For companies hiring in Canada for the first time, it’s important to have a solid understanding of what benefits you’re legally obligated to offer to your full-time employees (also known as T4 employees).
First, you need to ensure that your company is offering all of the benefits employers are legally mandated to provide to Canadian employees. This includes following both federal and provincial regulations. Beyond that, it’s also important to know what optional benefits can help you stand out as an employer.
In this article, we’ll cover the mandatory employee benefits that Canadian employees are legally entitled to, and highlight a few optional wellness benefits and perks you can offer to help your company stand out from the competition.
Statutory Benefits in Canada
Statutory benefits are the bare minimum that you’re legally required to provide to your Canadian employees. This includes vacation time, pension contributions, and workers’ compensation insurance.
Minimum Wage
Canada’s federal minimum wage applies to workers employed in federally regulated industries, such as banking or shipping. As of April 1, 2024, the minimum wage is $17.30 per hour.
If your company is not part of a federally regulated industry, you need to refer to the minimum wage guidelines for the province your employees live in — assuming you’re hiring hourly employees, not salary-based ones.
Provincial Healthcare Insurance
Every Canadian has access to public healthcare system in Canada. This covers the basic health needs of all Canadians, including hospital stays. Healthcare is federally funded and mandated in Canada, but managed by the individual provinces and territories. This means there are specific requirements in each province. While basic health benefits are provided by the government, other medical services such as eye care, dental work, and medications are not covered.
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Employment Insurance Benefits
Employment Insurance benefits provide financial assistance to Canadians who lose their jobs, or who work seasonally and need help temporarily replacing their income. Typically, employment insurance provides up to 55% of an employee's average insurable weekly earnings (for a max of 45 weeks).
Employers are required to deduct employment insurance from each dollar earned by the employee and, along with that, they must also contribute 1.4 times the amount they deduct from their employees. So, if you deduct $0.10 from an employee, you must also contribute $0.14 on their behalf.
Employment insurance also helps cover types of leave like:
- Sickness
- Parental leave
- Critical illness leave
- Compassionate care leave
Pension Contributions
All Canadians employees and employers are required to contribute to the Canada Pension Plan (CPP), which is the federally managed system that provides financial assistance to Canadians once they reach retirement age (65 as of April 2024). The employer and employee contribution amount is based on the employee’s income. The only exception is for people living in Quebec, who contribute to the Quebec Pension Plan (QPP). This plan is similar to the CPP, but only applies to Quebecers.
Survivor’s Pension
Canadians who are married or in common-law relationships are entitled to claim their deceased partner’s CPP. There is nothing required of employers in this situation. It’s managed by either the Canadian government or the Quebec government, depending on where your employees live.
Workers’ Compensation Insurance
Canadian employers must pay into the provincial worker’s compensation fund for each employee. This fund is in place to help workers who are injured or become sick on the job.
Each province in Canada manages its own worker’s compensation program and it’s up to employers to make sure they’re following the proper rules and guidelines for each province their employees work in.
Leave
Canadians can take a range of different types of leave. In some instances, the specifics might be different depending on factors like the province an employee lives in or how long they’ve been with the company.
We’ve covered the specifics of each type of leave before, but at a high level, here’s what Canadians are entitled to:
- Medical or sick leave
- Maternity leave
- Personal leave
- Family violence leave
- Critical illness leave
- Compassionate care leave
- Leave for legal proceedings
- Leave for the disappearance of a child
Holidays
Similar to other provinces, Canadians are entitled to up to 12 paid public holidays, depending on the province. These include a mix of religious and non-religious holidays. Some of the dates are different depending on the province and not all provinces are required to give employees the day off for all holidays, such as Remembrance Day.
- New Year’s Day: January 1
- Family Day: Third Monday in February
- Good Friday: Date varies and not all provinces have the day off
- Easter Monday: Date varies and not all provinces have the day off
- Victoria Day: Last Monday before May 25.
- Canada Day: July 1
- Labour Day: First Monday in September
- National Day for Truth and Reconciliation: September 30
- Thanksgiving: Second Monday in October
- Remembrance Day: November 11 (not all provinces have the day off)
- Christmas Day: December 25
- Boxing Day: December 26
Vacation Days
There are federally mandated vacation allowances for Canadian employees based on years of employment. Employers also have the option to offer time off that exceeds the minimum.
The breakdown for vacation time looks like this:
- After 1 year, employees get two weeks of vacation time.
- After 5 consecutive years, they’re entitled to three weeks of vacation time.
- After 10 consecutive years, employees can take up to four weeks of vacation time.
Canadian employees also receive vacation pay provided by the company. Similar to the way time accrues, vacation pay increases the longer an employee works for a specific company and is calculated as a percentage of their gross wages. This breaks down as follows:
- Two weeks of vacation: 4% of earnings
- Three weeks of vacation: 6% of earnings
- Four weeks of vacation: 8% of earnings
Supplementary Benefits for Canadian Employees
As we’ve mentioned, these benefits represent the bare minimum that you are required to offer to Canadian employees. In order to remain competitive in the workforce, however, it helps to offer a benefits plan that exceed the minimum requirements. This shows that you value your employees and their well-being, and their contributions to your company. Comprehensive benefit offerings also serve as a strong recruiting and retention tool for top talent.
Some areas where you can provide an enhanced employee benefits package include:
- Health insurance: Canadians have most of their health needs paid for by government health care. However, medication, dentistry, eye care, chiropractic care, and some other types of medical services aren’t covered. Employers can choose to offer enhanced health insurance plans to ensure their employees’ health needs are better covered.
- Retirement plans: Canadians receive pension benefits to help fund their retirement, but many employers choose to offer additional financial assistance. This could include a Group Registered Retirement Savings Plans (RRSP), which is similar in some ways to the 401(k) plans found in the United States.
- Life insurance: Life insurance is paid out to an employee’s dependents in the event of their death. It helps cover things like burial, cremation, and other funerary expenses. It can also be used to cover debt repayment and to help manage finances for the beneficiaries. Employers can opt to partially or fully pay the premiums for supplemental life coverage.****
- Long-term disability: Some long-term disability insurance coverage is possible through Employment Insurance, but it’s often not enough for most people to survive on. Employers can offer additional coverage and benefits to help employees who reach the limit of their government benefits.
EORs Can Help Navigate Canadian Employee Benefits
Employment laws can be complex, and when you add in the fact that many of the laws in Canada are governed by both federal and provincial regulations, it can be tough to keep up.If you want assistance managing the complexities of the Canadian employment landscape, an Employer of Record like RemoFirst can help.
We’re experienced in assisting companies with compliantly hiring employees in more than 180 countries. We assume the responsibility for all formal employment tasks, including global payroll processes and compliance documentation. This allows your company to legally employ workers in other countries without the risk of violating local labor laws. Book your demo today to learn more about how we can help you.
