The WSDRF (Workforce Skills Development and Recognition Fund) is a program established under Québec’s 1% Training Law (Skills Act) and managed by the Ministère de l’Emploi et de la Solidarité sociale. The law mandates that companies in Québec with a total payroll exceeding $2 million allocate at least 1% of their payroll toward employee training and skill development. If a company’s training expenses are less than 1% of its annual payroll, it must contribute the difference to the WSDRF. These contributions help fund broader workforce development initiatives across the province.
Who does the WSDRF apply to?
The 1% Training Law applies to every business in the Canadian province of Québec with an annual payroll of over $2 million. Eligible businesses can refer to their RL-1 summary - Summary of Source Deductions and Employer Contributions (RLZ-1.S-V) to calculate their total payroll, training expenses, and required contribution to the WSDRF.
Businesses must make their yearly contribution to the WSDRF by the end of February of the following year. In addition to paying the contribution, businesses are required to submit an RL-1 summary and the corresponding remittance slip.
Exemption to the rule: Companies holding a Training Initiative Quality Certificate for exemplary training practices are exempt from the standard WSDRF requirements. This means they are not required to pay into the fund while their permit remains valid, typically for three years.
The Commission des partenaires du marché du travail (CPMT) is responsible for issuing quality certifications. It also has the authority to revoke the certification if a company fails to comply with regulations or engages in misconduct. In such cases, the company must retroactively contribute 1% of their yearly payroll to the WSDRF for the year(s) it did not meet certification standards.
Primary goals of the WSDRF
Key objectives of the WSDRF include:
- Workforce upskilling: WSDRF initiatives provide targeted training programs to address skill gaps, helping employees acquire new or improve existing skills.
- Skill recognition: By leveraging certification, the WSDRF acknowledges employees’ previous experience, supporting their career advancements and transitions between industries.
- Enhancing collaboration: The WSDRF fosters collaboration between educational institutions, employers, and unions to create relevant and impactful training programs.
Who can apply for funding?
Employers, training providers, unions, and industry associations can apply for WSDR funding. The application process typically involves:
- Identifying skill gaps within the organization or industry
- Submitting a proposal outlining the training and recognition initiative
- Demonstrating the potential impact on employees and the labour market
How to ensure compliance with WSDRF standards
Complying with the 1% Training Law and WSDRF standards requires employers to take the following actions:
- Assessing payroll: Reviewing financial records, such as their RL-1 summary, helps companies calculate their total payroll and determine whether it exceeds the $2 million threshold.
- Planning training initiatives: Businesses that meet the $2 million threshold are required to spend 1% of their payroll on employee training and skill development or contribute the difference to the WSDRF. Careful planning can help ensure their training initiatives meet legal requirements.
- Reporting: Businesses must submit annual training-related declarations with Québec's revenue agency to confirm compliance with training and other reporting requirements.
What should training and expense planning look like?
When projecting a training plan for the following year, a company must take into consideration the following elements:
- Diverse training activities: Employees should attend on-the-job and classroom training, conferences, and online courses. Companies should design training modules that meet employees’ schedules, learning preferences, and working styles.
- Qualified educators: The company must ensure that training is provided by certified educational institutions or recognized professionals with proven expertise in their field.
- Expense documentation: Employers must keep detailed records of all eligible training expenditures to ensure compliance with WSDRF standards and align training plans with the company’s budget. These records should be available to Revenu Québec and the Labor Market Partners Commission.
Why is the WSDRF important?
Advances in technology have triggered rapid industrial transformation. In such a fast-changing business environment, initiatives like the WSDRF support:
- Career advancements: Workers with in-demand skills are more competitive in the job market.
- Economic growth: The fund ensures businesses can innovate and thrive by addressing skill shortages and bridging expertise gaps.
- Continuous learning: The WSDRF promotes lifelong learning as the foundation of professional growth.
FAQs about the WSDRF
What is the difference between the WSDRF, Québec Pension Plan (QPP), and Québec Parental Insurance Plan (QPIP)?
The WSDRF is an initiative supporting employee development and career growth. Contributions made to the Québec Pension Plan (QPP) and Québec Parental Insurance Plan (QPIP) ensure employees' lifelong financial security and leave entitlements. The QPP and QPIP are mandatory for all employers in Quebec, while only companies with a payroll exceeding $2 million are required to invest in employee development programs. While the contributions of these three programs are separate, they are all designed to improve employee well-being throughout various stages of their professional life.
What is the role of human resources in managing WSDRF contributions and ensuring compliance with the 1% Training Law?
Although it varies among companies, human resources (HR) departments can be critical in ensuring that businesses comply with the 1% Training law. HR professionals often assess a company’s training needs, develop training programs, and monitor expenses. They can help keep track of required contribution thresholds, ensuring their companies don’t miss the submission deadlines set by the Québec Revenue Agency. Finally, HR teams ensure the training activities are aligned with the company’s goals and that funds are used effectively to bridge skill gaps and boost employee performance.
Rippling and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.