Canada Employee Benefits

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Hiring Employee Benefits Canada 

Employment Contracts in Canada

• Legally. employment contracts can be verbal or in writing. Written contracts are advisable where complex terms apply to such as compensation, benefits and pensions and must comply with provincial and territorial laws

• Contracts can be fixed-term or indefinite

• Any restrictions on confidentiality or intellectual property rights must be covered in the contract

• Foreign workers’ contracts must comply with representations made in the work permit application

https://www.osler.com/en/resources/business-in-canada/browse-topics/hiring/employment-agreements

Canadian Minimum Wage

The National Minimum Wage (NMW) in Canada is set at CAD11.06 per hour by federal authorities, but the 10 provinces and three territories also set their own levels for minimum wages – in some cases with different levels in the same province depending on the type of employment. As of June 2020, rates range from a low of CAD11.70 in New Brunswick to CAD13.46 in Northwest Territories and CAD16.00 in Nunavut. In Ontario the general rate is CAD14.25, with CAD13.60 for students under 18 and CAD12.45 for alcohol servers.

Probation Periods in Canada

Canada’s 10 provinces and three territories have different statutory administrations for probation and termination entitlements. However, depending on the nature of the business, federal law may apply over provincial law.

A probationary period generally consists of the first three months. Most legislation across Canada decrees that an employee may be dismissed without just cause (for any reason that is not discriminatory) in the first three months, without notice, pay or severance. However, probationary periods can differ from province to province.

If a contract does not detail the probation period and termination entitlements, employees may be entitled to a severance package even if termination occurs during the statutory probation period.

Overtime in Canada

Under Canada’s Labor Code, employees receive 50% extra pay for every hour above their daily or weekly workload. Where overtime pay differs between hourly and weekly calculations the higher amount is paid.

Some provinces base overtime on the national minimum wage, for example New Brunswick, Newfoundland and Labrador.

Employees’ overtime rights depend on legislation and regulations, plus numerous exceptions and exemptions. Bradford Jacobs’ payroll experts ensure employers comply with all rules and regulations. Employers’ “averaging agreements” must be posted it in the workplace. In a number of jurisdictions overtime may be taken as time off at a later date.

For more information on recent legislation concerning relevant provinces and territories: http://www.workershelp.ca/overtime.asp

https://singhlamarche.com/probation-periods-in-canada-what-are-they-and-what-do-they-mean/

Notice Periods in Canada

An employer must give employees written notice when their employment is being terminated or must ‘pay in lieu of notice’. This applies to all employees except:

• Those who have not completed three consecutive months of employment

• An employee who has been dismissed for just cause

• Emplyee who terminates their employment

• An employee who has been laid off but not terminated

• If employment has reached the contractually-stipulated end date

Length of notice depends on length of service and if any additional time has been included in the contract. Also each province/territory has its own rules and regulations.

https://www.mondaq.com/canada/employee-rights-labour-relations/889876/resignation-notice-periods-what-is-required

https://www.canada.ca/en/employment-social-development/services/labour-standards/reports/termination.html

Redundancy, Severance, Notice and Termination in Canada

When terminating an employee’s contract employers must give a minimum two weeks’ notice, or two weeks’ pay in lieu of notice. Employers must give severance pay regardless of the length of service or the company’s size. Written notice or pay in lieu does not apply in certain circumstances, such as the employee has not completed three months’ continuous service, is being dismissed for just cause or the contract details an end date for employment. An employee is not legally required to give notice, but contracts usually include a notice period clause for both employer and employee.

https://www.canada.ca/en/employment-social-development/services/labour-standards/reports/termination.html

Pension Plans in Canada

To qualify for the Canada Pension Plan (CPP) individuals must be 60 years old. This taxable benefit replaces part of the former employee’s salary on retirement and is paid for the rest of their life.

https://www.canada.ca/en/services/benefits/publicpensions/cpp.html

Public Holidays in Canada

Not all public holidays are celebrated throughout Canada so employers and employees should check with each province or territory.

• New Year January 1

• Good Friday March / April (except Québec)

• Victoria Day Monday preceding May 25

• Saint-Jean-Baptiste Day June 24 (Québec only)

• Canada Day July 1 (or July 2 if it falls on a Sunday)

• Civic Holiday first Monday in August

• Labor Day first Monday in September

• Thanksgiving Day second Monday in October

• Remembrance Day November 11

• Christmas Day December 25

• Boxing Day December 26

https://www.canada.ca/en/revenue-agency/services/tax/public-holidays.html

Working Hours in Canada

Where Canada’s Labor Code applies, the normal working week totals 40 hours averaging eight per day, although these may differ in certain industries or types of work such as shipping, transport and railways. Employees governed by federal regulations receive one rest day each week, usually Sunday. In most cases, the maximum number of hours worked in a week is 48 with certain exceptions.

https://www.canada.ca/en/employment-social-development/programs/employment-standards/work-hours.html

https://laws-lois.justice.gc.ca/eng/regulations/C.R.C.,_c._986/index.html

Sick Leave in Canada

Entitlements differ between provinces and territories. Under Canada’s federal Labor Code, however, employees are permitted five days sick leave in a calendar year for themselves or relating to the health or care of family. Three days leave are paid after three months of continuous employment.

Employment Insurance (EI) sickness benefits can provide up to 15 weeks of financial support if work cannot be fulfilled for medical reasons. This could be 55% of earnings up to a maximum of CAD595 a week. To receive sickness benefits, a medical certificate is required if absence is due to illness, injury or quarantine. However, before applying for EI, employees must check with their employers to see if they make provision for paid sick leave, short term illness or disability leave.

https://canadianlabour.ca/sick-leave-across-canada/

Holidays in Canada

The federal Canada Labor Code allows for annual vacations of two weeks for every completed 12 months worked from the date of employment. After five consecutive years with the same employer, the entitlement increases to three weeks and after 10 years to four weeks.

Each province or territory has its own regulations regarding paid holidays with a minimum amount under the relevant employment standards legislation. Employers calculate 4% (except in Saskatchewan where it is 6%) of each pay check towards vacation pay, unless they wish to give the employees more.

https://www.canada.ca/en/employment-social-development/services/labour-standards/reports/annual-vacation.html

https://www.canadaone.com/ezine/july07/inoutvacation.html

Maternity / Paternity Leave in Canada

Parents on maternity leave receive up to 55% of earnings to a maximum of CAD595 weekly. Financial support comes from the federal Employment Insurance (EI) and covers pregnancy, those who have recently given birth and are caring for their new-born or newly-adopted child. Québec is responsible for providing maternity, paternity, parental and adoption benefits to its residents.

EI maternity benefits are up to a maximum of 15 weeks and cannot exceed 17 weeks after the expected or week of childbirth, whichever is later.

EI standard parental benefits are for a maximum 35 weeks, paid within 52 weeks (12 months) of the week the child was born or the week the child was placed for adoption.

EI extended parental benefits can be paid for a maximum 61 weeks and must be made within 78 weeks (18 months) of the week the child was born or placed for adoption.

To be eligible for EI maternity benefits, the mother must have at least 600 hours of insurable employment in the qualifying period.

To be eligible for EI parental benefits, each parent who applies must have at least 600 hours of insurable employment in his or her qualifying period.

https://www.canada.ca/en/services/benefits/ei/ei-maternity-parental.html

https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/reports/maternity-parental.html

Compensation and Benefits in Canada

Minimum requirements of Canadian Government-mandated employee benefits include participation in Employment Insurance (EI), Canada Pension Plan (CPP) or the Québec Pension Plan (QPP), Worker's Compensation (WC) or Workplace Safety and Insurance Board (WSIB).

Basic guaranteed benefits include:

• National Minimum Wage

• Holiday entitlements

• Working hours

• Termination, dismissal, notice periods and severance regulations

• Sick leave

• Maternity and paternity allowances

The five most common extra employee benefits offered by Canadian employers are health and dental insurance, group life insurance, training expenses, vehicle allowances, gifts and awards, according to a survey by the Canadian Payroll Association (CPA).

Benefits such as National Minimum Wage, holiday entitlement, working hours, termination, severance and notice periods, sick leave and benefits, maternity and paternity leave can vary between provinces and territories.

Managing benefits and compensation comprises a key element of human resources management. Bradford Jacobs’ thorough understanding of these sectors of Canadian employment law ensures all requirements will be met in a trouble-free process.


What Canadian Compensation Laws Exist?

The Workers’ Compensation Act stipulates:

• Employers bear the direct cost of compensation, receiving protection from lawsuits arising from injuries

• Workers give up the right to sue their employers and receive compensation benefits at no cost for work-related injuries

• Negligence or fault for injuries are not considered

• The workers’ Compensation Board (WCB) have exclusive jurisdiction over all matters arising

Workers’ compensation is administered provincially rather than federally, creating variations in which businesses carry workers’ compensation. Companies that are incorporated or have employees must register with their province or territory WCB. Mandatory registration may also depend on the number of employees.

Both the labor rights of employees and the responsibilities of employers fall under the Canada Labor Code. The rights of foreign workers are also protected. Laws include:

• The Canadian Human Rights Act prohibits discrimination in employment and services within federal jurisdiction

• The Employment Equity Act requires federally-regulated organizations and businesses to provide equal employment opportunities to women, Aboriginal groups (Indian, Inuit or Métis), people with disabilities, members of minorities

• The Legislated Equity Employment Program requires employers to report annually how many individuals from the four groups have been integrated into their workforce

Find more information at:

https://www.canada.ca/en/canadian-heritage/services/rights-workplace.html

https://www.canada.ca/en/employment-social-development/corporate/portfolio/labour.html

https://www.workplace.ca/laws/index.html

https://www.thebalancesmb.com/guide-to-workers-compensation-insurance-2947112

Social Security in Canada

Health, education, unemployment, family and child assistance, old age, disability and survivors’ benefits are all covered by the Canadian social security and social assistance programs.

Canada Pension Plan (CPP) and Québec Pension Plan (QPP) are compulsory, earnings-related social insurance programs providing income for retired and disabled workers and their survivors. Its benefit formula also contains significant flat-rate components for the disabled and survivors under the age of 65. CPP and EI contributions are:

Insurance Type Paid by Employer Paid by Employee Total

Canada Pension Plan 5.25% 5.25% 10.5%

Employment Insurance 2.21% 1.58% 3.79%

Total 7.46% 6.83% 14.29%

Employers withhold contributions from all employees aged 18 to 71 and combined payments are remitted to the Canada Revenue Agency or the Québec fiscal authority.

https://home.kpmg/xx/en/home/insights/2011/12/canada-other-taxes-levies.html

https://www.ssa.gov/policy/docs/ssb/v68n2/v68n2p53.html

Statutory Costs in Canada

Statutory employment costs in Canada include:

• Meeting the National Minimum Wage for each employee, though there is no ‘national’ rate, which varies between provinces and territories

• Making contributions to the Canada Pension Plan (CPP) and Employment Insurance (EI) and withholding contributions from the employees for remitting to the Canada Revenue Agency and the comparable Québec authority

What Benefits are guaranteed in Canada?

• Holiday entitlement – The Canada Labor Code allows for two weeks for every completed year from the start of employment. This increases to three weeks after five years and four weeks after 10 years. Individual provinces and territories can apply their own allowances

• Working hours – The Labor Code stipulates 40 hours a week. Working hours, with a maximum of 48 in a week, can be averaged over a period of time

• Sick leave – the Labor Code allows for five days in a calendar year for sick leave, or care related to family members, with three days paid

• Maternity leave – Employment Insurance (EI) funds up to 55% of earnings to a maximum of CAD595, with different allowances, restrictions and timescales applying to maternity and paternity benefits

What Restrictions exist on Benefits and Compensation in Canada?

To qualify for unemployment benefit the employee must have lost their job through no fault of their own, have been without pay for seven consecutive days in the previous 52 weeks, have worked the required insurable employment hours in the previous 52 weeks or since the start of a previous claim under Employment Insurance (EI).

Since January 1 2021, CAD56,300 annually and CAD595 per week are the maximum insurable amounts. Generally, EI benefits are calculated at 55% of weekly earnings up to the maximum amounts.

https://www.canada.ca/en/services/benefits/ei/ei-regular-benefit/eligibility.html

Health Insurance and other Benefits in Canada

All Canadians are covered by the healthcare system, which is funded by tax revenues covering necessary medical and doctors’ services without having to pay at the point of service.

• The Canada Pension Plan (CPP) is a monthly, taxable benefit that replaces part of employees’ income when they retire. Qualifiers receive the CPP retirement pension for the rest of their life. The CPP is financed through mandatory contributions from employees, employers and self-employed, and through the revenue earned on CPP investments. Workers contribute to the Plan from age 18. Employees contribute at a rate of 5.25%, and employers match that with equal contributions

https://www.osler.com/en/resources/business-in-canada/browse-topics/hiring/group-benefit-welfare-plans

Bonuses in Canada

Canada Pension (CPP) and Employment Insurance (EI) are mandatory deductions on bonus payments with one exception — when an employee has contributed the maximum yearly amounts for CPP and/or EI no further deductions will occur.

Work with Bradford Jacobs’ international Employer of Record (EOR) Services

Understanding the laws applying to compensation and benefits in Canada is an important element to successfully operating a subsidiary. But they are complex and relate not only to Canada’s Labor Code but also to regulations applying in individual provinces and territories. Compensation and benefits, statutory costs, social insurance payments, health insurance and bonuses are issues that cannot be overlooked for the smooth transition of opening a subsidiary in Canada. There is a simple solution. Be on top of these issues by working with Bradford Jacobs to utilize our Employer of Record payroll services in the certainty that we have all the solutions.