A cornerstone of any hiring strategy is total compensation. But calculating
employee compensation in new international markets can be a significant
challenge, especially when hiring in Canada. Why? Not only are there several different labor regulations that
impact employee compensation in Canada, but these regulations often vary by
province.
You’ll need a firm understanding of local laws to ensure your business is
offering a competitive compensation package that will attract and retain top
Canadian talent.
To help you navigate the complexity, here’s a comprehensive look at local
requirements that impact employee compensation in Canada.
Minimum wage requirements
Employers need to be aware of minimum wage requirements
in the provinces in
which they operate. For example, the current minimum wage in Ontario is
$14.25 per hour , and it ’s expected to increase to $14.35 on October 1,
2021. Minimum wage in Alberta is $15 per hour and is the highest in Canada.
However, there are exceptions to the minimum wage rules in each province.
Ontario, for example, sets a minimum wage of $13.40 per hour for students
under 18 years of age that work 28 hours or less each week. Specific
professionals—like hunters, fishermen and guides—may also have different
minimum wage requirements.
Additionally, employees that are provided room and board by their employers
may have different minimum wage requirements.
Vacation entitlements
Organizations must provide employees with vacation pay. Minimum requirements
vary based upon years of service, and laws have recently changed.
Here’s a summary of vacation requirements in most provinces of Canada:
- One or more year of service. Employe e are entitled to at least two weeks of vacation at 4% of gross earnings.
- Five or more years of service. Employees are entitled to at least three weeks of vacation at 6% of gross earnings.
- Ten or more years of service. Employe es are entitled to at least four weeks of vacation at 8% of gross earnings.
Employers have flexibility around the timing of the vacations. For example,
employers don’t need to allow all four weeks of an employee’s allotted
vacation to be taken at once if it interferes with business operations. They
can instead request that employees spread that time over multiple periods.
Public holidays
Another compensation requirement for employees in Canada is public
holidays. Employees can elect to work a holiday, but an alternative day off
must be provided and the person must be paid a premium rate on that day.
Here is a list of holidays in Canada that employers typically count as a
paid day:
- New Year’s Day
- Good Friday
- Victoria Day
- Canada Day
- Labour Day
- Thanksgiving
- Remembrance Day
- Christmas Day
- Boxing Day
Paid time off and illness
In addition to vacation time, employees in Canada also have sick time, which
falls under “personal leave.” Employers must provide employees with at least
five paid days of personal leave annually. Employees qualify for paid leave
after working three consecutive months for an employer.
Qualifying reasons for an employee to take personal leave include:
- Treating an illness or injury
- Taking care of health obligations for a member of the family
- Taking care of educational obligations for a family member under the age of 18
- Managing an “urgent” situation involving a family member
- Attending a citizenship ceremony, as defined under the Citizenship Act
Employers can ask an employee to provide supporting documentation for paid
leave within 15 days of the request.
Additionally, employees who suffer from work-related injury or illness may be
eligible for a benefits package through workers’ compensation in Canada
that is administered by individual provinces.
Other types of employee leave
In addition to vacation time and paid time off for illness or injury, there
are other types of leave that must be offered to workers in Canada (though
some are not required to be paid leave).
Understanding the difference between various types of unpaid and paid leave
in Canada will help you create an attractive and legal compensation package.
Here are a few considerations:
Maternity and parental leave. Employees are entitled to up to
17 weeks of maternity leave, which is not required to be paid by the employer.
The Employment Insurance Act provides eligible employees with maternity or
parental benefits during the period they are on leave. In addition to
maternity leave, employees can take up to 63 weeks of parental leave.
Compassionate care leave. Employers must offer compassionate care
leave, but it’s not required to be paid. An employee may qualify for this type
of leave when he or she needs to look after a family member that has a serious
medical condition and is at risk for death.
Critical illness leave. You must provide employees with critical
illness leave. This type of leave applies to employees with a family member
or child that is critically ill. Employees can take up to 37 weeks of leave
within a 52-week period to provide care to a child under the age of 18 years.
And employees can take up to 17 weeks within a 52-week period to provide care
to support an adult. Regulations do not require that this leave be paid.
Medical leave. Employers must provide employees with at least 17 weeks of
leave for illness or injury, organ or tissue donation or attending medical
appointments. If the sick leave is three days or longer, you can request a
note from the employee’s medical provider. It’s not required that you pay for
this type of leave.
Leave for court or jury duty. Employers are required to offer leave for
employees to serve as witnesses in court or participate in the jury process.
This leave is not required to be paid.
Employee benefits in Canada
In addition to employee leave, an employer in Canada must provide specific
employee benefits, including:
Employee pension. The Canada Pension Plan is a savings plan for all
Canadians that are employed. As of Jan. 1, 2020, employees and their employers
must each contribute at least 5.25% of their earnings to the pension plan,
though the percentage may vary by province.
Employment insurance. Employers are required to provide employment
insurance, which is typically 55% of an employee’s average weekly earnings.
The maximum employee benefit runs from 14 to 45 weeks and varies based on
unemployment rates in the region. Income replacement is available due to
sickness, maternity or parental leave and compassionate care leave.
Understanding these benefits ensures you’re compliant with local employment
law and helps you create a compensation package in Canada that workers are
accustomed to.
Optional supplemental benefits
Employers can provide employees with any additional benefit (beyond those
discussed above) to make their company more attractive and stand out against
the competition. These include additional retirement options for employees and
supplemental health care benefits.
87% of Canadian employers provide employees with extended health care benefits to
supplement governmental health insurance.
Healthcare spending and wellness accounts, as well as a stipend to gym
facilities, are also potential benefits.
How can an employer of record help?
Expanding your business into a new country comes with a steep learning curve
around employment law and appropriate benefits packages. An employer of
record, like GEO, can hire employees in Canada on your behalf, ensuring you stay in compliance with local laws, and help you offload time-consuming tasks like benefits
administration and payroll management.
Learn more about how our employer of record solution in Canada, can help you manage the nuances of employee compensation in Canada.
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