Leaves of absence and temporary part-time work arrangements
Overview
This section provides background information on leaves of absence (LOAs) and temporary part-time work arrangements, including the pension options that may be available to members and the role of the employer in related pension transactions. It also describes the procedures and forms employers must use for transactions related to a member’s LOA or temporary part-time work arrangement.
The special rules that apply for periods when a member is receiving or eligible to receive Long-Term Income Protection (LTIP) benefits are described separately.
Leaves of absence
Please review the information on the different types of LOA to determine whether a member’s leave has any pension implications. Where the LOA may have an impact on the members’ pension, we have provided additional information on the member’s options and the procedures that must be followed.
Important! Before a member starts any unpaid leave of absence of more than one month, the employer must complete OPTrust’s Notice of Unpaid Leave of Absence (OPTrust 1025ER) form. The member must be instructed to complete the Application to Contribute During an Unpaid Leave of Absence (OPTrust 1025) form. This form is used to indicate whether the member wants to continue making pension contributions during the leave. Both completed forms must be submitted to OPTrust.
Completing the Notice of Unpaid Leave of Absence (OPTrust 1025ER) form is particularly important for pregnancy, parental, family medical and family caregiver leaves, and any other statutory leaves that are protected under Ontario’s Employment Standards Act (ESA).
Under the ESA, members and employers are required to make contributions during the leaves, unless the member elects in writing using the Application to Contribute During an Unpaid Leave of Absence (OPTrust 1025) form not to make contributions to the Plan.
Temporary part-time work arrangements
Please review the information about temporary part-time work arrangements, the member’s options and the procedures that must be followed.
Important! Before a member starts a temporary part-time work arrangement, the employer must complete OPTrust’s Temporary Part-time Work Arrangement Contribution/Buyback Application (OPTrust 1030) form, together with the member. This form is used to indicate whether the member wants to continue making pension contributions based on their regular hours during the arrangement or make pension contributions only on the reduced hours they work during the arrangement. The completed form should be submitted to OPTrust, whether the member decides to contribute on their regular hours or their reduced hours during the arrangement. Members and employers are required to make contributions during the arrangement based on the member’s regular hours, unless the member elects in writing to make contributions only based on their reduced hours.
LOAs and pension credit
For pension purposes, leaves of absence can be divided into three broad categories. Only some of these leaves have an impact on a member’s pension credit and/or contributions.
1. Leaves of absence with pay
Normally, leaves of absence with pay have no impact on a member’s pension. During an LOA with pay, the member continues to receive his or her regular salary while he or she is absent from work. For these leaves, both the employer and the member continue to make regular pension contributions to OPTrust, and the member continues to accrue pension credit at the normal rate.
2. Leaves of absence without pay – less than one month
Unpaid leaves of absence lasting less than one month also have no impact on the member’s pension credit. When a member takes an LOA without pay for less than one month, both the employer and the member must make regular pension contributions for the period of the leave. Normally, the employer deducts the amount of contributions that the member would have paid if no leave had been taken from the member’s salary when he or she returns to work and salary resumes.
3. Leave of absence without pay – more than one month
Unpaid leaves of absence of more than one month do affect a member’s pension. For these leaves, contributions are not automatically made to the Plan during the member’s absence from work and the member does not receive pension credit for any leave period for which contributions are not made.
For leaves that are approved by the employer, the member may elect to contribute to the Plan during the period of the leave, using OPTrust’s Application to Contribute During an Unpaid Leave of Absence (OPTrust 1025) form. This applies to unpaid leaves of more than one month, including:
leaves due to illness, including approved leaves relating to periods when the member receives benefits from the Workplace Safety and Insurance Board (WSIB);
pregnancy, parental or adoption leaves;
leaves for special or educational reasons;
caregiver leave.
Special rules apply for periods where a member is eligible to receive benefits under the employer’s Long Term Income Protection (LTIP) plan.
Each of these types of leave – and the cost to the member and employer should the member decide to contribute – is discussed in more detail in this section.
Note! If the member chooses not to contribute during an unpaid LOA, he or she may be eligible to buy back credit for the leave period after returning to work. For more information, please see the Employer Manual section on Buybacks.
Option to contribute during an LOA
Before starting any unpaid LOA of more than one month, the member and employer must complete an Application to Contribute During an Unpaid Leave of Absence (OPTrust 1025) form and submit it to OPTrust. This form is used to indicate whether or not the member chooses to make pension contributions during the leave. The OPTrust 1025 form cannot be completed once a member returns to work.
If the OPTrust 1025 is received during the leave, the available payment option will be compressed to fit the leave period. If the leave ends prior to the submission of the OPTrust 1025 then the appropriate information should be submitted on the OPTrust 1036 form.
Contributing during the LOA
If the member chooses to contribute during the LOA, the amount of contributions required from the member and from the employer will depend on the type of leave. Once OPTrust receives the completed 1025 form, we will calculate the member contributions that must be made during the leave period and notify the member of the amount and the available payment options.
Contribution payments
For most unpaid leaves of absence, member’s contribution payments during the leave are made directly to OPTrust, either as a lump sum or in a series of installments.
In certain cases, contributions may be paid through payroll deductions:
For pregnancy, parental or adoption leaves, the member may have the option of having pension contributions deducted from the Supplementary Unemployment Benefit (SUB) paid by the employer.
For self-funded leave periods, if the member continues to be paid by the employer, pension contributions are to be paid through payroll deductions.
For leave periods when the member is eligible to receive LTIP benefits, the employer pays both the member and employer contributions.
If the member chooses not to contribute during the LOA
Members who choose not to make pension contributions during the LOA must still complete and submit the OPTrust 1025 form together with the employer, prior to the start of the leave.
If the member chooses not to contribute, the unpaid leave does not interrupt his or her plan membership. However, the member will not receive pension credit for the leave period. On returning to work, the member may be eligible to buy back credit for the period of the LOA, subject to the Plan’s normal buyback rules. For more information, please see the Employer Manual section on Buybacks.
ITA limits on credit for LOAs
The Income Tax Act imposes limits on the total amount of pension credit that members may accrue for leave of absence periods. These limits apply to all leaves occurring after 1990. The total combined credit a member may obtain for post-1990 leaves due to illness, or for special or education purposes is five years.1 Where the leave is due to pregnancy or adoption, the five-year limit on the total combined credit can be increased by the period of the pregnancy/adoption leaves, to a maximum of three additional years.
Part-time employees
A part-time employee cannot contribute for more credited service during a leave period than he or she would normally have earned by working during that leave period. For example, if an employee normally works 50 per cent of full-time hours, he or she can only accrue credit at half the rate of a full-time employee during a leave period.
1 OPSEU Pension Plan Text, Article 7.4(10).
Leaves for illness or WSIB
Members have the option of continuing to contribute to the Plan while on an unpaid leave of more than one month due to illness. This includes periods where the member's absence from work is related to an approved claim under the Workplace Safety and Insurance Board (WSIB) and has been approved by the employer as a leave of absence for purposes of WSIB.
For these leaves, both the member and the employer pay a portion of the cost if the member chooses to continue contributing.
The cost to the member equals the contributions he or she would have paid if the leave had not been taken. This cost is based on:
OPTrust’s member contribution rate in effect during the period of the leave,
the member’s salary rate at the beginning of the leave, plus escalation where the leave spans a calendar year, and
the member’s normal rate of credit accrual (i.e. at the ratio of scheduled hours worked to regular full time employment for the position).
The cost is calculated using the same formula as the member’s buyback cost for non-contributory service with an employer that contributes to the Plan.
The employer’s cost is also based on the employer contributions that would have been paid had the member continued working. This is calculated using the formula for the employer’s buyback cost for non-contributory service with an employer that contributes to the Plan.
Leaves while on WSIB
When a member is on an approved WSIB leave of absence, the effect on his or her pension contributions and credit depends on the phase of the WSIB leave period:
During the phase when the member is paid by the employer, the employer will continue to deduct contributions automatically, and the member will accrue credit at his or her normal rate.
During the phase when the member is paid directly by WSIB, he or she has the option of paying contributions to OPTrust or not. As with other leaves due to illness, the member and employer must complete and submit the OPTrust 1025 form. The member and employer costs are calculated in the same way as for other illness leaves.
If the member is paid directly by WSIB, but is eligible for or qualified to receive payment under the employer's Long Term Income Protection (LTIP) plan, the member is considered to be on LTIP for pension purposes. The employer is responsible for remitting both the employer and employee contributions for the entire period that the member qualifies for LTIP. Contributions are based on the contribution rates in effect during the period, the member's pre-injury or pre-illness salary rate, plus escalation for each subsequent calendar year, and the member's pre-injury or pre-illness credit accrual rate (i.e. the ratio of scheduled hours worked to regular full time employment for the position).
Return-to-work arrangements
Where members resume employment on a gradual basis or at reduced work hours during their recovery from injury or disability, they are considered to be participating in a return-to-work arrangement. Return-to-work arrangements are classified into three categories: rehabilitative employment, temporary job accommodations and permanent job accommodations. While return-to-work arrangements typically occur at the end of a member's WSIB leave or LTIP benefit period, they may occur during any phase of the leave or benefit period.
Rehabilitative employment (LTIP only)
Rehabilitative employment refers to arrangements where the member's return to work occurs during the LTIP benefit period and while the member continues to receive full or partial disability benefits. These arrangements are invisible for pension purposes and have no impact on the member's pension.
Pension contributions and the accrual of credit continue to be based on the member's regular, pre-disability employment and do not take into account the member's actual earnings nor the actual hours worked during the period of rehabilitative employment.
Temporary job accommodations (WSIB only)
Temporary job accommodations refer to arrangements where the reduction in the member's hours is of a temporary or finite duration. They may occur at any phase of the leave period during which the member is in receipt of benefit payments from either the employer or from the WSIB.
Temporary job accommodations are considered to be part of the member's approved WSIB leave period, so for pension purposes, they are invisible and have no impact on the member's pension.
Pension contributions and the amount of pension credit that can be accrued continue to be based on the member's regular, pre-injury or pre-illness employment and do not take into account the member's actual earnings, nor the actual hours worked during the temporary job accommodation.
However, the actual accrual of pension credit will occur only where contributions are mandatory (i.e. during the phase of WSIB leave where the member receives payment directly from the employer) or where the member elected to contribute during or after the period of the WSIB leave without pay (i.e. during the phase where the member receives a benefit directly from WSIB).
Where the employer determines the reduced hours of work to be "permanent" and no longer approves the member's WSIB LOA, then the return-to-work arrangement changes from a temporary job accommodation at the time of that determination.
Permanent job accommodations
Permanent job accommodations occur where the reduction in the member's hours is of a long-term or indefinite duration, and where there is no pre-determined or foreseeable end date.
For pension purposes, permanent job accommodations are considered to be regular part-time employment.
Pension contributions are mandatory and are based on the member's actual scheduled part-time earnings. Pension credit accrues at the ratio of the actual scheduled hours worked to the member's regular, full-time employment.
There is no opportunity for the member to purchase the difference between the hours worked and the regular full-time hours of the member's position.
For more information on the stages of a WSIB claim and the impact on salary payments and the member’s pension contributions, please refer to the WSIB and Pension Contributions Timetable in the Forms and Tools section.
Pregnancy, parental, adoption and ESA leaves
Under the Employment Standards Act, members and employers are required to make contributions while the member is on pregnancy, parental, adoption or family caregiver leave, unless the member elects in writing not to make contributions to the Plan.
The member’s choice to contribute during the leave or not should be indicated on Application to Contribute during an Unpaid Leave of Absence (OPTrust 1025) form. This form must be completed by the member and employer and submitted to OPTrust before the start of the leave, whether or not the member elects to contribute during the leave.
If the member decides to continue contributing during the leave, the costs for both the member and the employer equal the contribution amounts that would have been paid had the leave not taken place. These costs are calculated using the same formulas as the buyback costs for non-contributory service with an employer that contributes to the Plan.
If the member will be receiving Supplementary Unemployment Benefit (SUB) allowance during the leave, he or she has the option of having pension contributions deducted from the SUB payments. This option should be indicated on the OPTrust 1025 form prior to the start of the leave.
Important! If the member does not complete a written election not to contribute prior to the leave, the employer must remit both the member’s and the employer’s contributions to the Plan.
Special or educational leaves
Members who take an unpaid LOA for special or educational purposes that is approved by their employer have the option of continuing to contribute to the Plan during the leave. As with other unpaid LOAs of more than one month, the member and employer must complete and submit OPTrust’s Application to Contribute during an Unpaid Leave of Absence (OPTrust 1025) form before the start of the leave.
For special and educational leaves, the employer does not match the contributions paid by the member. Instead the member pays the full cost of pension contributions for the leave. This amount is based on:
the member’s salary,
the length of the LOA, and
the member contribution rate plus the employer contribution rate for the period.
Self-funded leaves
A self-funded leave is considered a special leave of absence for pension purposes. As a result, if the member chooses to contribute during the leave, he or she must pay both the member and employer share of pension contributions during the period of absence from work. In this case, contributions continue to be deducted at the member’s full time salary rate, even though the member may be receiving a reduced wage for the period prior to and during the leave.
LOA procedures
Leaves of absence
Employers must complete the following procedures for a member taking a leave of absence without pay of more than one month. The same procedures should be followed whether:
the member chooses to contribute during the leave, or
the member elects not to contribute during the leave.
1. Complete the Application to Contribute during and Unpaid Leave of Absence (OPTrust 1025)
The Member and employer must complete the Application to Contribute form and submit it to OPTrust before the start of the leave. This form must be completed whether or not the member chooses to make pension contributions during the LOA.
2. Set up automatic payroll deductions for pregnancy parental or adoption leaves
For pregnancy, parental or adoption leaves, if the member elects to contribute through the SUB allowance, the employer must ensure that the member is set up to continue pension payroll deductions.
For additional information, please see the section on Reporting Pension Data.