Payroll Services for Daycare Centres
RECE Wage Enhancement Grant tracking, CWELCC wage floor compliance, supply staff payroll, ratio-based staffing, Ministry of Education reporting, public holiday pay for variable-hours staff. From $125/month. T4s and ROEs included.
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The Ontario Grant That Adds $2 Per Hour to Every RECE Paycheque and What Happens When You Process It Wrong
The Wage Enhancement Grant pays $2.00/hour plus $0.414/hour in benefits for every eligible RECE hour worked. The Ministry reimburses the operator quarterly. But the $2.00 must flow through regular payroll as part of gross wages with CPP, EI and income tax deducted on the total. Operators who pay the WEG as a separate untaxed cheque face a CRA reassessment for unremitted deductions AND a Ministry clawback of the entire grant. Double penalty. Add CWELCC wage floors that must be met on every pay run, supply staff who are employees not contractors, public holiday pay calculated individually for every part-time worker on every holiday, and Ministry reports that must reconcile dollar-for-dollar against payroll records. One discrepancy and the Ministry withholds funding.
We handle payroll for licensed daycare centres, home child care agencies, before-and-after school programs and EarlyON centres across Ontario. WEG hours tracked per employee per pay period. CWELCC wage floors monitored. Supply staff on payroll with 4% vacation per cheque. Ministry reports prepared directly from payroll data. From $125/month.
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Our Daycare Payroll Services
Pay Run Processing
Biweekly or semi-monthly. WEG included in gross pay. Variable hours for part-time and supply staff. Overtime at 1.5x after 44 hours.
WEG Grant Tracking
$2.00/hr + $0.414/hr tracked per eligible RECE per pay period. Ministry reports prepared. Grant claims reconciled to payroll records.
CWELCC Compliance
Wage floors monitored every pay run. Alerts if any rate falls below floor. Annual reconciliation reports prepared for Ministry.
Supply Staff Payroll
Per-shift pay. 4% vacation on each cheque. CPP/EI/tax deducted. T4s issued. ROEs filed after 7 days without work.
Holiday Pay Calculations
Variable-hours formula per employee per holiday for all 9 Ontario public holidays. Part-time and supply staff calculated individually.
Ministry Reporting
WEG hours by employee, funded vs unfunded positions, wage rates by category. Every number matches payroll records exactly.
Daycare Payroll by a Licensed CPA
Every aspect of daycare payroll handled correctly. From WEG tracking to Ministry reporting. AFFORDABLE flat-fee pricing.
Wage Enhancement Grant Processing
The most misunderstood payroll component in the daycare industry. We get it right on every pay run.
- Add $2.00/hour WEG to eligible RECE staff gross hourly rate. Not a separate cheque. Not a bonus. Part of regular wages.
- Calculate CPP, EI and income tax on the total gross including WEG. The employee's T4 includes WEG as employment income.
- Track $0.414/hour benefit enhancement (employer CPP, EI, WSIB, vacation) per eligible hour for Ministry claim.
- Prepare WEG distribution report by employee, by hours, for Ministry quarterly or semi-annual reimbursement application.
- Reconcile WEG grant claim amounts against payroll records before submission to prevent clawback.
CWELCC Wage Floor Monitoring
Paying below the floor risks losing CWELCC funding for the entire centre.
- Monitor all program staff wages against the CWELCC regional wage floor on every pay run (GTA RECE floor approximately $23.86/hr, indexed annually).
- Issue alerts immediately if any program staff rate falls below the floor for any reason (new hire, rate error, position change).
- Track funded vs unfunded positions separately. Ratio-required positions are CWELCC-funded. Additional floaters, kitchen and admin may not be.
- Prepare annual CWELCC wage reports from payroll data. Every dollar matches the financial statements and Ministry submission.
- Ensure no wage has been reduced below the level at opt-in. Any reduction disqualifies the centre from CWELCC.
Supply and Casual Staff Management
Supply staff are employees. Not contractors. CRA reclassification in daycare is common.
- Process supply staff as employees on payroll: CPP, EI and income tax deducted on every shift payment.
- Pay 4% vacation pay on each cheque (or 6% at 5+ years). Vacation pay included in gross for deduction calculations.
- File ROE when a supply employee has 7 consecutive calendar days without work or earnings. Reason Code A.
- Track supply staff costs separately from permanent staff for Ministry reporting and centre budgeting.
- Issue T4s for all supply staff by February 28 regardless of total earnings amount.
Public Holiday and Vacation Pay
The #1 payroll error in daycare: flat-rate holiday pay for variable-hours staff.
- Calculate public holiday pay individually for each employee on each of the 9 Ontario public holidays using the formula (4 weeks wages / 20).
- Part-time and supply staff with variable hours get a different holiday pay amount for each holiday based on actual wages in the prior 4 weeks.
- Track vacation pay accrual at 4% (or 6% at 5+ years). Supply and part-time: paid on each cheque. Full-time: accrued for vacation period.
- Handle centre closures correctly: statutory holidays = pay required. Non-statutory closures (PD days, March break) = no ESA pay unless contract says otherwise.
- Monitor the 5-year threshold for the 4% to 6% vacation pay increase. Track hire dates for all staff including rehires.
Overtime, Split Shifts and ESA Compliance
Late parent pickups add minutes that compound into overtime across the week.
- Track total weekly hours for all staff including late-stay minutes for parent pickup delays and ratio coverage.
- Calculate overtime at 1.5x after 44 hours. No childcare exemption from overtime provisions. All daycare staff are entitled.
- Handle before-and-after school split shifts: both segments count toward total weekly hours. PD day coverage may push the week past 44.
- Ensure 30-minute eating period every 5 hours. Break coverage must be scheduled so the room remains in ratio during the break.
- Track ESA rest period compliance: 11 hours between shifts and 24 consecutive hours off each work week.
CRA Filing and Ministry Reconciliation
CRA and the Ministry of Education both audit payroll. Both must match.
- Submit CRA remittances (CPP + EI + income tax + employer contributions) by the deadline every pay period.
- Prepare all T4s by February 28 with WEG amounts included in employment income and all taxable benefits reported.
- File ROEs within 5 days of every separation, maternity leave and supply staff interruption of earnings.
- Prepare Ministry wage reports: WEG distribution, CWELCC wage floor compliance, funded vs unfunded positions.
- Reconcile payroll costs to annual financial statements for CWELCC audit or review engagement submission.
Free Daycare Payroll Consultation
Free Daycare Payroll Consultation
Case Studies: Daycare Payroll
Licensed Centre, Scarborough (WEG Paid as Separate Cheque)
A 70-child centre had been paying the $2.00/hr WEG as a separate untaxed cheque to 6 RECEs for 18 months. No CPP, EI or income tax deducted. CRA exposure: $22,000+ in unremitted deductions and penalties. Ministry exposure: full WEG clawback ($31,000). We corrected all payroll records, filed amended T4s, submitted voluntary disclosures to CRA and restructured WEG through regular payroll. CRA penalty reduced by 80%. Ministry clawback avoided. Cost: $125/month ongoing.
Before-and-After School Program, Mississauga (Supply Staff as Contractors)
A school-age program was paying 4 supply workers as independent contractors ($150/shift, no deductions). All 4 worked exclusively at the centre on the centre's schedule. CRA reclassification exposure: $18,000 over 2 years. We moved all supply staff to payroll, filed ROEs for interruptions, set up 4% vacation per cheque and corrected prior-year reporting. Cost: $125/month ongoing. Payroll Services →
Home Child Care Agency, Brampton (Ministry Report Discrepancy)
A home child care agency's Ministry wage report showed $142,000 in WEG-eligible wages but payroll records totaled $128,000. The $14,000 discrepancy triggered a Ministry review and funding hold. We reconciled payroll records against the agency's WEG application, identified overtime and vacation pay that had been excluded from the Ministry calculation, corrected the report and released the funding within 3 weeks. Cost: $125/month ongoing.
Multi-Location Centre, Toronto (CWELCC Wage Floor Violation)
A 3-location daycare had 2 RECEs at $23.00/hr when the CWELCC floor was $23.86/hr. The $0.86/hr shortfall over 8 months meant $2,752 in back pay owed and risk of CWELCC funding suspension for all 3 locations. We identified the gap during onboarding, calculated back pay, processed retroactive adjustments through payroll with correct CPP/EI/tax and submitted the correction to the Ministry before it was flagged. Cost: $125/month per location.
The RECE Wage Enhancement Grant: How It Works on Payroll
| WEG Component | Amount | Payroll Treatment |
|---|---|---|
| Wage enhancement (RECE) | $2.00/hour | Added to gross hourly pay. CPP, EI, income tax deducted on total. Reported on T4 as employment income. |
| Wage enhancement (non-RECE supervisory) | $2.00/hour | Same treatment. Must be in program staff role. Admin/kitchen do not qualify. |
| Benefit enhancement (employer share) | $0.414/hour | Covers employer CPP, EI, WSIB, vacation on the $2.00 increase. Reported to Ministry, not on T4. |
| Home child care visitors | $2.00/hr + $0.414/hr | Agency visitor employees qualify. Independent home providers do not. |
WEG Must Flow Through Payroll: Not a separate cheque. Not a bonus. Not untaxed. Part of the gross hourly rate. Operators who pay WEG separately face CRA reassessment AND Ministry clawback. Double penalty.
CWELCC Funding and Payroll Compliance
| Requirement | Details |
|---|---|
| Wage floor | GTA RECEs: approximately $23.86/hr (indexed). Non-RECE program staff: lower floor. Must meet to keep CWELCC funding. |
| Wage reporting | Actual wages reported to Ministry. Must match payroll records exactly. Discrepancies = funding clawback. |
| No wage reduction | Cannot reduce any wage below opt-in level. Any reduction disqualifies from CWELCC. |
| Funded vs unfunded | CWELCC covers ratio-required positions. Extra floaters, admin, kitchen may not be fully funded. Track separately. |
| Annual financial statements | Audited or review-engagement statements required. Payroll must reconcile to financials and Ministry reports. |
Staff-to-Child Ratios and Payroll Planning
| Age Group | Ratio | Max Group | Payroll Implication |
|---|---|---|---|
| Infant (under 18 months) | 1:3 | 10 | Highest cost. 10 infants = minimum 4 staff (with break coverage). $15K-$20K/month. |
| Toddler (18 months to 2.5 years) | 1:5 | 15 | 15 toddlers = 3 staff + break coverage. |
| Preschool (2.5 to 3.8 years) | 1:8 | 24 | 24 preschoolers = 3 staff. Most cost-efficient age group. |
| Kindergarten (3.8 to 5 years) | 1:13 | 26 | 26 children = 2 staff. Lowest staff cost per child. |
| School-age (6-12, before/after) | 1:15 | 30 | 30 children = 2 staff. Split-shift payroll complexity. |
Ratio Non-Compliance: Ministry conducts unannounced inspections. Below ratio at any time (including breaks) = non-compliance order. Repeated = licence suspension. Payroll planning must include break coverage, sick call replacements and staggered schedules.
Overtime, Split Shifts and ESA Rules
| Rule | Application | Common Violation |
|---|---|---|
| Overtime: 44 hours/week | 1.5x for all daycare staff. No childcare exemption. | Late parent pickups add minutes. Compounds to OT over the week. |
| Split shifts (before/after school) | Both segments count toward weekly total. PD day = full day may push past 44. | Not tracking total hours across split segments. |
| 30-minute break every 5 hours | Must schedule break coverage so room stays in ratio. | Skipping breaks because ratio cannot be maintained. |
| Public holiday closures | 9 Ontario holidays. Staff get holiday pay (4 weeks wages / 20). | Flat-rate holiday pay for variable-hours staff. Formula required. |
| Non-statutory closures | PD days, March break: no ESA pay unless contract says otherwise. | Treating non-statutory closures as paid public holidays. |
Vacation Pay, Public Holiday Pay and Supply Staff
| Entitlement | Amount | Notes |
|---|---|---|
| Vacation (under 5 years) | 4% of gross | Part-time/supply: paid per cheque. Full-time: accrued for vacation period. |
| Vacation (5+ years) | 6% of gross | Track hire dates. Increase applies from 5th anniversary. |
| Public holiday pay (variable hours) | 4 weeks wages / 20 | Per employee per holiday. Different amount each holiday. #1 payroll error in daycare. |
| Supply/casual staff | Per shift, 4% vacation per cheque | Employees, not contractors. CPP/EI/tax. T4s. ROEs after 7 days without work. |
| ECE student placements | Unpaid, not payroll | Cannot count toward ratios. If paid for extra hours outside placement = employee. |
What Our Daycare Payroll Service Includes
| Service | What We Do |
|---|---|
| Pay run processing | Biweekly/semi-monthly. WEG in gross. Variable hours. Overtime at 1.5x after 44. |
| WEG tracking | $2.00/hr + $0.414/hr per eligible employee per hour. Ministry reports prepared. Grant claims reconciled. |
| CWELCC wage floor compliance | All program staff monitored against floor. Alerts issued. Annual wage reports prepared. |
| Supply staff payroll | Per-shift. 4% vacation per cheque. CPP/EI/tax. T4s. ROEs after 7 days. |
| Vacation pay | 4%/6% on every pay run. Supply: per cheque. Full-time: accrued. Year-end verified. |
| Public holiday pay | Variable-hours formula per employee per holiday. Full-time: regular daily rate. |
| CRA remittances | CPP + EI + tax by deadline. Never late. |
| ROE filing | Within 5 days. Supply staff after 7 days without work. Correct reason codes. |
| WSIB tracking | Premiums calculated. Annual reconciliation. Tracked for Ministry reporting. |
| T4 and T4 Summary | Filed Feb 28. WEG in employment income. Reconciled to remittances and Ministry reports. |
10 Common Payroll Errors Ontario Daycare Centres Make
| # | Error | Consequence |
|---|---|---|
| 1 | WEG paid as separate untaxed cheque | CRA reassessment for unremitted deductions + Ministry clawback. Double penalty. |
| 2 | RECEs below CWELCC wage floor | Funding withheld until corrected + back pay. Centre may lose CWELCC entirely. |
| 3 | Supply staff as independent contractors | CRA reclassification: CPP/EI/tax/penalties for all years. |
| 4 | Flat-rate holiday pay for variable-hours staff | ESA violation. Formula (4 weeks/20) required per employee per holiday. |
| 5 | No ROE for supply staff after 7 days without work | Delays EI claim. Flags employer account. |
| 6 | Counting ECE students in ratios | Non-compliance order. Students are not employees and cannot fill ratio spots. |
| 7 | WEG hours not tracked separately | Ministry denies or claws back funding without detailed WEG distribution report. |
| 8 | Mixing funded and unfunded positions | Overstated CWELCC claim = Ministry audit with clawback. |
| 9 | No overtime for late parent pickup minutes | Extra minutes compound. If week exceeds 44 hours, OT at 1.5x owed. |
| 10 | Late CRA remittances | 3%-10% penalty. $5K late 7 days = $350. Repeated = accelerated status. |
Why Choose Gondaliya CPA for Daycare Payroll?
Daycare Specialists
WEG tracking, CWELCC compliance, ratio staffing, supply staff and Ministry reporting built into every engagement.
Never Late
CRA remittances, T4s and ROEs filed on time every period. No penalties. No interest. No flags.
Ministry-Ready Reports
WEG distribution, wage floor compliance and funded position reports prepared from payroll data. Every dollar matches.
AFFORDABLE Flat Fee
From $125/month. T4s and ROEs included. No hourly billing. 30-Day Money-Back Guarantee.
Transparent Flat-Fee Pricing
| Service | Fee | Includes |
|---|---|---|
| Daycare payroll (first employee) | From $125/month | Pay runs, WEG tracking, CWELCC monitoring, vacation, holiday pay, CPP/EI/tax, T4s, ROEs |
| Each additional employee | $75/month | Same full service per additional employee |
| Supply staff payroll | Included | Per-shift processing, 4% vacation, ROEs. No extra charge per supply worker. |
| Monthly bookkeeping + payroll | From $275/month | Bookkeeping ($150) + payroll ($125). HST filing, T2 FREE. |
| T4, ROE, Ministry reports | Included | All T4s by Feb 28. ROEs within 5 days. WEG and CWELCC reports prepared. |
| Payroll software setup | FREE | Wagepoint or PaymentEvolution configured with WEG, position categories and Ministry reporting. |
Know Your Exact Fee Before We Start
Flat fee, fixed in advance. 30-Day Money-Back Guarantee. 60-Day Fees-Matching Policy.
Daycare Payroll: Cities We Serve
We handle payroll for daycare centres across every Ontario city and Canada.
Frequently Asked Questions: Payroll for Daycare Centres
Meet Your Daycare Payroll Specialists
Sharad Gondaliya, CPA
Founder & Managing Director
Gondaliya CPA Professional Corporation
Sharad manages all daycare payroll engagements, WEG compliance, CWELCC reporting and CRA audit defence.
Vandana Goel, CPA
Senior Accountant
Gondaliya CPA Professional Corporation
Vandana handles pay run processing, WEG tracking, supply staff payroll, Ministry reporting and T4 preparation.
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Daycare Payroll Is Complex. Let a CPA Handle It Correctly.
WEG tracking, CWELCC compliance, supply staff, ratio staffing, T4s, ROEs, Ministry reporting. From $125/month.