Early Service Payout Option (CUPE Employees)

Early Service Payout Option

The COLLECTIVE AGREEMENT between the Strait Regional Centre for Education and the Canadian Union of Public Employees Local 955 contained a provision for an early payout of severance awards to eligible CUPE members.

Documents

  • Severance Award Provisions (COLLECTIVE AGREEMENT between the Strait Regional Centre for Education and the Canadian Union of Public Employees Local 955)
  • CRA Declaration of Intent (The Canadian Revenue Agency allows for a deductible contribution to an RRSP)

Contact

For further information, check the Frequently Asked Questions section below or:

Email: servicepayout@srce.ca (Preferred method for earliest response)

Phone: 902-625-2191 (Please leave a message)

 

Frequently Asked Questions (FAQs)

Q: Under the section Registered Retirement Savings Plan (RRSP) contributions, the CRA T1213 Form says “Give details or a copy of the payment arrangement contract.” What is this?

A: Please attach a copy of your Notice of Election Form to the T1213 Form when you submit it to the Canadian Revenue Agency.

 

Q: The CRA Form T1213 asks for Employer information. What do I put on the form?

A: Please use the following:

Employer/Payer

Name

Contact Person

Telephone

Strait Regional Centre for Education

Financial Services

(902) 625-2191

 

Q: What is the Early Service Payout?

A: The Early Service Payout is a one-time option for eligible CUPE employees to receive a lump-sum payment in lieu of a severance award, which was frozen effective March 31, 2015.

 

Q: Who is eligible for the Early Service Payout option?

A: To qualify for the Early Service Payout option, you must have eligible years of service before March 31, 2015.

 

Q: What counts as “eligible service”?

A: For CUPE members, eligible service is as defined as the period from a CUPE employee’s Seniority Date to March 31, 2015.

 

Q: Do I have to take the Early Service Payout now? What are my options?

A: No, you do not have to take the Early Service Payout. Your other option is to wait to receive your severance award when you retire, if eligible, as per the terms of the collective agreement and regulations in place at that time.

 

Q: I was hired after 2015. What are my options?

A: CUPE Employees hired after the severance award was frozen (after March 31, 2015 for CUPE employees) do not qualify for an Early Service Payout and are also not eligible for a severance award at retirement.

 

Q: I am not sure how much Early Service Payout I am eligible for. How do I find out?

A: The SRCE is currently making payout calculations for each employee based on employment records, eligible years of service and salary on March 31, 2018. That information was sent to you in a communication on Friday, October 4, 2019, and will include a form for you to complete if you elect to take the Early Service Payout.

 

Q: How will you calculate the Early Service Payout amount?

A: The one-time Early Service Payout amount will be calculated in accordance with applicable contract provisions. For CUPE members, this is Article 43 of the COLLECTIVE AGREEMENT between the Strait Regional Centre for Education and the Canadian Union of Public Employees Local 955. The calculation is based on contract eligible service up to March 31, 2015 and salary on March 31, 2018.

 

Q: How do I elect to be paid the Early Service Payout?

A: If eligible, you will receive a letter on October 4, 2019 outlining the amount of Early Service Payout you are eligible for before deductions for income tax, CPP and EI. It will also include a form for you to indicate that you are taking the Early Service Payout. More detailed instructions will be provided in the above-referenced communication. If you elect to take the Early Service Payout option, you are not able to retract or change this decision.

 

Q: By when do I have to make my decision?

A: You will have to return your election form so that it is received by the SRCE by October 25, 2019. Late submissions will not be processed.

 

Q: Will I have another opportunity to take this Early Service Payout?

A: No, the Early Service Payout is a one-time option. If you do not elect to take it by October 25, 2019, your only other option is to wait until retirement to receive your severance award, if eligible, as per the terms of the collective agreement and regulations in place at that time.

 

Q: If I elect to take the Early Service Payout, when will I receive my payment?

A: All payments will be made on November 21, 2019.

 

Q: Will the payout be included on my T4?

A: Yes, as employment income, the payment will be included on your T4 in the year that the payment is made.

 

Q: Will the Early Service Payout be taxed?

A: The Early Service Payout will be taxed as employment income, and subject to income tax withholdings, CPP and EI deductions. Since it is not being paid on retirement, it cannot be treated as a retirement allowance.

 

Q: If I am currently receiving Employment Insurance (EI) benefits and choose to take the Early Service Payout, will this impact my EI benefits?

A: The Early Service Payout is employment income and may impact your EI benefits.

 

Q: Can I roll this payment into my Registered Retirement Savings Plan (RRSP)?

A: The Early Service Payout is not retirement income – it is a payment in lieu of your severance award. As employment income, it is subject to all applicable taxes and deductions. However, the Province of Nova Scotia has obtained a tax waiver from Canada Revenue Agency (CRA) so that you may transfer all or some of your payment, up to $15,000, to your RRSP without income tax being deducted, depending on your personal RRSP contribution room. This will be paid on your regular pay and you are responsible for ensuring it is contributed to your RRSP.

 

Q: How do I know if I have enough room in my RRSP to cover the whole payment?

A: You will find the amount of RRSP room you have in your most recent Notice of Assessment issued by Canada Revenue Agency (CRA). Questions about your personal RRSP contribution room should be directed to CRA by calling 1-800-959-8281.

 

Q: What if the $15,000 tax waiver from CRA is not enough to cover my full payout? What are my options?

A: If you expect your Early Service Payout to be more than the $15,000 covered by the waiver, you have two options:

  1. You can receive up to $15,000 of your payout without income tax deducted (CPP and EI will be deducted as applicable) to be put into an RRSP. This will be paid on your regular pay and you are responsible for ensuring it is contributed to your RRSP. The payout amount over the $15,000 will be paid to you through your regular pay after appropriate income taxes, CPP, and EI are deducted.
  2. To put an amount more than $15,000 into an RRSP without income tax deducted you must apply to CRA for a personal tax waiver. This is done by completing a T1213 form (available at https://www.canada.ca/en/revenue-agency/services/forms-publications/form...). Once you receive your personal tax waiver letter from CRA (this can take up to 90 days to process), you must forward it to the SRCE to process your Early Service Payout. Please note that, if you choose this option, you must still complete and return your election form so that it is received by the SRCE by October 25, 2019. You can submit the personal tax waiver letter from CRA to the SRCE after October 25, 2019.
  3.  

Q: If I choose the Early Service Payout option, can I receive some now and the rest at retirement?

A: No, this is a one-time, lump-sum payment. If you elect to receive the Early Service Payout, you will be paid the full amount as calculated, less applicable taxes and deductions (unless you have opted to have taxes waived as referenced above). There is no option to receive some now and the rest at retirement. If you choose not to take this one-time option for the Early Service Payout, your other option is to receive your severance award, if eligible, upon retirement, as per the terms of the collective agreement and regulations in place at that time.

 

Q: I retired and received my Service Award but have since returned to active employment. Am I eligible for the Early Service Payout? What years will it cover?

A: As a currently active employee, you are eligible for the Early Service Payout if you came back to work before March 31, 2015. The Early Service Payout will be based on the eligible service since you returned, to March 31, 2015. Your combined eligible service will be capped subject to applicable collective agreements and/or regulation.

 

Q: I am currently on Long Term Disability. Do I qualify for the Early Service Payout?

A: Yes, as long as you have years of eligible service before March 31, 2015.

 

Q: I had an unpaid leave of absence before March 31, 2015. Does that impact my Early Service Payout?

A: Yes, an unpaid leave of absence will impact the eligible service.

 

Q: I am a term employee. Do I qualify for the Early Service Payout?

A: No, term employees do not qualify for Early Service Payout.

 

Q: I am not sure what I should do. Where can I get financial advice?

A: If you need help making your decision about the Early Service Payout, you are encouraged to seek professional financial advice based on your personal situation and goals. SRCE staff will not provide financial advice.

 

Q: If I worked for the SRCE or predecessor board on a permanent contract, resigned and subsequently returned to the SRSB, will my service be broken?

A: Yes, if you resigned from the SRCE and returned, your service will only count from the date you returned to the employ of the SRCE.

 

Q: Who can I contact if I have more questions?

A: Questions will be addressed in one of two ways:

Email: servicepayout@srce.ca (Preferred method for earliest response)

Phone: 902-625-2191 (Please leave a message)