4.7 Union Dues and Pension Plan Contributions

4.7.1 Union Dues

Unionized employees must pay union dues; employees benefiting from union representation may not opt out of paying dues. This principle is long established in common law and is referred to as the Rand Formula, after former Supreme Court of Canada Justice Ivan Rand, who established the principle in 1946 in the wake of a massive workers’ strike (Canadian Labour Congress, 2021). It ensures that no employee can opt out of paying union dues and still benefit from collective bargaining.

Some jurisdictions in Canada have incorporated the Rand Formula into legislation, requiring employers to automatically deduct union dues. Other jurisdictions have left automatic dues check-offs as a matter to be agreed upon in collective agreements between unions and employers. In either case, whether by legislation or collective agreement, it is very likely that it is mandatory for employers in Canada to deduct union dues from employees’ pay and to remit those dues to the union.

In the relatively rare instance that a collective agreement does not require the employer to deduct and remit union dues, payroll should review labour legislation in the relevant jurisdiction to determine whether the employer must deduct and remit union dues.

4.7.2 Pension Plan Contributions

Many employers offer a pension plan to their employees, and participation in the pension plan is often a condition of employment for eligible employees. Whether or not a pension plan is required and whether participation is mandatory for employees will vary according to employer policy. Where employee pension plan contributions are required by the employer, payroll should make those deductions and remit the employee pension contributions to the pension plan administrator. Pension plan contributions typically take the form of a percentage of salary, paid in even increments every pay period.

References

Canadian Labour Congress. (2021). The Rand decision: Everyone who benefits should contribute. https://canadianlabour.ca/who-we-are/history/the-rand-decision-everyone-who-benefits-should-contribute/