For Canadian heavy civil contractors managing field crews, overtime, and multi-provincial payroll
Mid-year is a critical moment for payroll and finance teams in construction, especially for those juggling complex labor structures, seasonal staff, and regional compliance. Before the second half of the year accelerates, now is the time to run a quick audit of your payroll setup and ensure you’re still on the right side of CRA rules.
Here are five of the most common (and costly) payroll mistakes we see construction companies make, and how to get ahead of them before they become a problem.
1. Contribution Rates Haven’t Been Updated Since January
CPP, EI, and QPP rates changed on January 1, 2025. If your payroll software or ERP hasn’t been updated since, you could be:
- Under-deducting from employee pay
- Under-remitting your employer contributions
- At risk for penalties, interest, or year-end mismatches
2025 Quick Reference:
- CPP: 5.95% (up to $3,867.50 per party)
CRA – CPP Contributions - EI: 1.66% employee / 2.324% employer (max $1,049.12)
CRA – EI Rates
Bonus Watch-Out:
In May 2025, the federal government announced a middle-class tax cut. While this affects employees’ personal income tax rates (not employer contributions), payroll systems will need updated tax tables. If your employees ask why their net pay has changed, this may be why.
2. Vacation Pay Isn’t Being Calculated on Gross Earnings
This is one of the most common mid-year issues, especially in construction environments where overtime, bonuses, and premiums are common.
In many provinces (like Ontario and BC), vacation pay must be calculated based on gross earnings, which includes:
- Overtime pay
- Shift differentials
- Retention or safety bonuses
- Most allowances
If your payroll system doesn’t account for all of these earnings types, you may be underpaying vacation, even if the percentage is correct.
What to do:
Audit a few recent pay runs that included overtime. Check that vacation pay was calculated on total earnings, not just base pay.
Ontario ESA Vacation Pay Rules
3. Subcontractors Are Functioning Like Employees
Construction companies, especially in heavy civil, rely heavily on subcontractors. But CRA’s criteria for determining whether a worker is an employee or contractor are stricter than many realize.
If a subcontractor:
- Works only for your company
- Follows your schedule and site procedures
- Uses your equipment
- Has no control over profit or risk
…then legally, they may be an employee, and you could be liable for unpaid CPP, EI, vacation pay, and more.
CRA – Employee vs. Self-Employed Criteria
4. RL-1 Slips Are Missing for Quebec-Based Workers
If you employ anyone who lives or works in Quebec, even temporarily, they must receive both a T4 and an RL-1 slip. This is in addition to any federal reporting you’re already doing.
Companies that process payroll outside Quebec often forget this requirement, especially if the employee is based in the field or considered “casual.” But Revenu Québec does not consider that a valid excuse.
5. Late Remittances Are Costing You More Than You Think
CRA penalties for late remittances are steep:
- 3% for payments 1–3 days late
- Up to 10% if you're more than a week late or have repeat offenses
Construction payroll is especially vulnerable to delays due to:
- Multi-layered approval processes
- Delays getting time from the field
- Confusion over CRA remitter types (monthly vs. accelerated)
Check your process:
- Are your remittances automated or triggered manually?
- Is there a backup if someone is away during a payroll run?
- Are field-approved hours being submitted on time?
CRA – Payroll Remittance Due Dates
Need a Smarter Payroll Process for Construction?
If these challenges sound familiar, you’re not alone. Construction payroll, especially in heavy civil, is among the most complex in Canada. From multi-province rules to subcontractor audits to vacation pay errors, it takes more than a generic payroll tool to stay compliant and efficient.
Eclipse ERP is built specifically for construction contractors. We help companies:
- Apply the right rates, deductions, and rules for each province
- Track and configure vacation pay, overtime, bonuses, and premiums
- Streamline CRA compliance across large crews
- Reduce errors and automate remittance timelines
Curious if Eclipse could help your business stay compliant and save time?
Request a custom demo and we’ll show you how it could work to improve your payroll setup.
