A payment made to "catch up" wages because a pay increase was processed late is a retroactive payment. The CRA provides different income tax calculation approaches depending on the payment type and specifically lists "Retroactive payments" as its own category, separate from regular tax-table calculations, lump-sum, and bonus/irregular methods.
For bonuses and retroactive pay increases, the CRA also points employers to the Payroll Deductions Online Calculator (PDOC) to calculate CPP, EI, and income tax correctly, which aligns with using the appropriate CRA method for retroactive amounts.
Because this situation is explicitly a retroactive adjustment (two pay periods late), the correct choice is the Retroactive tax method (option C), not the bonus/irregular method, not the lump-sum method, and not the regular tax tables.

$509.78
Explanation:
Legislated wages in lieu of notice are treated as pensionable employment earnings for CPP purposes, so they are included with the employee's final regular pay when calculating CPP deductions (assuming no CPP exemption applies).
Step 1: Determine total pensionable earnings for the week:
$7,760.00 + $875.00 = $8,635.00.
Step 2: Subtract the CPP basic exemption (Year's Basic Exemption is $3,500 annually). For a weekly payroll, the basic exemption is prorated:
$3,500 ÷ 52 = $67.31.
CPP contributory earnings for the week:
$8,635.00 # $67.31 = $8,567.69.
Step 3: Apply the 2026 CPP employee contribution rate of 5.95% (base CPP). The question states the annual maximum will not be exceeded, so no capping is required in this calculation.
CPP contribution:
$8,567.69 × 5.95% = $509.7777..., rounded to $509.78.

A retiring allowance is treated as a lump-sum payment for payroll withholding purposes. When part of a retiring allowance is transferred directly to an RRSP/RPP, CRA guidance indicates you do not withhold income tax on the transferred amount (up to the employee's available limit), because it is not paid to the employee in cash.
Step 1: Determine the portion paid directly to the employee (non-eligible portion):
$25,000 # $15,000 transferred to RRSP = $10,000 paid/remaining.
Step 2: Apply CRA lump-sum withholding rates (outside Quebec):
For total lump-sum payments $5,001 to $15,000, the withholding rate is 20%.
Step 3: Calculate tax to withhold on $10,000:
$10,000 × 20% = $2,000.00.
So the correct option is B ($2,000.00).

Piecework (also called piece-rate pay) is a pay method where an employee's earnings are determined by output-they are paid a set amount per unit produced or completed, rather than by hours worked or a fixed salary. This aligns directly with option C. A time-based hourly/daily wage (option A) is a different earnings method, and a fixed pay-per-period arrangement (option B) describes salary. Therefore, "all of the above" is incorrect because these are three distinct compensation structures.
In payroll calculations, piecework earnings are typically calculated as: piece rate × number of units produced in the pay period. Employers still have to ensure compliance with employment standards, such as minimum wage and overtime rules, even where piecework is used. A Canadian payroll educational reference defines piecework as payment for each unit produced "regardless of the amount of time taken."

For payroll withholding, income tax is calculated on taxable income for the pay period, so only deductions that are income-tax deductible (or otherwise reduce taxable income at source) will reduce the employee's taxable base for withholding. Employee contributions to an RRSP are generally deductible for the employee, which is why payroll-deducted RRSP contributions (such as contributions to a group RRSP taken off the paycheque) reduce the amount of income tax withheld when the payroll system is set up to treat them as deductible contributions. The CRA confirms that deductible RRSP contributions can be used to reduce your tax.
By contrast, paying provincial health care premiums (where applicable) and paying an employee share of group benefit plan premiums are not automatic "reduce taxable income at source" deductions in the same way for payroll withholding; they may be personal expenses and, depending on the plan/premium type, may only affect the employee's personal tax situation through credits/deductions when filing, not the standard payroll withholding base. Therefore, the only correct choice is A.