Deferred Salary Leave Plan Procedure
Approval Date: 2018-03-15
Effective Date: 2018-04-01
Responsible Unit: Department of Human Resources
1. Employees wishing to participate in the Deferred Salary Leave Plan must:
a) Review the plan options and understand the implications of participation;
b) Ensure they are financially able to participate in the plan;
c) Make written application to their Unit Head at least three months before they wish to begin to contribute to the plan.
2. Requests received by a Unit Head are forwarded to the Department of Human Resources to be reviewed.
3. Approval of requests is subject to operational requirements as anticipated during the Employee's period of leave.
4. Employees are notified, in writing, within two months of their request of the final decision regarding participation in the Deferred Salary Leave Plan. Deductions will commence in accordance with the pay period schedule.
1. The minimum period of leave is six months except where an Employee is attending a recognized post-secondary educational institution on a full-time basis. In this case, the minimum period of leave is three months.
2. The maximum period of leave is twelve consecutive months.
3. The leave must start immediately after the deferral period.
4. The deferral period cannot exceed six years.
5. Employees can defer up to a maximum of thirty-three and one-third percent (33 1/3%) of their gross salary in a taxation year.
6. The following table presents examples of calculations for plan participation:
Percentage of Salary Deferred
% of Normal Salary During Plan
1 over 1.5 Year
33 1/3 %
2nd Year (6 months)
2 over 3 Years
33 1/3 %
3 over 4 Years
4 over 5 Years
5 over 6 Years
6 over 7 Years
7. The deferred portion of an Employee's salary is deposited into an individual trust account with Memorial's bank. The interest earned is not paid on an annual basis. The interest earned is held in trust for the Employee along with the funds the Employee contributes, and is paid out during the leave period. Income tax is deducted at the time it is paid out. The rate of interest is that which the bank would pay to an individual account. Interest will be earned on the account until the account is totally paid out at the end of the leave period.
8. In accordance with Canada Revenue Agency requirements, all Employees who receive a leave of absence in accordance with this Plan guarantee that they will return to employment with Memorial for a period of time that is not less than the period of the leave of absence. As such, the Deferred Salary Leave plan can not serve as an early retirement program.
Salary and Benefits during Deferral and Leave Periods
1. During each year of enrolment in the Plan, Employees receive their annual salary less the percentage elected for annual deferral. The amount elected for deferral is deducted from salary and transferred on a bi-weekly basis to Financial and Administrative Services for deposit. The fund receives the same interest rate as other trust funds of Memorial.
2. During the period of the leave of absence the Employee receives on a bi-weekly basis an amount from the fund up to but not greater than the salary that the Employee would have received if they were working. Within this limitation, the funds are equally disbursed during the period of the leave until the Employee's contribution to the fund and accumulated interest is depleted.
3. The percentage of gross salary received by the Employee is fixed for the entire deferral period and the leave period.
4. While an Employee is enrolled in the Plan and not on leave, any benefits tied to salary level are structured accordingly to the salary the Employee would have received had the Employee not been enrolled in the Plan.
5. While on leave, any benefits tied to salary level are structured according to the salary the Employee would have received in the year prior to taking the leave had the Employee not been enrolled in the Plan.
6. All group insurance and pension plan contributions will continue on the regular cost-shared basis between the Employee and the employer.
7. Notwithstanding any other provision of this Plan, all statutory deductions are in accordance with Canada Revenue Agency rulings and all pension plan contributions are in accordance with the Memorial University Pensions Act.
1. Leave under this Plan is credited as service for purposes of:
ii. Step Progression
iv. Severance Pay
Annual Leave does not accrue during the period of the deferred salary leave.
2. In the event that a suitable replacement cannot be found for an Employee due to receive a leave, Memorial may defer the leave for up to one (1) year. In this instance, the Employee may choose to remain in the Plan or the Employee may withdraw and receive any monies and interest accumulated to the date of withdrawal.
3. Pension contributions are paid on the salary the Employee would have received had the Employee not entered the Plan or gone on leave. These payments are made during each year of enrolment including the period of leave and will be the normal contribution rate as required under the Memorial University Pensions Act.
4. All Employees wishing to participate in the Plan are required to complete a Deferred Salary Leave Plan Application and Approval Request Form agreeing to the terms of the plan before final approval for participation will be granted.
5. Employees will continue their normal payment of Union dues during each year of enrolment including the period of leave.
Income Tax Implications
1. During the deferral period, income tax is deducted at the rate in effect for the reduced income level.
2. During the leave of absence period, similar income tax deductions are made in accordance with the Employee's salary level at that time.
3. Memorial University Employees are not permitted to receive any salary amounts other than the deferred earnings from the employer (Memorial University).
4. Deferred Salary Leave Programs are regulated by the Canada Revenue Agency; therefore, changes may occur to reflect legislative changes.
Withdrawal from the Plan
1. An Employee may withdraw from the Plan, at any time for any reason, and receive all monies deferred to the fund plus accumulated interest. An Employee must withdraw upon resignation of employment.
2. An Employee whose employment is terminated or who is laid off will be paid out all monies deferred plus accumulated interest.
3. Should an Employee die while participating in the Plan, any monies deferred to the fund plus accumulated interest will be paid to the Employee's estate.
4. An Employee who withdraws from the Plan is required to wait a minimum of twelve (12) months before applying again.
5. Payment to the Employee will be made within sixty (60) days of withdrawal from the Plan. Income tax will be payable on the amount withdrawn in the calendar year in which it is paid.
Returning from Leave
1. The Employee must provide their manager with a minimum of two months'notice of their return to work date.
2. Upon return from leave, the Employee will be given a comparable position unless it is mutually agreed between the Employee and the Employee's department that the Employee return to a particular position.
Changes to an Application
Changes to an application may be made from time to time subject to mutual agreement between the parties.