The VRSP: Ring any bells?

On July 1, 2014, most of the provisions of the Quebec Voluntary Retirement Savings Plans Act came into effect^Footnote1 Since a first group of employers had until Dec. 31, 2016, to comply with certain obligations under the VRSP Act, we are providing you with a summary of some of the main obligations of employers under said Act.

First, it is important to note that any employer that has an establishment in Quebec and five or more “eligible employees” has the obligation to offer a VRSP and to automatically enrol all of its eligible employees therein.^Footnote2

An “eligible employee” is essentially an employee who:

1. is 18 or more years of age;
2. has at least one year of uninterrupted service; and
3. performs his work:
   • in Quebec; or
   • partially in Quebec and outside Quebec for an employer having an establishment in Quebec; or
   • outside Quebec but who has his domicile or a residence in Quebec and whose employer is located in Quebec.

However, an employer is not required to enrol any eligible employee in the VRSP if the employee:

• Has the opportunity to contribute, through payroll deductions, (whether or not he/she actually does so) to a designated registered retirement savings plan or a designated tax-free savings account set up by the employer; OR
• Belongs to a category of employees who benefit from a registered pension plan.^Footnote3

The deadline by which an employer must offer a VRSP and automatically enrol its eligible employees depends on the number of eligible employees on certain given dates. The deadline for employers with 20 or more eligible employees as of June 30, 2016 was Dec. 31, 2016. The deadline for employers with 10 or more eligible employees as of June 30, 2017 is Dec. 31, 2017. The deadline has yet to be determined for employers with five to nine eligible employees, but it will not be before Jan. 1, 2018.

An employer who is required to offer a VRSP must choose from among those set up by the authorized administrators. A list of authorized administrators who have set up a VRSP is available on the website of Retraite Québec.

Once it has made its choice, the employer must, no less than 30 days before offering the chosen VRSP, notify its eligible employees in writing. This written notice must contain all the information required by the VRSP Act.^Footnote4 Once the employer has actually joined the chosen VRSP, it has 30 days to enrol its employees with the VRSP.

Under the VRSP Act, the employer has no obligation to contribute to the VRSP on behalf of its enrolled employees. If it chooses to contribute, it may subsequently change its contribution, subject to any contrary clause contained in a collective agreement or individual employment contract. To change its contribution, the employer must give written notice to the employees concerned and to the VRSP administrator. If the amendment has the effect of reducing its contribution, it cannot take effect before the 30^th day following the date written notice is given.

Employers who are required to offer a VRSP also have other obligations under the VRSP Act, including the following:

1. Employees may opt out of the VRSP offered by their employer by notifying it in writing of their intention to do so within the time period specified in the VRSP Act. In such case, the employer must retain this written notice for the entire duration of the employee’s employment. The employer will also be required to verify periodically whether the employee wishes to change his/her mind and enrol in the VRSP. This must be carried out in the month of December, every two years following the employee’s decision to opt out.^Footnote5
2. Pursuant to the regulation, enrolled employees may set their contribution rate to 0 per cent. When an employee does so, the employer must periodically give them the opportunity to start making contributions again. The employer must do so in the month of December, every two years following the date on which the contribution rate was set to 0 per cent.
3. The employer must deduct the contributions of each employee who is a member of the VRSP from his/her pay and pay it to the VRSP within the time period specified in the statute, i.e. no later than the last day of the month following the deduction thereof.^Footnote6 Should the employer not pay the contributions to the VRSP within the requisite time period, the employer will be required to pay interest at the rate and according to the method specified in the regulation.
4. Where an employee's employment is terminated, the employer must notify the VRSP administrator thereof within 30 days.

Different bodies are responsible for applying the VRSP Act, including Retraite Québec and the Commission des normes, de l’équité, de la santé et de la sécurité du travail. The CNESST oversees the employer's compliance with its obligation to offer a VRSP to its eligible employees.

In the event of a violation of the VRSP Act, the employer may be subject to penal sanctions, among other things. For example, the VRSP Act states that if an employer fails to offer a VRSP within the time period prescribed by law, it commits an offence and may be liable to a fine of $500 to $10,000.

In closing, we note that it appears the CNESST will only intervene if a complaint is received. If an employer was supposed to offer a VRSP by Dec. 31, 2016 and has not yet done so, it should act quickly, if a complaint has been filed with the CNESST, the employer could be subject to prosecution and payment of a fine.

François Parent is a partner and Cloé Potvin is a lawyer with Lavery, de Billy