December 8, 2021
Dusan Baic

Employee Benefits Cheat Sheet [Small Business Edition]

December 8, 2021
Dusan Baic

You don't have time to administer your employee benefits plan - that's why you have an HR manager that takes care of this. Still, there are some general things you need to know as a business owner. Below is a quick cheat sheet for you to reference.

During the Hiring Process

  • Do not offer the benefit plan to independent contractors. This will negate their status as a contractor, thus converting them to being an employee.
  • Do take note when interviewing candidates that individuals who ask for extreme detail on the benefit plan may end up being a costly hire.
  • Don't waive the waiting period for a new hire that has not been covered within the last 6 months, unless you're prepared to pay for the higher premium due to hire claims. Employees who have never had a plan, or haven't been on one within 6 months to a year, tend to spend a much larger amount, therefore, affecting your renewal.
  • Do offer the plan to everyone who is eligible. You set eligibility criteria, but stick to it, otherwise “discrimination” can bite you.
  • Don’t let eligible employees refuse the benefit plan.
  • It's legal to make employee benefits a mandatory condition of employment.
  • If they dig their heels in, make sure their spouse signs off that they also agree to refuse. However, this will not protect you in court.

During an Employee's Tenure

  • Actively promote your benefits coverage to your employees.
  • Do not terminate an employee's benefits while they're on sick leave.
  • At minimum, keep the life insurance but opt them out of health & dental.
  • Common law: Judges believe that it's reasonable to extend health & dental benefits for 12-24 months.
  • Do proactively create a policy for sick leave now before anyone needs an extended sick leave in the future. Never continue paying their full payroll – take advantage of EI sickness benefit.
  • Other than vacation, maternal leave, and regular sick days, please let your carrier know about leave of absences, severances, sabbaticals, sick leaves, or any other time that they are not actively at work.
  • In addition, it's important to let your carrier know about any material salary changes as many benefits are directly tied to your employees'  income.
  • Maternal leave / parental leave: benefits remain in force as if they were a regular employee. It’s discriminatory to change any terms of their benefit plan due to maternal / paternal leave (i.e. asking them to pay for their premiums when normal employees do not pay).
  • Ask your carrier to provide high level reports of how your team is leveraging their benefits at once a year. This will help you inform which your future plan design or your communication strategy regarding your benefits usage.
  • Do use Cost-Plus services for business owners to deduct medical expenses from the business. Which medical expenses are eligible?

Termination of Employment

  • Do extend benefits during the notice period of a termination.
  • Employees in Ontario are entitled to 1 week per year served, up to a maximum 8 weeks.
  • Severance: we recommend extending benefits up to 6 months maximum. You can go beyond 6 months, but do not offer a deal to extend benefits during severance unless you speak to an HR professional or use our in-house HR advisor.


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