Kitchen & bath renovator payroll: one company, two rulebooks

Showroom staff and site crews follow different ESA rules

Renovating, altering, and repairing buildings falls inside the construction industry as Ontario's ESA regulations define it, so your on-site crew are construction employees even though you never pour a foundation. That classification changes their entitlements: construction employees are exempt from ESA termination and severance pay, and they fall outside the public holiday provisions when they are paid vacation or holiday pay of at least 7.7 percent on top of wages under the current regulation. Your showroom designer, estimator, and office coordinator get none of those exemptions — they are entitled to public holiday pay, termination notice, and the rest of the standard rules.

Two rules apply to everyone. Overtime starts after 44 hours in a week, and time spent driving between job sites during the day is working time, even though the morning drive to the first site usually is not. We configure the payroll platform — Wagepoint or QuickBooks Payroll for most renovators — with two employee groups from the start, so vacation pay accrues for the office and pays out per cheque for the crews, and nobody is paid holiday pay they were not owed or denied pay they were.

Piece rates, commissions, and the minimum-wage floor

Paying installers by the box, by the linear foot, or by the bathroom is legal in Ontario, but the ESA still requires that piece-rate earnings average at least minimum wage for every hour worked in the pay period, and it still requires you to record those hours. A crew that finishes a galley kitchen in a day and a half is fine; a crew stuck on a three-day plumbing surprise at the same flat rate may not be. Time tracking through QuickBooks Time or the clock in your project app is what proves the floor was met.

Showroom designers are usually paid a base plus commission on signed contracts. The plan needs to say when the commission is earned — at deposit, at install start, or at final payment — and what happens when a homeowner cancels inside the ten-day cooling-off period that Ontario's Consumer Protection Act gives to agreements signed in the customer's home. Commissions are wages: they carry CPP, EI, and income tax, vacation pay is calculated on them, and a clawback for a cancelled contract has to be written into the agreement before it is deducted.

Installers on payroll or on invoice?

The plumber and the licensed electrical contractor are almost always subcontractors; electrical work in Ontario has to be done by a licensed electrical contractor in any case. The harder call is the tile setter and the cabinet installer who show up every day in your shirt, in your van, on your schedule. CRA decides by looking at the working relationship, not the invoice, and our employee-or-contractor explainer walks through the factors.

An installer who has incorporated does not settle the question. The corporation may carry its own personal services business risk, but if the relationship looks like employment, the assessment for unremitted CPP and EI still lands on you. Where the same two or three subs have worked for nobody else for years, we raise it before CRA does.

WSIB, EHT, apprentices, and the slips

WSIB coverage has been mandatory in Ontario construction since 2013, and the home renovation exemption is narrower than most renovators assume: it covers people hired directly by the homeowner, not subcontractors hired by your company. So a sub needs a valid clearance certificate before each payment, or their premiums become your problem. Your own crew's wages carry premiums up to the annual insurable maximum, and under the current rate framework the whole business is usually rated by its predominant activity, which means showroom wages are typically assessed alongside site wages.

• Employer Health Tax — Ontario exempts the first $1,000,000 of payroll for eligible private employers, so most renovators owe nothing until a second or third crew pushes them over.
• CPP2 — the second additional CPP contribution has applied to earnings above the first ceiling since 2024; lead installers and salaried designers can cross it.
• Apprentices — cabinetmaker, tilesetter, plumber, electrician, and general carpenter are Red Seal trades, so a registered first- or second-year apprentice can earn your corporation the federal Apprenticeship Job Creation Tax Credit of 10 percent of eligible salary, to $2,000 per apprentice per year.
• Records of Employment — the January slowdown is when renovation crews get laid off; ROEs go through ROE Web within the deadline, coded correctly for a temporary layoff.

Year-end brings two slip runs. T4s for everyone on payroll are due at the end of February. T5018s report every subcontractor paid $500 or more for construction services, on a calendar or fiscal-year basis, and are due six months after the end of the period you choose; our T5018 explainer covers who is caught. If any of your suppliers or specialty installers are across the border, the renovator cross-border guide covers the paperwork, and our payroll services page describes how remittances and filings run month to month.

Source: CRA — T5018, Statement of Contract Payments.