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Self-Funded Leave Plan |
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The Self-Funded Leave Plan (hereafter referred to as the Plan) was established on October 1, 1998 to provide eligible employees with the opportunity to fund a subsequent leave of absence by deferring part of their salary. The Plan const itutes a prescribed plan or arrangement as defined in Section 6801 of the Income Tax Regulations. Employees who are members of the Mount Allison Staff Association are eligible to participate in the Plan. An eligible employee must have a continuing appointment and at least five (5) years of continuous service with the Employer at the time the deferral of salary is to begin.
An application to participate in the Plan must be made in writing to the employee's manager or department head at least one month before the proposed start date of the period of deferred salary. The application must include the date that the deferral of salary is to start, the percentage of annual salary to be deferred and the start and end dates of the leave of absence. Approval of individual requests to participate in the Plan will rest solely with the Employer. A request to participate in the Plan must be recommended by the employee's manager or department head and approved by the appropriate vice-president. When an employee moves to a new department during the period that salary is being deferred, continued participation in the Plan is subject to the approval of the new manager or department head and the appropriate vice-president. If it is necessary for the Employer to cancel participation in the Plan or to delay the start date of the leave of absence, the employee will be provided with the reasons in writing. A delay will not move the start date of the leave of absence beyond six (6) years from the date that the deferral of salary commenced. In the case of cancellation, the amount of accumulated deferred salary less income tax and any interest not already paid (less income tax) will be paid to the employee. A leave of absence under the Plan may not be taken more often than every five (5) years. The salary to be deferred in any calendar year may not exceed 33% of an employee's annual salary. The percentage of salary to be deferred may be changed no more than once in any twelve (12) month period. Appendix A provides some examples of possible deferral options. The deferred salary will be held in a separate account on the Employer's books. Interest will be credited to the account monthly and will be based on the Employer's calculated average yield on short-term investments. Accumulated interest will be paid and reported to the employee annually during the deferral and leave periods. Credited interest is taxable in the calendar year it is earned and will be reported on a T5 form. During the deferred period, income tax is deducted on the amount actually received by the employee and not on the amount earned by the employee. For example, income tax will only be deducted on 80% of an employee's salary in the case where the employee elects to defer 20% of his/her salary.
A leave of absence under the Plan must start within six (6) years of the date of the first salary deferral. The leave must be a minimum of six (6) consecutive months and can be no more than twelve (12) consecutive months in duration. The deferred salary will be paid in equal semi-monthly payments during the leave of absence. During the leave, the employee cannot receive any additional remuneration from the Employer or persons with whom the Employer does not deal at arm's length other than the amount deferred under the Plan and applicable benefit coverages.
6.1 During the Salary Deferral Period
6.2 During the Leave of Absence
A long term disability claim that is approved in respect of any disability that starts during the leave of absence will continue to be paid based on the deferred salary amount should the employee not be able to return to work. If the employee is able to return to work and total disability occurs again due to the same or related causes within six months of the end of the previous disability, the insurance carrier will consider it a continuation of the previous total disability. A new elimination period will not be applied and benefits will be based on the coverage in force on the original date of disability, i.e., the deferred salary amount.
Employees who participate in the Plan are expected to follow through on their commitment. However, in unforeseen or extenuating circumstances, an employee may withdraw from the Plan up to three (3) months before the date of the scheduled leave by informing their manager or department head in writing. The amount of accumulated deferred salary less income tax and any interest not already paid (less income tax) will then be paid to the employee. Where it is not possible to provide three (3) months notice, such requests will be considered by the Employer on a case by case basis. The Employer reserves the right to delay the start of a leave of absence due to unforeseen circumstances. Written notice of such a delay will be provided to the employee at least three (3) months before the date of the scheduled leave. The employee may then agree to accept the delay or to withdraw from the Plan. The delay will not move the start date of the leave beyond six (6) years from the date that the deferral of salary commenced.
An employee must return to the Employer after completion of the period of leave for a period that is not less than the period of absence under the Plan. The employee will have the right to return to the same position that was held before the start of the leave of absence. If the position no longer exists or if the employee has been bumped from the position, the layoff provisions in the Collective Agreement with the Mount Allison Staff Association will apply. APPENDIX A EXAMPLES OF DEFERRAL OPTIONS (based on an annual salary of $25,000 and a one year leave of absence)
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©
2003 Mount Allison University |