Custom home builder payroll: T4 crew, T5018 subs, and the WSIB bill in between

Start with the roster, not the software

Before any payroll platform is configured, we list every person who will set foot on your lots this year and decide which side of the line each one is on. The usual builder roster has a salaried site supervisor, a few hourly carpenters and labourers paid weekly, an office or selections coordinator, the owner, and then twenty or more trades working under subcontract. The trades are self-employed when they control their own hours, bring their own tools and crews, carry their own risk of loss and work for other builders. A framer who works only your lots, on your schedule, with your compressor and your nail guns, looks like an employee to CRA no matter what his invoice says.

Misclassifying one person costs both halves of CPP and EI going back years, plus penalties, and it opens the door to Employment Standards claims for vacation and overtime. How the CRA decides between employee and contractor sets out the tests we apply to each name on the roster.

WSIB in residential construction: coverage is mandatory, clearances are the proof

Since 2013, WSIB coverage has been compulsory in Ontario construction for independent operators, sole proprietors, partners and executive officers, not just for employees. One executive officer or partner who does no construction work can be exempted; everyone else is covered and their earnings are insurable. The home-renovation exemption exists for people working directly for the occupant of an existing home, which does not describe a new build on an empty lot, so we treat every one of your subs as needing an account of their own.

That is why the clearance certificate matters. Before a trade starts, you obtain a WSIB clearance confirming they are registered and in good standing, and you keep it current for the length of the job. If a sub has no account, WSIB can assess premiums on the labour portion of what you paid them as if they were your workers. We hold clearances alongside each vendor record and report insurable earnings under the residential building construction rate group so the premium reconciles to the payroll and sub ledgers. Whether you need WSIB coverage for your Ontario business covers the registration side.

Ontario construction employees have their own ESA rules

Employment standards for construction workers depart from the general rules in ways that change how a pay run is built. Overtime starts after 44 hours in a week. Vacation pay is four percent, rising to six after five years, and most builders pay it on every cheque under a written agreement rather than banking it. Construction employees who receive at least 7.7 percent of their hourly rate as vacation and public-holiday pay (9.7 percent after five years of employment) are exempt from the separate public-holiday entitlement, a rule worth setting up deliberately rather than by accident. Construction employees are also outside the general notice-of-termination provisions, which is why a winter layoff is handled with a Record of Employment rather than working notice.

Those seasonal ROEs are routine for builders: code A for shortage of work when the last lot closes before the frost, and a rehire in the spring. The Ontario Employer Health Tax does not bite until payroll passes the exemption most small builders stay under, and the second CPP ceiling introduced in 2024 adds a deduction tier for your higher-paid supervisors. We track each of these in the payroll set-up so year-end T4s and the EHT annual return are not a surprise.

Payroll that feeds job cost

Every hour a T4 employee works belongs to a lot. Time captured in Buildertrend's time clock or a tool like ClockShark, coded to the house and the phase, flows into Wagepoint or Payworks for the pay run and back into QuickBooks Online Projects as a burdened labour cost — wages plus the employer's CPP and EI, WSIB, vacation pay and any EHT. The site supervisor's salary is allocated across the active lots by hours or by a stated formula, so no single spec home looks cheaper than it was because it happened to be built while he was spread thin.

Remittances follow the schedule CRA assigns you, T4s are due at the end of February, and T5018 slips are due six months after the reporting period you elected for them. The failure mode we see most is cash paid on site to a labourer who appears on no slip: no T4, no T5018, no WSIB record, and no deduction CRA will accept without a fight. The fix is a payroll routine that makes it faster to add someone properly than to reach for the bank machine. Crews travelling to a US job raise a separate set of questions, which we cover in our cross-border guide for custom home builders; the general engagement is on our payroll services page.

Source: Ontario — Your guide to the Employment Standards Act.