What Is RROP in Payroll for CPP and EI Contributions?

RROP in payroll refers to “Record of Employment Original Pensionable Earnings.” This figure plays a role in Canadian payroll, particularly for calculating deductions when an individual is working while also receiving a pension. RROP helps determine how Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums are handled for these unique employment situations. It represents a historical earnings amount that influences current payroll obligations.

Understanding RROP’s Core Meaning

RROP, or Record of Employment Original Pensionable Earnings, represents the total earnings an individual accumulated from a previous employer before they began receiving a pension from that same employer. This figure is specific to situations where an individual has retired or started receiving a pension from a former employer but then returns to the workforce. The term “Original Pensionable Earnings” distinguishes these past earnings from any current earnings the individual may be receiving.

This specific figure is necessary for payroll purposes because it helps determine the applicability of certain payroll deductions for individuals who are simultaneously working and receiving a pension. Without this historical earnings record, accurately calculating Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums for such employees would be complex. The RROP ensures that individuals are not over-contributing or under-contributing to these programs based on their combined pension and current employment income.

The RROP figure originates directly from the Record of Employment (ROE), a form that employers complete and file with Service Canada whenever an employee experiences an interruption in earnings. When an individual begins receiving a pension from an employer, that employer is required to issue an ROE, even if the individual continues to work in some capacity. This ROE includes the “Original Pensionable Earnings” up to the point the pension commenced.

The ROE is a document that provides a comprehensive history of an individual’s employment, including details like insurable earnings, insurable hours, and the reason for the interruption of earnings. It typically covers the last year of pay periods, plus one, prior to the interruption. This detailed information, including the RROP, is then used by Service Canada to determine eligibility for various benefits, such as Employment Insurance.

RROP’s Role in Canada Pension Plan and Employment Insurance

RROP influences how Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums are handled for individuals working while also receiving a pension. For CPP, the standard employee contribution rate for 2025 is 5.95% on pensionable earnings, with employers matching this amount. Individuals under 70 receiving a CPP retirement pension may elect to stop contributing to CPP if they are also working. If they elect to continue, RROP is not directly used in current CPP calculations, as contributions are based on current pensionable earnings. The Annual Basic Exemption (ABE) of $3,500 applies to annual earnings before CPP contributions begin.

For Employment Insurance (EI) premiums, the employee contribution rate for 2025 is $1.66 per $100 of insurable earnings, up to a maximum annual insurable earnings amount. Employers contribute 1.4 times the employee’s premium. RROP does not directly impact current EI premium calculations, as EI premiums are based on current insurable earnings.

The RROP serves as a historical reference when an individual’s employment situation changes due to pension commencement. It ensures a clear distinction between earnings accumulated before and after pension receipt. This distinction is important for Service Canada’s administration of benefits and for preventing double-counting of earnings for contribution maximums.

For example, if an individual retired from Company A and started receiving a pension, Company A would issue an ROE with their RROP. If that individual then begins working for Company B, Company B will calculate CPP and EI based on the current earnings they pay, following standard contribution rules. The RROP from Company A’s ROE provides a complete picture of the individual’s earning history, which Service Canada can review if questions arise about benefit eligibility or contribution obligations.

The mechanics of applying RROP are less about direct calculation on current earnings and more about the historical context it provides. It ensures that total pensionable or insurable earnings over an individual’s working life are accurately tracked. This prevents situations where an individual might contribute beyond annual maximums for CPP or EI if their pension and current employment earnings were simply combined without this historical breakdown.

Ensuring RROP Accuracy and Compliance

Ensuring the accuracy of RROP reporting on the Record of Employment (ROE) is important for both former employers and the individuals receiving the pension. Former employers are required to issue an ROE when an employee experiences an interruption of earnings, which includes starting a pension. This ROE must accurately reflect the “Original Pensionable Earnings” up to the date the pension commenced. Employers must issue an electronic ROE within five calendar days after the end of the pay period in which the interruption of earnings occurs, or within 15 calendar days after the first day of the interruption, depending on the pay period frequency. Paper ROEs must be issued within five calendar days of the interruption or the employer becoming aware of it.

Payroll departments onboarding an employee who is also receiving a pension need to verify and review the information provided on the ROE, particularly the RROP. This involves confirming the details in Box 15C, “Total insurable earnings,” and Box 15A, “Total insurable hours.” While the RROP itself is not a direct input for current payroll deductions, understanding its context helps in correctly applying CPP and EI rules for the new employment.

Employees should carefully review their ROE when they receive it to ensure the accuracy of all reported information, including their earnings and hours. Inaccurate RROP or other ROE details can lead to issues with Employment Insurance (EI) benefit claims or other government programs. If the RROP is understated, it could potentially affect how Service Canada assesses past earnings, though its direct impact on current contributions is limited.

Employees should regularly review their pay stubs and annual T4 slips for accurate reporting of their current pensionable and insurable earnings. While the T4 slip will not directly show RROP, it will reflect the CPP contributions and EI premiums deducted from their current wages. If an employee suspects any discrepancies related to their earnings or contributions, they should contact their employer’s payroll department for clarification. Discrepancies on an ROE, such as an incorrect reason for separation, can be contested by contacting Service Canada.