SPECIAL REPORT: Administrative nightmare for obligatory training in Quebec to end

by Canadian Shipper

MONTREAL, Que. — A newly-created co-operative will soon relieve Quebec companies of the crippling administrative burden associated with their legal obligation to spend a minimum amount on employee training.

The co-op for the transportation industry sector will be owned and run by Camo-route, a provincial carrier-labour organization mandated by the Quebec government to ensure the qualification and quantification of labour for the road transportation sector.

For some 12 years, Quebec companies with annual payrolls over $1 million have had to either spend 1% of their payroll on employee training or turn the money over to the government. Although the spirit of this law was perhaps benevolent, in practice, the reporting requirements Revenue Quebec hatched are so burdensome that for many companies, the paperwork cost more than the training.

“A lot of companies send the government a cheque and then do the training without reporting it. Many have said, ‘what is the use?'” says Claude Chouinard, director general of Camo-route.

This January, the government authorized an overhaul of the training funds program. Camo-route has been busy setting up the co-op, which also resembles a trust fund and will officially launch it at CamExpo, which runs Nov. 7-9 in Quebec City.

The modus operandi of the co-op, as described by Chouinard, appears so elegant that it surely could not have come from the nimble minds of government bureaucrats, and in fact it did not. It was the brainchild of the Commission des partenaires du marche du travail (labour market partnership commission), which operates with some independence from the government. Within this industry-labour umbrella organization are 31 industry sectors, each represented by a sector council. Transportation is one of the sectors, and Camo-route is its sector council.

“The government has said it will allow each industry (sector) to manage its own fundscompanies can tell the co-op to administer their 1%,” says Chouinard. As well, companies with payrolls under $1 million will be allowed to participate.

In other words, rather than companies spending and shovelling paperwork, or throwing up their hands and remitting their 1%, they can simply deposit their training funds into their co-op accounts.
“The co-op will do the paperwork and will be the only place where government officials can come to do an audit,” Chouinard says. Employers need only show on their tax return that they have deposited the required funds into the co-op. The co-op, which is not-for-profit, will be allowed to use up to 10% of the training funds to run itself.

Unlike the current set-up, where employers must spend or surrender their 1% every year, regardless of their training requirements, the new structure will give them five years in which to use the funds they submit to the co-op. Consider a scenario where a company is required to spend $20,000 a year: If, in year one, it does only $3,000 worth of training, the co-op holds the leftover $17,000. The next year the company deposits $20,000 more and spends none of it. In year three, say, it has massive training needs. It already has $37,000 “banked,” plus the $20,000 it must set aside in year three, giving it $57,000 to spend.

Another plus, which may be particularly attractive to new companies with high up-front training costs, is that companies can borrow from the fund. For example, a company pays in $15,000 one year but needs $25,000 worth of training. The co-op “fronts” the company the $10,000, which pays it back from its next years’ deposits, with the balance of any debt due at the end of the five years.
“Your cash flow will not be affected. The only money coming out of your company each year is the 1%,” Chouinard explains.

The co-op will maintain one file per employee per company. When they move to other companies, their files and proof of training will move with them. The co-op will also enjoy economies of scale and have access to public funds that are generally not available, Chouinard explains.

“For example, a company that needs to train five guys at $500 a piece may not be able to access public funds. But the co-op might be able to say that it has 1,000 companies, each with five employees. We will be able to help the small carriers.”

The co-op will also be able to provide more efficient and frequent training to companies in outlying areas.

To illustrate the ease with which the system could work, Chouinard sketches this scenario: “For cash flow purposes, the easiest way to remit the money to the co-op is to have the company’s administrator cut a cheque for 1% of the payroll every two weeks and send it to the co-op. If the company (purchases) training, the co-op will pay it back.”

Any money that companies do not spend in the next five year will stay in their industry sector as the property of the co-op, which can spend it on training, equipment or “whatever.”
For more information, contact Claude Chouinard at 514-593-5811, 866-927-6883 or visit: www.camo-route.com.

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