Canada has the most educated workforce of The Group of Seven (G7) nations, surpassing the United States, United Kingdom, France, Italy, Germany, and Japan. So, it’s no secret that Canadian workers have the knowledge to drive any business to higher levels.

Still, we urge you not to move forward unprepared. Although Canada is generally a very welcoming, friendly country, its laws surrounding labor can be strict, and the penalties for non-compliance can be crippling to any business. What’s more, offering the right benefits package can make your business more attractive to candidates and ensure that your Canadian workers are well taken care of.

In this guide on employee benefits in Canada, we’ll cover the labor laws in the country, the minimum Canadian employee benefits, and more!

An Overview of The Labor Law in Canada

Businesses that intend to hire talent from Canada will have to follow the official laws enacted by the Government of Canada Workplace Standards. They outline everything employers need to know, including:

  • Federally regulated industries and workplaces
  • Workplace health and safety
  • Equality and inclusion
  • Federal labor standards
  • And more

Does Every Canadian Get Employee Benefits?

Employers are required to provide benefits to Canadians who are working for them full-time. This applies regardless of the company’s size or industry. The country defines full-time as working 30 hours or more per week. If you’re hiring Canadians and only require them to work up to 29 hours, they aren’t considered full-time, and the information below doesn’t apply to them.

Independent contractors and part-time employees do not receive statutory employment benefits. Learn more on the Canadian government website.

Mandatory Employee Benefits in Canada: Minimum Employer Requirements

At a bare minimum, your Canadian employee benefits packages should meet the mandatory requirements set forth by the Canadian government. We’ll touch on each of them below:

Canada Pension Plan (CPP)

When you hire Canadian residents, you’ll need to contribute to the Canada Pension Plan (CPP). This is a national retirement plan designed to act as a portion of the employee’s income when they retire. The employee can begin to draw from the plan on a monthly basis starting at age 60, so long as they have made one contribution to the CPP.

The employer’s contribution amount is 5.95% of the employee’s salary as of 2024. The employee must set aside the same percentage.

Contributions stop for the year once the fund reaches the year’s maximum pensionable earnings – $68,500.

Quebec Pension Plan (QPP)

If your Canadian employee is a Quebec resident, you are required by law to enroll them in the Quebec Pension Plan (QPP). These contributions go to Revenu Quebec. This public insurance plan gives your employees retirement benefits. To access QPP funds, they must meet the following criteria:

  • They must be at least 18 years old.
  • They must make more than $3500 per year.
  • Funds may not be dispersed before the age of 60.

There are two types of QPP:

  • Base plan – This plan is funded 50/50 by the employer and the employee. The overall contribution sits at 10.8% of the employee’s salary. So, the employer should be prepared to contribute 5.4%.
  • Additional plan – This plan is for people who make more than $68,500. This plan is also dual-funded – 50/50 by the employer and the worker. The total contribution is 8%. So, for employees that fall into this bracket, you’ll have to contribute an additional 4% of the employee’s salary.

Time Off

Canada has strict regulations for time off allotments. We’ll cover annual vacation time/pay as well as general holidays Canadian employees are entitled to under the law.

Annual Vacation

Vacation time and pay correlate with how long the employee has been working for the same employer:

Length of EmploymentLength of Vacation TimeVacation Pay
1 year2 weeks per year4% of earnings
5 years3 weeks per year6% of earnings
10 years4 weeks per year8% of earnings

The employee is entitled to vacation pay, ideally within 2 weeks of the vacation. If you’re not able to meet this deadline, Canada allows employers to pay it as soon as possible – during or right after the vacation is over.

General Holidays

Employees also get the following holidays off with pay:

  • New Year’s Day*
  • Good Friday
  • Victoria Day
  • Canada Day*
  • Labour Day
  • National Day for Truth and Reconciliation*
  • Thanksgiving Day
  • Remembrance Day*
  • Christmas Day*
  • Boxing Day*

*If this holiday falls on a non-working day, employers have to give the employee one paid day off before or after the holiday.

Employment Insurance

Mandatory Canadian employee benefits also include employment insurance. The plan provides financial coverage for people who are unemployed. They can access benefits when they meet the following criteria:

  • They become jobless, AND it isn’t their fault.
  • They are able to work and are available to take a job.

Qualifying circumstances include:

  • Work shortages
  • Mass layoffs
  • Seasonal layoffs

*There are more qualifications that employees must meet.

Employers are expected to contribute 1.4 times as much as the employee contributes. The max annual contribution for employees is 1.66% of insurable earnings. This rate may vary based on location.

Sick Days

Per the Canada government website, sick leave for full-time employees who work at least 37.5 hours per week is earned at a rate of 9.375 hours per month. These hours only apply to employees who receive at least 75 hours of pay in a month.

Typical Supplementary Benefits

The benefits outlined above are mandatory and should appear in your Canadian employee benefits plan. But what you’ll find is that many businesses offer supplementary benefits over and above the requirements to make their opportunities more exciting to employees.

Private Health Insurance

Various health services and treatments are free to Canadian patients, but some come with fees. Offering your Canadian employees private health insurance can give them peace of mind and expand their access to services and treatments that aren’t free of charge.

Dental and Vision Insurance

These insurance types are non-mandatory. However, certain dental and vision care can be difficult to get in Canada without paying a hefty fee. You can alleviate a portion of this burden by offering dental and vision insurance coverage for your Canadian employees.

Life Insurance

Life insurance isn’t a compulsory benefit in the country of Canada. It will cover qualifying death-related expenses in the event of your employee’s passing.

The good thing is that you don’t have to foot the entire bill for these extras. If you cannot afford to pay all of the premiums, you can offer to pay a portion of them. This will make these benefits easier for the employee to obtain. This money savings is a sure advantage for your employees.

In addition to the above insurance options, you can offer the below perks to make working at your company even more alluring:

  • Mental health and wellness stipends
  • On-site childcare services
  • Additional PTO
  • Performance bonuses
  • Career development opportunities
  • Meal allowances
  • Fuel allowances
  • Technology allowances

Compliance Concerns and Consequences

Canada is very transparent when it comes to employer compliance with federal labor standards. You could find yourself in legal trouble in the following cases:

  • Failing to comply with federal labor standards as laid out by the Government of Canada.
  • Misclassifying your employees.
  • Not providing the right employment-related information to applicable parties.

Read about these topics on this Government of Canada website page.

Putting Your Canada Employee Benefits Package Together

Learning about labor law basics is the first step toward building a Canada Employee benefits package. Once you’ve learned the fundamentals, it’s essential to dig further into the actual laws established by the Canadian government – the Federal Labour Standards. It’s time to sift through all of the legislation in an attempt to ensure you’re covering every base.

You may need to reach out to a professional in HR, law, or international employment for assistance at any point. They can clarify the legislation, find answers for you, and help keep you on the right track.

With the legal legwork done, feel free to put the employee benefits plan together. Start off with the mandatory benefits and finish up with any supplementary perks you want to offer your Canadian employees.

Get Assistance When Needed

Sometimes, when employees begin to build their Canadian employee benefits plans, they find that the process is too convoluted. That’s understandable, considering the potential hurdles, legal components, and complicated procedures associated with foreign governments. Thankfully, there’s assistance out there for employers who’d rather pass on the benefits creation and administration processes. 

Aside from lawyers and HR professionals, there are Professional Employer Organizations (PEOs) and Employers of Record (EORs). Both of these entities handle international employee benefit structuring and implementation (among other things). So, be sure to explore these options as well.

So, there you have it – everything you need to know about employee benefits in Canada. We hope you found all the information you were looking for, and we wish you the best as you expand into Canadian territory.