and calculate the QPP contribution using the usual method.

However, if you pay the amount separately from the employee's salary or wages, use the method applicable to gratuities to calculate the contribution.

Québec parental insurance plan (QPIP) premiums and other employer contributions

If you pay an employee for overtime done during a pay period, the amount is subject to employee and employer Québec parental insurance plan (QPIP) premiums, the employer contribution to the health services fund and the contribution related to labour standards, if one of the basic conditions for making source deductions and paying employer contributions is met. 

Similarly, you must include this amount in your total payroll used to calculate your health services fund contribution rate, your participation in workforce skills development and, if applicable, your contribution to the Workforce Skills Development and Recognition Fund (WSDRF).

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