Canada’s provinces and territories have a variety of differences in employment law, but statutory benefits remain mostly consistent across the country. Quebec can be an outlier in certain areas, but for the most part, employers of Canadian workers can prepare a standard benefits package that will be compliant throughout the country.

Our guide on hiring in Canada provides a thorough look at the labor laws and regulations that apply to Canadian workers. Let’s take a closer look at which benefits to offer remote workers in Canada.

All full-time employees in Canada are guaranteed certain benefits. While Canada does allow probationary periods during which employers can terminate employees without cause, workers in Canada generally enjoy more rights and protections than workers in the US.

Importantly, Canada does not practice the concept of at-will employment in general. Probationary periods provide trial periods for employers to “feel out” the fit of an employee, but beyond probationary periods, employers must have at least one valid reason to end an employment relationship.

Statutory and common employee benefits in Canada

Canadian employees are guaranteed different amounts of paid time off depending on the province or territory in which they live.

Canadian federal law mandates a minimum two weeks’ paid time off per year for employees with at least one year of employment. After five years of employment, the minimum increases to three weeks. After 10 years, the minimum reaches its highest point of four weeks.

Canadian provinces sometimes enforce minimums on the percentage of pay given to employees during their time off. Under Quebec law, employees who have worked at least three consecutive years are guaranteed three weeks of vacation paid out at the value of 6% of their annual pay.

Canadian employers may offer unlimited PTO as long as their employees take at least the minimum.

Canada Pension Plan and Quebec Pension Plan

Employers and employees collectively contribute to a statutory pension plan called the Canada Pension Plan. In Quebec, companies and their workers contribute to the Quebec Pension Plan instead.

In 2020, employers and employees both pay 5.25% of the employee’s salary to the CPP, making the total contributions from both parties equal to 10.5% of the employee’s total salary. These contributions only apply to salaries between CAD $3,500 and $58,700.

Workers who earn more than $58,700 cannot contribute more than the maximum to the CPP. Companies also cannot contribute more on behalf of their employees. Each side is required to contribute 5.25% of wages up to the max.

The QPP follows the same rules but with different rates. In 2020, Quebec employees and employers both contribute 5.4% of the employee salary, totaling 10.8% in contributions between the two.

Both the CPP and the QPP pay out pensions to eligible recipients over the age of 60. Anyone who has made contributions to the plan for any length of time may be eligible, as there is no minimum contribution amount required to receive benefits. However, people who contribute more over a longer period of time receive larger payments.

Canada’s minimum wages vary from one province to another. In 2020, Saskatchewan has the lowest minimum wage of CAD $11.45. You can find current minimum wages in Canada here.

Overtime rates also vary by location. Some regions of Canada require employers to pay overtime rates for hours worked after eight hours in a day or 40 hours per week. Others increase the limits to 48 hours per week. While most provinces mandate overtime pay at 150% regular wages, some increase overtime rates to 200% depending on the number of overtime hours worked.

Employers in Canada should be aware that salaried exempt employees may still be eligible for overtime pay. While some provinces exclude certain professions from mandatory overtime, like doctors, lawyers, and managers, rules vary by location. 

Workers in Canada are guaranteed the right to request new working hours after six months of continuous employment with a company. Employers have broad authority to refuse these requests, but employees can push the issue if flexible hours would help their work-life balance and their job duties would not be affected by the change.

In addition to paid time off, employees in Canada are entitled to personal leave after they have worked in the same position for three consecutive months. Employers must pay for this leave, but only for the first three days.

Personal leave allows employees to take time off for important tasks, like caring for a sick family member. Employers may not punish employees for using the full amount of their personal leave.

Canada is one of a few nations that offers additional protections for victims of family and domestic violence. Under Canadian law, employees who take leave because of family violence receive 10 days of protected leave, and employers must pay for five of those days. Employees who are accused of perpetrating family violence are not eligible for family violence leave.

Canadian employees are eligible for up to 17 weeks of unpaid leave for medical issues related to illness, injury, organ donation, tissue donation, or medical appointment attendance, including hospital stays. For illnesses lasting three days or longer, employers may require documentation from a healthcare practitioner confirming the circumstances prevented the employee from working.

Employers may reassign employees returning from medical leave to new positions when employees are unable to perform the duties their old positions required.

Canada offers two forms of protected unpaid leave related to the COVID-19 pandemic.

The first type of leave is for two weeks and protects employees who have been exposed to the virus and need to quarantine as well as employees who contract the virus but suffer only mild symptoms.

The second type of protected leave can last up to 26 weeks for employees who must provide care for a child, elderly relative, or other family member who requires additional care but cannot receive that care because circumstances prevent them from retaining access to their usual care providers.

Both types of leave are set to expire on September 21, 2021.

Employees may take up to 28 weeks of protected unpaid leave within a 52-week period to care for a family member with a serious illness that includes a significant risk of death, as determined by a medical professional. The leave can begin when a healthcare practitioner records the diagnosis on a medical certificate or first examines the critically ill person, or the leave can begin the week the family member falls ill. The leave ends when the illness ends, the person suffering the illness dies, or the 52-week period expires.

Similar to compassionate care leave, employees who have children or family members suffering from a critical illness may take leave to support the ill person. Protected leave extends to 37 weeks for employees caring for a sick child and 17 weeks for employees caring for a sick adult.

If two or more children suffer a critical illness, the employee is eligible for separate 37-week leave periods for each sick child. 

Canadian law provides 52 weeks of unpaid protected leave for parents of missing children. This leave increases to 104 weeks of leave if the child is discovered to be deceased, beginning on the date of the death. People eligible for this leave include parents, adoptive parents, guardians, and caregivers responsible for children between phases of adoption.

Employees are not eligible to take this leave if they are charged with a crime related to the disappearance or if the child is suspected to be party to a crime related to their own disappearance.

Employees in Canada are entitled to unpaid leave when summoned for jury duty or as a witness in a trial. This leave does not apply to employees who are parties in lawsuits as plaintiffs or defendants.

Employees in Canada are entitled to receive pay for certain public holidays. Covered holidays vary by province.

In the past, employers could deny holiday pay to workers with less than 30 days of employment time. That law has changed. Today, employees are eligible for holiday pay from their first day on the job.

Canada guarantees a minimum of 15 weeks’ maternity leave to all employees who give birth. Some provinces mandate more maternity leave, but 15 weeks is the minimum across the country.

Parents in Canada are also entitled to a minimum of 27 weeks of shared parental leave, regardless of gender. Some provinces increase parental leave to 35 weeks.

New parents can use this leave whenever they like, consecutively or separately, as long as they use it within one year of the birth of the child.

Employers do not have to pay employees for maternity and parental leave. Employees receive pay on their leave from government programs funded by taxes and social contributions. Parents who take leave receive either CAD $547 per week or 55% of their regular income, whichever is lower. In Quebec, payments are substantially higher at $900 per week.

Employers may choose to pay employees during leave if they desire.

Employees who are pregnant or nursing may request modification of their current duties or reassignment to new roles if continuing in their current roles could pose a health risk to themselves or their children, born or unborn. All requests for reassignment must include documented confirmation from a healthcare practitioner about the necessity of the request. This documentation must be specific about which duties the employee may not continue to perform and for how long.

Employees are entitled to paid leave while their employers consider their requests for reassignment. Where reassignment is not practical or achievable, employees are entitled to unpaid protected leave for the duration of the condition that makes continued employment in the role unfeasible.

Aboriginal employees in Canada receive a statutory five days of leave per year to participate in Aboriginal customs and attend Aboriginal events. Employees of Aboriginal descent may use this time for hunting, fishing, traditional ceremonies, or other purposes related to their Aboriginal heritage. Leave for Aboriginal heritage purposes is not guaranteed to be paid leave.

When an employee’s immediate family member passes away, federal law provides the employee with a minimum of five days of bereavement leave. As is the case with personal leave, employees may take five days of leave, but employers are only required to pay for three. These minimums apply after employees have been with the employer for at least three consecutive months.

Employers in Canada often offer private health insurance plans to attract top talent, even though Canada does provide public healthcare to all residents. Private health insurance premiums tend to be smaller than those in the US, and Canadians with private insurance get access to a wider variety of healthcare facilities and potential treatments. Employers can also offer vision and dental insurance, although these benefits are not required by law.

Employers may offer private long-term disability insurance to protect employees from the possibility of loss of income due to permanent disability. These plans are separate from other forms of health insurance and government-provided protections.

Like HSAs in the US, health care spending accounts (or HCSAs) allow employees in Canada to spend tax-free money on medical expenses. Employers can offer HCSAs to employees as an additional perk.

While the CPP and QPP cover all Canadian employees, some employers in Canada offer additional retirement savings vehicles to attract top talent. The most common form of employer-sponsored retirement contribution in Canada is the RRSP, Registered Retirement Savings Plan. These plans work similarly to employer-matched contribution accounts in the US.

In 2020, the RRSP contribution limit was CAD $27,230. In 2021, the limit increases to CAD $27,830. 

Offer your employees in Canada better benefits with Remote

As the expert on global employment, Remote helps companies of all sizes provide first-class benefits packages to workers in Canada. We can help your company provide a variety of packages to attract top talent while remaining compliant with all applicable federal and provincial laws. Contact us today at sales@remote.com to learn more about our Canada global employment and employer of record solutions.

Employee Benefits in Canada: All You Need To Know

Benefits to offer employees in Canada

Remote’s guide on hiring remote workers in Canada covers the basics of employment in Canada, Canadian labor laws, and how requirements vary from one province to another. This guide answers some common questions about paying remote workers in Canada. At a glance, paying remote workers in Canada requires companies to:

Determine whether your Canadian workers are contractors or employees.

Set up a legal entity in the applicable province or partner with an employer of record.

Collect key information from your workers, including government identification.

Identify all required payroll deductions, social schemes, and mandatory benefits contributions.

Set up the appropriate pension plan (Canada Pension Plan or Quebec Pension Plan).

Write and sign a compliant employment agreement with your chosen candidate.

Remember to pay your Canadian employees in Canadian currency!

Payroll for employees in Canada (and payroll for contractors in Canada) requires employers to understand Canadian rules about classification, taxes, and other important requirements. To ensure your business can pay Canadian employees, workers, and contractors on time and without unnecessary complications, use this helpful guide.

How do foreign businesses pay remote workers in Canada?

To pay remote employees in Canada, companies have two options.

The first option is to open a local legal entity in the province where the employee works. If the employee lives in one province but commutes to work in another, laws of two different provinces may apply. Canada typically levies taxes based on residence, not where the work is performed, unlike the US.

Businesses choosing this option must open a business banking account in Canada in person. These accounts cannot be opened by phone or online. Further, to establish a legal entity in Canada, the company must operate a physical location in the country. P.O. boxes are not acceptable.

The second option is to work with a global employment solution, or employer of record, like Remote. With the right employer of record, companies can hire international employees in Canada without worrying about issues of payroll compliance. Remote handles payroll processing, benefits management, and compliance with Canadian law to keep employers of remote workers in Canada protected.

What payroll deductions are employers required to make in Canada?

Employers in Canada must deduct at least two things from their employees’ pay stubs: employment insurance and one of two pension plan contributions.

Employment insurance, or EI, covers unemployment programs run by the Canadian government. EI contributions also cover payments for maternity and parental leave, as a form of temporary unemployment.

Canada has two pension plans. The first, the Canada Pension Plan (CPP) applies everywhere but Quebec. The Quebec Pension Plan (QPP) applies only in Quebec. All employers and employees must contribute a fixed amount to these plans, up to a yearly maximum.

Employers may also deduct union dues, premiums for private health insurance, contributions to additional pension plans, and other payments for benefits. In some cases, employers show deductions on paychecks to account for paid time off, as many Canadian provinces require employers to provide a certain percentage of pay across time off taken during the year (for example, 4% of pay spread across two weeks of PTO).

How much do companies and employees contribute to the Canadian Pension Plan?

For the Canada Pension Plan in 2020, employers and employees both contribute a statutory amount of 5.25% of the employee’s salary to make a total of 10.5% plan contribution. These contributions only apply to income between CAD $3,500 and $58,700. The maximum contribution in 2020 is CAD $5,798 from both employer and employee, and half of that per party. Neither side can contribute more than the other: the rate is set for the specified salary range.

How much do companies and employees contribute to the Quebec Pension Plan?

The Quebec Pension Plan works similarly to the CPP, but the total contributions are slightly higher. Employees and employers both pay 5.4% for a total of 10.8%. The maximum total contribution for the QPP is CAD $5,961.60. 

Different provinces enforce different overtime rates in Canada. This applies both to the hours at which overtime pay begins and the actual rates paid.

Some provinces start overtime pay after 40 hours in a week, while others start after 44 or 48 hours. Most provinces mandate 150% pay after the employee has worked more than the allotted number of hours. Some provinces also enforce daily limits, such as eight working hours per day, before overtime begins. In a few cases, provinces enforce higher overtime rates depending on the amount of overtime worked.

Be cautious, as even salaried exempt employees are often eligible for overtime pay in Canada. If you have questions about overtime compliance for your employees in Canada, contact Remote to ensure you stay fully compliant in every province.

The minimum wage in Canada varies by province and can increase or decrease yearly depending on economic factors. You can view current minimum wages in Canada here.

Foreign employers may pay contractors in Canada directly using tools like Remote’s free contractor payments platform. Paying contractors in Canada works much the same as paying contractors anywhere else. As long as the employee is genuinely a contractor and not a misclassified employee, companies may pay contractors directly without the need to withhold taxes or funds for Canadian social programs.

In Canada, contractors and self-employed workers are liable for the full 10.5% contribution to the CPP (or 10.8% if in Quebec for the QPP).

Independent contractors in Canada should note that they are not eligible to receive EI benefits if they stop receiving work from client companies.

Companies working with Canadian contractors must send T4A statements to any contractors paid more than CAD $500 in the last year.

In what currency do companies pay employees in Canada?

Foreign employers must pay Canadian employees in Canadian dollars through Canadian payroll processors. Companies working with contractors may be able to pay those contractors in different currencies, but any money paid will be converted to Canadian dollars when calculating taxes.

Pay remote employees in Canada with Remote

Canada is home to brilliant talent across a variety of industries. No matter what your business does, you can find great employees and contractors in Canada to help your company grow.

Remote’s global employment and global contractor solutions make it easy for businesses all over the world to pay employees and contractors in Canada without opening a legal entity. Our full employer of record solution provides a superior experience for your Canadian employees for one low flat rate with no hidden fees and no long-term commitments. Contact us today to learn more about our Canada payroll solutions.

To pay remote employees in Canada, companies have two options. The first option is to open a local legal entity in the province where the employee works. The second option is to work with a global employment solution, or employer of record, like Remote.

How to Hire & Pay Remote Workers in Canada

How to pay remote workers in Canada

Canada’s labor laws can vary dramatically from one province to the next. Owning a local entity in one province does not necessarily grant a business the right to hire in another. Whether you’re hiring remote workers in Canada or expanding your team to a new province, this guide can help you understand the basics of Canadian labor laws.

Canada’s provinces enforce different amounts of paid leave, different tax rates, different minimum wages, and other contributions from employees and employers. Rather than cover every small difference, let’s take a high-level look at Canada’s labor laws to set expectations for what it’s like to employ Canadian workers.

The concept of at-will employment does not exist in Canada. Rules vary by province, but in general, Canadian employers have more obligations to employees than US employers do.

The minimum wage in Canada varies by province. Saskatchewan has the lowest minimum wage at CAD $11.45, while Nunavut has the highest minimum wage at CAD $16. These wages are true as of October 2020, but most provinces in Canada have rules that require minimum wages to adjust annually to account for economic factors like inflation.

To view a complete list of minimum wages in Canada by province, view this helpful chart.

As with minimum wages, overtime rates in Canada vary depending on the laws of the province where the employee works. Most provinces require employers to pay an overtime rate of 150% of the employee’s regular wages after a certain number of hours.

In Alberta, for example, employers are required to pay 150% of normal wages for any time worked after 44 hours in a week or after eight hours in a day. In British Columbia, employees receive 150% pay for the first four hours worked after eight hours in a day, then 200% pay for every hour worked after that point.

If you would like to employ someone in Canada and have questions about overtime, Remote can provide more detailed information based on your employee’s position, profession, and location.

Do salaried exempt employees receive overtime pay in Canada?

In many cases, yes, salaried employees are eligible for overtime pay in Canada. Certain highly skilled professions do not include mandatory overtime pay. Doctors and lawyers, for example, are not guaranteed overtime pay by law. Manager-level employees and above are also not entitled to overtime pay if they are salaried exempt workers.

What discrimination protections does Canada provide for workers?

Canada’s laws protecting employees from discrimination are more robust than similar laws in the US. When interviewing, Canadian employers may not ask employees to reveal any information that could lead to discrimination.

This not only includes age, religion, sexual orientation, gender expression, race, and other commonly protected applicant characteristics, but also criminal history. Unless the question is specifically related to the duties of the job, Canadian employers may not question applicants about their criminal histories. Canada has strict policies about criminal records for entrance to the country, however, so employees attempting to emigrate to Canada may have difficulty if they have committed crimes in another country in the past.

How does Canada protect against sexual harassment and discrimination?

Under Canadian law, workers of all genders are entitled to protection from sexual harassment. Employers are obligated to provide safe and inclusive environments free from harassment for all employees.

Employers must draft and publicize workplace policies that clarify expectations for behavior and notify employees of their rights if they feel they have been harassed or discriminated against. Employers may not disclose the identity of a complainant or the details of the allegation except in contexts where doing so is necessary under the law. Employers notified of harassment or violence within their workplaces are obligated to act.

Canada’s new and stricter laws on harassment and violence in the workplace supersede older and less strict laws as of January 1st, 2021.

Can Canadian employers ask prospects about their Canadian work experience?

Laws on whether employers in Canada can ask about employees’ work experience in Canada do not always favor employers. Some interpretations of Canadian law could view “Canadian work experience” questions as discriminatory. Companies should err on the side of caution and ask questions about the field of work instead of the location where the work occurred.

Do Canadian employees start on probationary periods?

All Canadian provinces allow employers to place employees on probationary periods at the beginning of the employment relationship. During a probationary period, an employer may terminate an employee without notice or severance pay if the relationship is not working out.

The standard probationary period lasts three months. Some provinces, however, allow for longer probationary periods. New Brunswick allows employers to keep employees on probation for up to six months, while Manitoba limits probationary periods to 30 days.

Can employers hire employees on fixed-term contracts in Canada?

Although fixed-term agreements do exist in Canada, Remote generally advises against hiring employees for fixed terms. Open-term or indefinite agreements are far more common in Canada, and employers who attempt to use fixed-term agreements could expose themselves to unnecessary issues of liability.

How long do Canadian employers have to keep employee records?

Emerging privacy legislation around the world, including legislation in Canada, gives consumers and employees more control over their own data. However, employers in Canada are required by federal law to maintain all records pertaining to individual employees for at least 36 months after the creation of the records. Remote encourages and practices a 48-month retention period to guarantee compliance in every province.

Are employees in Canada allowed to use marijuana?

Marijuana is legal in Canada at the federal level for recreational use. Employees in Canada generally may use marijuana on their own time, but companies are entitled to forbid the use of marijuana on company grounds or during work hours. Employees suspected to be working under the influence may be terminated for doing so. In most workplaces, employers treat marijuana use the same way they treat alcohol use.

Can companies drug test employees in Canada?

Employers in Canada may not ask prospective employees to take a drug test as a condition of employment in most cases. Random drug tests are also forbidden unless an employer can prove that other efforts to curtail on-the-job drug use have failed in the past. Companies may require employees to take drug tests after incidents that create safety concerns or after employees return from rehabilitation treatment.

How do companies terminate employees in Canada?

Different provinces enforce different standards for employee termination requirements. Outside probationary periods, employers can only terminate employees for legally recognized, valid reasons. Canadian laws generally encourage employers to train and accommodate underperforming employees as an alternative to termination.

In all provinces, employers must provide either a minimum amount of notice or the same time period’s amount of pay to employees being terminated. Notice periods vary based on a variety of factors including age, length of employment, and the market for the employee’s skills.

With so many provinces enforcing so many variations in labor law, Canada can be a particularly challenging country for businesses to understand. However, Canada is also home to top talent in a variety of fields, and employing remote workers in Canada has never been easier.

Remote makes labor laws in Canada simple regardless of where in Canada your employees live and work. Our global employment solutions keep businesses compliant with all federal and provincial Canadian labor laws while providing a superior experience for Canadian employees. Contact us today to learn more about Remote’s global employment solutions in Canada.

What are labor laws like in Canada?

To hire employees in Canada, companies must first know the laws of the province in which the prospective hire lives and works. While Canada does enforce some federal labor laws, individual provinces have a lot of say on Canadian labor laws, payroll processes, benefits, taxes, and other factors.

If you are looking to hire an employee in Canada or help a current team member move there, Remote’s guide on hiring employees in Canada can help you get started.

Every province in Canada has its own unique set of labor laws. The laws and regulations outlined in this guide are federal laws unless noted otherwise. For more information on laws specific to a province, contact Remote and let us know in which provinces your employees and prospective hires work.

Related: What are labor laws like in Canada?

Minimum wage and overtime rates in Canada

Every Canadian province sets its own minimum wage. Most provinces have schedules designed to increase their minimum wages based on factors like inflation. 

Current minimum wages can be found on the website for the Retail Council of Canada.

Canadian employees are eligible for overtime pay when they work over a certain number of hours per week. Overtime rates and rules can vary by province, but federal law mandates that employees may substitute overtime pay for extra paid time off, earned at a rate of a minimum of 1.5 hours for every hour of overtime worked.

Overtime rates in Canada vary by province. Typically, provinces mandate overtime pay of 150% regular wages beginning after 40-44 hours of work within a week. Some provinces also enforce daily overtime rates and caps on allowable amounts of overtime. Contact Remote to learn more about the rules in the provinces where your employees work.

For hourly workers and salaried workers with schedules that can change from one week to another, Canadian employers must provide at least four days’ notice for new shift schedules. If the schedule changes because of an unforeseen event, the company must provide at least 24 hours’ notice.

Hiring and discrimination protections in Canada

Employers in Canada cannot ask applicants questions that could introduce prejudice related to gender, religious beliefs, or age. Questions about pregnancy, for example, are not allowed in interviews for jobs.

Canada’s laws are stricter on interview questions than laws in the US. For example, Canadian employers cannot ask candidates whether they can work weekends, holidays, or evenings, because such questions could reveal a candidate’s religious beliefs. Employers also cannot ask candidates about their criminal records unless the question is specific and relevant to the job opening. While employers can run background checks and are required to collect paperwork for tax purposes, employers also may not ask about applicants’ status as citizens or permanent residency.

Although employers may want to know about candidates’ experience working in Canada, these questions may also expose employers to liability. Rather than ask about Canada-specific experience, interviewers should keep their questions specific to the duties and responsibilities of the position.

Probationary periods and fixed-term contracts

Employers in Canada may use probationary periods at the beginning of employment relationships. These periods typically last three months.

In some cases, provinces mandate a probationary period. British Columbia, for example, has a fixed three-month probationary period, even for companies that do not include probationary periods in their employment agreements.

While Canadian employers may hire workers on fixed-term agreements, Remote generally discourages this practice. Fixed-term agreements can expose employers to liability concerns that would be easier to avoid on open-term employment agreements.

Employers are required to maintain all employment records, including payroll records, for at least 36 months after the records’ creation. This law may clash with privacy laws, especially in an evolving regulatory environment.

Remote can help companies keep their employees’ data secure and compliant. We maintain a minimum holding period of 48 months for important documentation to protect our customers during compliance inspections or discovery processes.

Related: How to pay remote workers in Canada

No. Unlike the US, Canada does not practice the concept of at-will employment.

While Canadian employers can terminate employees for legitimate reasons (excluding any that could be construed as discriminatory), employers should be respectful of the employees being let go. That includes providing a reasonable notice period, which tends to be around one month. Factors such as the employee’s tenure at the company, job description, and age may necessitate longer notice periods. Different provinces enforce different standards.

Labor union membership is much more common among Canadian workers than US workers, especially in manufacturing and trade industries. Union rules vary by province, so employees in different provinces may have more or less voting power within their unions depending on where they live and work. Employees who work at unionized workplaces do not have a choice on whether to join the union.

Marijuana legalization and drug testing in Canada

After the legalization of marijuana at the federal level in Canada, employers generally agreed to treat the use of the substance the same way they do alcohol. In most workplaces, employees can do what they want on their own time, but they may not commit crimes (such as driving under the influence) or work while intoxicated, even when working from home.

Canadian laws generally forbid drug tests as a form of pre-employment screening. Employers also may not randomly drug test employees unless they can prove to a court that other efforts to curtail drug use at work have previously failed. Canadian companies may drug test workers after safety incidents if they have reason to believe the employee responsible for the incident may have been under the influence at the time of the event. Companies can also drug test employees who have recently returned from drug rehabilitation treatment.

Many companies with remote workers understand the need for flexible hours and asynchronous collaboration. That can come in handy in Canada, because workers in Canada gain the right to request adjustments to their working hours after six months of employment with a company. Employers can refuse these requests with legitimate reasons, and the standards of what makes a reason legitimate are not high. However, employers should consider the value that flexible work can offer employees and attempt to provide flexible arrangements when possible.

Employers in Canada usually provide their employees with the following benefits:

Related: Benefits to offer employees in Canada

Recent changes to Canadian labor laws increased employee PTO entitlements. Employees who have worked for one year must receive at least two weeks of paid time off per year. After five years of consecutive employment for the same company, employees must receive a minimum of three weeks off per year. Mandatory leave allotment increases to four weeks after 10 years of employment.

The percentage of wages paid during paid time off varies by province. In Quebec, for example, employees with three years of service or more are guaranteed at least three weeks’ of paid vacation with pay equal to 6% of their annual wages. Quebec employees may legally take all their leave at once, if they desire.

Remote helps companies ensure they provide a compliant leave package for all their Canadian employees. If you would like to provide your Canadian team with more time off or follow an unlimited PTO strategy, Remote can help with that as well.

Employees are also entitled to five days of personal leave each year after working in a position for three months, although employers are only required to pay for the first three. This personal leave applies when employees need to care for a sick family member or are compelled to attend to other important tasks. Personal leave time doubles to 10 days for employees who are victims of family and domestic violence. In cases of family violence, the number of paid days increases from three to five.

Recent changes to Canadian labor laws removed the 30-day minimum requirement for employees to collect holiday pay. Now, employees who have worked for a company for any length of time must receive holiday pay as long as they are employed on the day the holiday falls.

Employees who give birth in Canada are guaranteed at least 15 weeks of maternity leave, although some provinces provide for longer leave periods. Parents are entitled to a minimum of 27 weeks of leave (some provinces provide up to 35 weeks), regardless of gender. Parents can share this leave however they like. Time does not have to be used consecutively or together but must be used within one year of the child’s birth.

Parents who take parental leave receive the lesser of 55% of their regular income or CAD $547 per week, paid by government insurance. Quebec ups this weekly payment to CAD $900. Employers may, of course, pay their employees 100% salary during parental leave if they desire.

Federal law in Canada mandates a minimum of five days of leave for Aboriginal employees to participate in Aboriginal ceremonies, holidays, and cultural activities. These activities can include hunting and fishing. Aboriginal employees must work a minimum of three consecutive months before becoming eligible for this leave.

Canadian law provides employees in all provinces with at least five days of bereavement leave after a death of an immediate family member. Like personal leave, employers are only required to pay employees for three of the five days.

Employees in all provinces are entitled to statutory workers' compensation pay for injuries sustained on the job. Workers' compensation varies by province and is run by provincial governments. Remote can help businesses enroll in workers' compensation insurance programs in every province.

Although Canada does offer state-sponsored health coverage, employers commonly offer more robust health insurance to attract top talent. Private health insurance can provide access to faster care and cover a wider range of procedures. In addition, many employers choose to offer vision and dental insurance.

Some companies offer employees access to other types of insurance for financial security. These offerings typically include life insurance and long-term disability insurance, with premiums paid by the employee, to protect workers in the event of major disasters.

Canadian employers also increasingly offer health care spending accounts, or HCSAs, to employees. These accounts function similarly to HSAs in the US, allowing employees to spend pre-tax dollars on medical expenses.

Many employers provide retirement investment and savings options for their employees. The most common form of retirement investment in Canada is employer-matched contribution to a Registered Retirement Savings Plan, or RRSP.

All employers and employees are required to contribute to the Canada Pension Plan (if outside Quebec) or the Quebec Pension Plan (if in Quebec). The Canada Pension Plan requires both employees and employers to contribute 5.25% of the employee's salary (for a total of 10.5%) on earnings between CAD $3,500 and $58,700. In 2020, the maximum allowed combined contribution is CAD $5,798, or $2,898 apiece. Self-employed individuals are required to pay the full 10.5% of earnings between CAD $3,500 and $58,700, and their contribution maximum is CAD $5,798. Rates and maximums differ in Quebec.

Eligible individuals may begin drawing payments from the Canada Pension Plan at age 60. There is no minimum contribution amount or number of contributions to become eligible. Payments depend on income, amount contributed, and other factors.

The Employment Insurance (EI) program in Canada provides support to workers who become unable to work for a variety of reasons including temporary unemployment and pregnancy. Deductions vary in Quebec, but for most of Canada, employees who earn CAD $54,200 or more pay the maximum premium of CAD $856.36 per year. Employers must contribute 1.4 times the employee share of the EI premium but may qualify for a deduction by offering a short-term disability plan to workers.

Laws on terminating employees in Canada differ from one province to another, though most provinces establish similar guidelines. Because Canada does not have a legal concept of at-will employment, employers must have legally valid reasons to terminate employees and should usually default to attempting to keep an underperforming employee unless that employee’s behavior endangers others.

Notice periods for termination vary based on the employee’s age, length of employment, and job-specific factors, such as availability of comparable work. Generally, the older the employee and the more difficult it would be to find a similar position, the longer the notice period must be.

Quebec has a special rule on termination. After two years of employment, employees gain more protections, similar to those enjoyed by workers in the UK and France. An employee in Quebec with two years of service can only be terminated in a layoff or for serious infractions. 

The US-Mexico-Canada agreement replaced NAFTA as the primary trade agreement connecting the three countries. This trade deal sought to provide more rights to workers while eliminating serious pay discrepancies for workers living in different places but performing similar duties.

Under the USMCA, an official process known as the Rapid Response Labor Mechanism sets a process through which investigators can evaluate claims of labor law violations more quickly. Any country found to be in regular violation of the new rules could be subject to penalties including loss of beneficial tariff treatments from the other two members.

The USMCA also introduced several new industry-specific protections, including those aimed at manufacturers and automobile makers. If you employ workers in Canada, Remote’s legal team will help keep you compliant no matter what your industry may be.

With so many different provinces and differences in laws, hiring employees in Canada can be a confusing and challenging task. Remote makes it easy for companies of all sizes to employ, pay, and manage Canadian employees for one low flat rate. Contact us today to learn more about our Canada employer of record solutions.

Canada

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