The Church as Employer
As pastors and leaders in the church we find ourselves perplexed by a paradox that others rarely experience. There are very few pastors who view their ministry as simply a job!
At times however there can be a tension between being obedient to the call of Jesus in pastoral ministry but also realizing that we are viewed as employees of the local churches where we serve. Lead pastors have the added complexity of also having to act in the capacity of an employer.
Canadian laws around employment apply equally to the church as they would any other organization or business. When a church enters into an arrangement where a person is being paid all of these laws and regulations begin to apply.
Each province across Canada has its own specific code for labour standards. It's important for pastors and church councils to familiarize themselves with the applicable codes to ensure decisions are in compliance.
For full details on standards by province please click HERE
The Church as Employer (Part 2)
Employment and the church can be a puzzling subject for most of us! A large majority of questions I receive are in some way linked to this topic. And just when you think you have it finally figured out some scenario comes up that let's you know you don't...
It's important for the church (council) to remember that the moment a decision is made to remunerate a pastor or staff person they automatically become responsible to adhere to the governing authorities and guidelines of our wonderful country!
Before moving onto the technical aspects of employment, payroll and the accounting function I thought it would be helpful to give an overview of the various laws, regulations and policies that influence how we steward this area of the church's ministry.
Canadian Income Tax Act
When administering payroll, the church’s first obligation is to follow the guidelines of the Income Tax Act (ITA). There are few cases where a person that is paid by the church would be deemed exempt from taxation as per the ITA.
Regardless of circumstances the church is not authorized to alter or reduce the amounts deducted for Tax, CPP, and EI on amounts paid by the church. Doing so is a legal offence.
Canada Revenue Agency
The church, as a registered charity, is responsible to deduct all payroll taxes at source.
Taxes are deducted according to the CRA Tax Tables provided on their website or through the Sage accounting program.
Deductions are to be remitted on or before the due date set by the CRA. Failure to do so could result in penalties and interest charges charged to the church.
Employment Standards & Laws
The church is obligated to be aware of and follow the standards and laws for employment as set out by both provincial and federal governing authorities.
Each province also has it's own set of Worker Safety Standards and in some cases will require a yearly insurance premium to be paid to cover work-related accidents or injuries.
Worker's Compensation Insurance
Once a church is registered with a payroll number, a WCB account (Workers Compensation Benefits) may need to be set up and premiums paid on a yearly basis. Each province has its own board and requirements. Below are the websites for each province for further information.
Once T4’s and the T4 Summary have been issued, a Yearly Report for WCB is to be submitted and payment remitted for premiums. Rates may differ from province to province.
If you require further assistance please contact the national office.
Foursquare Administrative Manual
Our Foursquare policy manual outlines our various obligations as an employer in the following areas: