The Ugly Side of Payroll: The Stuff Nobody Talks About Until It’s a Problem

Most business owners think payroll is simple:

Set up employees → run payroll → remit deductions → done.

But payroll has a sneaky side. The side that shows up months later with CRA penalties, frustrated employees, missing paperwork, or a scramble during an audit or termination.

At Accent CPA, we often see business owners do a great job handling the actual payroll runs but miss the less obvious pieces that quietly matter just as much.

Here are some of the most commonly forgotten payroll items and why they matter.

Employee Contracts Matter More Than You Think

One of the biggest payroll mistakes happens before the first paycheque is ever issued.

Many employers hire someone with:

• a verbal agreement,
• a text message,
• or a vague understanding of pay and expectations.

Then months later:

• vacation disputes happen,
• overtime expectations become unclear,
• or an employee leaves and disagrees with termination terms.

A solid employee contract should outline:

• wage or salary structure,
• overtime expectations,
• vacation entitlement,
• benefits,
• statutory holiday treatment,
• termination terms,
• remote work expectations,
• reimbursement policies,
• and ownership/confidentiality clauses where appropriate.

Without a contract, employment standards legislation often fills in the blanks for you… and that may not always work in the employer’s favour.

Record Of Employment (ROE) Account: Set It Up Before You Need It

Many employers do not realize they should have a My Service Canada Account / ROE Web setup process ready long before an employee leaves.

Then someone quits unexpectedly, goes on leave, or is terminated… and suddenly:

• nobody knows how to issue the ROE,
• access isn’t set up,
• passwords are lost,
• or the former bookkeeper was the only one with access.

ROEs are time-sensitive and delays can affect an employee’s EI claim.

Workers Compensation Board (WCB) Is Often Forgotten Entirely

Many new businesses do not realize they may need to register with Workers Compensation Board of Manitoba or their provincial equivalent.

Common issues include:

• assuming contractors remove the requirement,
• forgetting annual reporting,
• estimating wages incorrectly,
• or misunderstanding which industries require coverage.

WCB issues often surface only after:

• an injury,
• an audit,
• or a contractor relationship gets questioned.

That is not the moment you want to discover you should have registered two years earlier.

Vacation Pay Is Frequently Mishandled

Vacation pay sounds simple until you realize there are several ways to handle it incorrectly.

Common issues include:

• paying vacation incorrectly on bonuses,
• forgetting vacation accrual on overtime,
• not tracking unused vacation balances,
• paying “4% on every cheque” without documenting it properly,
• or confusing vacation time with vacation pay.

Clear documentation and consistent payroll setup are critical here.

Statutory Holidays and Overtime Rules Are Not Always Straightforward

Many employers unintentionally apply blanket rules that do not actually comply with employment standards legislation.

Areas that often cause confusion:

• stat pay eligibility,
• averaging agreements,
• overtime banking,
• salaried employees,
• commission employees,
• and holiday calculations for part-time staff.

This becomes even more complicated with:

• hybrid work,
• seasonal staff,
• and fluctuating schedules.

Final Thoughts

Payroll is more than just issuing paycheques and remitting deductions. It involves compliance, planning, documentation, and making sure both employers and employees are protected along the way.

At Accent CPA, we help businesses navigate the less obvious side of payroll so small issues do not turn into expensive problems later. Whether you are setting up payroll for the first time or reviewing your current processes, our team is here to provide trusted advice and personal service every step of the way.

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