Employer of Record (EOR) in Canada
Wisemonk's comprehensive EOR solutions enable global companies to hire, pay, and manage employees in Canada without the need for a local entity. From tax optimization to equipment services, we handle all compliance and administrative tasks, allowing you to focus on your core business.
The minimum wage varies across provinces and territories in Canada. Below are the current minimum hourly wages for general labor:
Minimum Wage by Province
Overtime
Overtime pay is generally mandatory, except for certain managerial roles. Usually, overtime is compensated at 150% of the regular salary, and employees can work up to 8 hours per week beyond the standard working hours. The standard working hours vary by province and typically amount to around 40 hours per week, from Monday to Friday.
Benefits
Mandatory benefits for Canadian employees include contributions towards Public Health Insurance, Employment Insurance, Workers' Compensation, Registered Retirement Savings Plan, and Pension Plan. Since Canada has a publicly funded healthcare system, there is no obligation for employers to provide health insurance. However, depending on the industry, private health insurance may be offered as a perk by employers.
- Annual Leave: Paid vacation time, the amount of which increases with the length of employment.
- Maternity and Parental Leave: For expecting mothers and new parents, including adoptive parents.
- Sick Leave: Time off for illness or injury, with the specifics varying by province.
- Bereavement Leave: Leave to mourn the loss of a family member.
- Family Responsibility Leave: Time off for specific family-related responsibilities.
- Compassionate Care Leave: For caring for a critically ill family member.
To read more about these benefits, download the Canada Hiring Guide.
Bonuses
While there is no legal requirement for employers to offer bonuses to employees in Canada, many companies choose to provide annual or performance-based bonuses as part of their compensation package.
In Canada, employers typically process payroll twice a month, and many companies prefer the following schedule:
Payment Cycle Information
Federal Income Tax
Individual taxes in Canada vary based on the individual's location. Federal individual tax rates are progressive and calculated as follows (as per 2023):
Income Tax Rates
Provincial Income Tax
Additionally, Provincial and territorial tax rates are also applied.
In Canada, the provincial tax system functions in tandem with the federal tax system. Each province and territory independently establishes its own tax rates and brackets. While the federal government is responsible for collecting personal income taxes in most regions, each area sets its distinct rates and brackets, leading to varied tax burdens across the country. Quebec uniquely manages its own personal income tax collection. These provincial taxes are utilized to fund regional services and infrastructure and typically feature a progressive rate structure, akin to the federal approach.
Read more about Provincial Taxes and taxes for Non-Residents here.
In Canada, an employee agreement should contain essential details such as the employee's name, address, job role, a clear job description with measurable duties, start date, compensation, vacation entitlements, benefits, and a termination clause. The contracts must be written in either English or French and can also be bilingual.
Probation
Probation periods are not obligatory, and there is no set minimum period. However, the maximum probation period allowed is 90 days.
Notice Period
The notice period required for termination can vary depending on the Employment Standards Act of each province.
As an employee working for a federally regulated employer, you must be provided annual vacation and general holidays.
Annual Vacation Entitlement: Federally regulated employees are entitled to Annual Vacation Entitlement.
General Holiday Entitlement: As an employee working for a federally regulated employer, you are entitled to a day off with pay for the following 10 days, which are called general holidays:
- 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
Read more about the structure of Annual Vacation entitlement and the General Holidays here.
Here are the major leave types in Canada:
- Annual Leave: Paid vacation time, the amount of which increases with the length of employment.
- Maternity and Parental Leave: For expecting mothers and new parents, including adoptive parents.
- Sick Leave: Time off for illness or injury, with the specifics varying by province.
- Bereavement Leave: Leave to mourn the loss of a family member.
- Family Responsibility Leave: Time off for specific family-related responsibilities.
- Compassionate Care Leave: For caring for a critically ill family member.
Read more about these leaves here.
Termination
In the event of termination without cause, termination pay is provided to the employee. On the other hand, severance pay is granted when there is a mutual separation agreement or when an employee completes a minimum of 12 consecutive months of employment. In federally regulated jurisdictions, eligible employees receive the greater of 2 days' wages per year of service or 5 days' wages as severance pay. The severance pay rates differ based on specific provincial regulations.
To work in Canada, individuals typically need a work permit and a visa. There are two main types of work permits:
- open work permits (allowing work for any employer) and
- employer-specific work permits (restricted to a specific employer).
The requirements for obtaining a work permit usually include a job offer from a Canadian employer and a Labour Market Impact Assessment (LMIA) if required. Some work permits, like those under the International Experience Canada program, have different criteria. In addition to the work permit, individuals from certain countries may need a visitor visa or an Electronic Travel Authorization (eTA) to enter Canada. The specific requirements can vary based on the individual's nationality, occupation, and intended duration of stay in Canada.
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Frequently asked questions
What are the mandatory employee benefits in Canada?
The mandatory benefits for employees in Canada include contributions towards the Public Health Insurance, Employment Insurance, Workers Compensation, Registered Retirement Saving Plan, and Pension Plan.
Are employers required to provide a bonus to employees in Canada?
There is no legal requirement for employers to provide a bonus to employees in Canada. However, many companies offer annual or performance-based bonuses as part of their compensation package.
What is the maternity leave policy in Canada?
In Canada, female employees are entitled to maternity leave of up to 15 weeks. The leave can start as early as 12 weeks before the expected date of birth and can end as late as 17 weeks after the actual date of birth. The employee will receive 55% of their average salary during this period, and the government will be responsible for this pay. The max salary payment is $638 CAD per week. The employee can extend leave through parental leave.
What are the public holidays observed in Canada?
The public holidays observed in Canada include New Year, Canada Day, Christmas, Good Friday and Labor Day.
How many sick leave days are employees entitled to in Canada?
The number of sick leave days can vary depending on the province where the company is located.
What are the legal requirements for terminating an employee in Canada?
Termination of employees can be complex. There is no at-will termination in Canada for the employer, outside the probation period, and termination must be done for just cause. Compliant terminations include: - When an employee voluntarily resigns - Through a mutual agreement between the employer and employee - Due to employee misconduct, breach of responsibilities, or unexplained absences from work - Refusal by an employee to perform job duties as assigned in agreement - Upon the expiration of the employment contract
How long is the notice period typically in Canada?
The notice period in Canada can vary as per the province's ESA (Employment Standards Act).
What documents are typically required during the employee onboarding process in Canada?
Compliance documents required at the time of onboarding: - Federal personal tax credit returns - Personal tax credits return based on province of residence - Void cheque or direct deposit form - Physical proof of SIN - Passport / ID - Proof of employment eligibility In addition to the above, provinces might require additional documents as well.