Have questions? Ask us!

Mandatory Employee Benefits in Canada: A Guide for Overseas Employers

Employing workers in a foreign country requires companies to learn and comply with a whole new set of employment and labor entitlements.  Some of these may be more or less generous than in your own country, so you might need to adjust your internal policies to meet the standards. 

Canada has a reasonable benefit structure, that is not nearly as employee-friendly as the European Union, but does have higher entitlement levels than the US.  It is complicated somewhat by the fact some benefit amounts and contribution rates are fixed at the province level. This guide will detail the primary employee benefit levels and how they are funded.

Which employee benefits are mandatory in Canada?

The following benefits are all statutory and required for any employee working in Canada.

Vacation Leave in Canada

Employees in Canada receive 10 paid public holidays and the amount of vacation leave depends on the province.  But in general, 2 weeks of paid vacation leave are offered after 12 months of service.  Some employers allow it to accrue monthly in the first year of service so it can be taken sooner.

Subscribe to get more insights like this.

Sick Leave 

Sick leave is generally unpaid, but some provinces offer a certain number of paid sick days.  Employees can also make an employment insurance claim for sick leave benefits.

Critical Illness Leave

Critical illness leave can be taken when an employee needs to care for a child or adult who has a life-threatening illness.  The maximum leave is 37 weeks for a child and 17 weeks for an adult.  The leave is unpaid, but the employer must guarantee the employee can return to their job after the leave ends.  Employment insurance assistance may also be available for employees on leave.

There is a waiting period/notice period of one pay period before the leave can begin, to allow the employer time to prepare for the employee’s absence.

Pension Contributions in Canada

Employees and employer each contribute 5.45% to the Canadian Pension Program, up to a maximum salary amount of $61,600.

Employment Insurance Contributions

Employment insurance is a benefit to assist employees who have lost their job, or cannot work due to illness or are caring for another ill person.  It can also be used for maternity leave.  This is one way the lack of paid sick leave is offset in the Canadian benefit program.

The employee contribution rate for 2021 is 1.58% based on a maximum salary of $56,300.  The employer contributes 1.4 times whatever amount the employee contributes, subject to the same maximum.  Quebec has a lower rate of 1.18%.

Client Case: How long do benefits last after a termination?

Context: One of our clients with employees in Canada wanted to know how long benefits would continue following employee termination.

Solution:  We let them know that all benefits would continue for 30 days after the termination date.

Do you need more information about Canada?

If you are new to hiring in Canada, you might have other questions such as:

Do employers have to offer paid maternity leave, or is that optional given the coverage of employment insurance?

Is unused vacation leave be paid out upon termination?

What documentation is required from the employee to confirm the need for critical illness leave?

Our clients rely on our guidance to comply with employee benefit entitlements when hiring abroad, as well as navigating payroll, tax and withholding requirements.  We make international employment simple.

 Need more information about employing in a new country? Learn more about:

 

 

Looking to hire an employee in Canada? Get in touch.

 

The information in this article is subject to changes in local legislation.

Related Articles

Are you managing a remote or global team?

Join 14,000+ managers receiving remote guides and international HR resources!