How to Set Up and Manage Employee Deductions

All deductions are configured in the employee's profile in the Other Pay Run Inclusions heading.

1. Go to People > People List > Click on the employee to get the employee's profile.
2. Scroll down to the Pay & compensation section and under the Pay Details tab, click on > Other Pay Run Inclusions.
3. Click + Add deduction.
4. Select a deduction name from the dropdown. Note: If none appear, no deduction categories have been set up yet at the business level. Learn how to set up deduction categories here.
5. Under Calculation type, select the appropriate type: Fixed, % of gross earnings, or % of pensionable earnings.
6. Enter the amount (for Fixed) or percentage rate (for % types). Rates must be between 0 and 100.
7. (Optional) Set a per-pay-run maximum for percentage deductions.
8. (Optional) Add Notes to be displayed on each pay run for this deduction.
9. Click Save.

A set dollar value is deducted from each pay run, exactly as entered. Use this for deductions with a consistent, flat amount (e.g., a set fee per pay run regardless of earnings).

Calculated from the employee's total gross earnings for the pay run.

Example: Deduction set to 3% of gross. Gross earnings this pay run: $1,000. Deduction amount calculated automatically: $30.

Calculated from the employee's pensionable earnings (gross earnings minus any pay categories marked as CPP-exempt in Business Settings > Pay Categories). This definition applies to all deductions equally and cannot be adjusted for a single deduction.

Example: Deduction set to 5% of pensionable earnings. Pensionable earnings this pay run: $800. Deduction amount calculated automatically: $40.

For percentage-based deductions, you can set a cap on the maximum dollar amount deducted in a single pay run. Entering a zero or negative value will show a validation error.

• Example (Cap applies): Deduction is 10% of gross with a $20 per-pay-run max and $1,000 overall max. Gross earnings: $500 (calculated amount: $50). Result: Capped at $20. Only $20 counts toward the $1,000 overall maximum.
• Example (Cap does not apply): Deduction is 3% of gross with a $50 per-pay-run max. Gross earnings: $900 (calculated amount: $27). Result: $27 (below the cap).

Every deduction has an optional Notes field that appears on each pay run. Notes can be edited even when a deduction line is locked within an open pay run — it is the only field that remains editable on a locked line.

Once a recurring deduction appears in an open pay run, its line is locked based on its calculation type. Recurring deductions show a small icon next to the line in the pay run.

• % of Gross / % of Pensionable: The entire line is locked (amount, category, and all other fields). Only the Notes field can be edited.
• Fixed dollar amount: The dollar amount remains editable. The deduction category is locked.

There are two ways to fix a locked deduction line, depending on whether the correction should carry forward:

1. Fix it for this and future pay runs: Update the recurring deduction on the employee's file, then exclude and re-include the employee in the pay run. The line regenerates with the updated values.
2. Fix it for this pay run only: Delete the locked line and add a new deduction directly in the pay run. This creates a one-off, manual entry for this pay run only without affecting the recurring deduction on file.

Union dues — whether fixed or percentage-based — are reported on the employee's T4 in Box 44. The total reported is the sum of all deduction amounts across the year's pay runs.

To ensure Box 44 is populated correctly, select Union Dues as the deduction category type when creating or editing the deduction category. This automatically sets and locks the T4 box to Box 44.

A fixed deduction takes the same dollar amount every pay run. A percentage deduction calculates automatically from the employee's earnings each pay run — useful when the correct amount depends on how much the employee earned that period.

A percentage-based deduction will calculate as $0 if the employee has no relevant earnings in that pay run. A fixed deduction takes the entered amount regardless of earnings.

No — the per-pay-run maximum is only available on percentage-based deductions.

Percentage-based deductions (% of Gross, % of Pensionable) are locked once included in an open pay run because the amount is calculated automatically. To correct the line, either update the recurring deduction and re-include the employee, or delete the line and add a one-off manual deduction instead.

No — you must select a deduction category.

Yes — union dues are reported in T4 Box 44 regardless of whether they're fixed or percentage-based. Select Union Dues as the deduction category type to ensure the T4 box is set correctly.