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End of Employment Procedures & Guidelines in Canada

Canada doesn’t recognise at-will employment. Instead, in order to lawfully terminate an employment, companies must provide employees with a notice of termination. Specific termination laws vary by province/territory, but the guidelines are more or less the same, as follows:

In Quebec, employees gain additional termination protection after a two-year tenure and can be terminated for serious infractions or layoffs only.

To avoid giving a notice, employers must prove that employees are dismissed with a just cause. This is difficult to prove unless there is strong evidence of serious misconduct such as fraud, significant breaches of employer policies, or insubordination.

Note: Non-unionised employees in every province/territory except Nova Scotia, Quebec, and the federal jurisdiction can be dismissed without cause but must be given the required notice. Nonetheless, even with a notice, civil claims being brought against employers are still likely. Collective agreements almost always provide protection against termination without cause.

Canadian laws encourage employers to work with underperforming employees rather than default to termination. If employers proceed with termination, they give their employees a written notice of dismissal, which can be delivered in person or by email/mail. Then employers must respect the notice period, which varies not only by province/territory but also by employee’s tenure and age. Employers can choose to pay in lieu of notice.

Upon termination, employers must process the final payment and pay it by the next pay date, issue the Record of Employment (ROE) to the employee, and report the termination to the authorities. If there’re any outstanding payments from unpaid time off or bonuses, they too must be paid by the next pay date. Failure to follow the requirements listed above may result in a fine of up to CAD$2,000 and imprisonment for up to six months.

Failure to follow employment standards can lead to fines or orders to compensate employees for losses incurred as a result of the contravention. There are no predefined minimums or maximums of the fine, and the exact sum depends on the violation and facts of each case. Employees can also commence a civil action for wrongful dismissal, and claim damages for losses suffered during the notice period. In these cases, remedies are compensatory, and reinstatement is not possible.

Disciplinary procedure

Before taking an employment termination route, companies in Canada should have a progressive discipline policy in place to assist employees who need to improve their performance or correct a misconduct. The goal of this policy is to help employees. While it has a degree of flexibility, the procedure involves certain steps that may or may not all be taken depending on the seriousness of the misconduct, past employee performance, and the employee’s response to prior disciplinary action:

  1. Verbal warning — given when minor corrective action is required or when no previous disciplinary action has been taken
  2. Written warning — given when a more serious disciplinary action is needed or because the previous disciplinary action had a poor response
  3. Suspension with or without pay and full and final warning — given when the offence is so serious that a lower level of action is not appropriate, there is repeated unacceptable conduct, or the previous disciplinary action had a poor response
  4. Termination with just cause — implemented when the misconduct fundamentally breaches the employment relationship, or the unacceptable behaviour has been repeated after a final warning or suspension

After each step before termination, the employee should be given an opportunity to correct the problem or their behaviour. If the employee doesn’t correct their behaviour, the type of discipline increases in severity, and, eventually, termination occurs.

Employers should document and date the meetings, training sessions, warnings, and performance reviews involved in the disciplinary process.

Resignation

Employees who want to resign from their jobs should follow a correct procedure to avoid breaching their employment contract. First, employees should submit a written resignation letter to their employers as proof of resignation to avoid being taken to court and failing to prove their giving the appropriate notice. Employees don’t need to provide details about their reason for leaving but should include a statement saying they are resigning and indicating their last day of work.

Second, employees must respect the notice period in their employment agreement, which is detailed in the Notice Period section. If there’s no stated period in the contract, the Canadian common law requires a “reasonable notice”, which is usually two weeks. The employer may negotiate a longer notice, depending on the employee’s position, length of service, pay, and time it would likely take to replace the employee.

Employees who resign are entitled to neither the unemployment funds benefit nor severance pay unless the employee can show they have been harassed, constructively dismissed, had their Human Rights violated, or that the workplace was toxic.

Redundancy

In Canada, the concept of redundancy doesn’t exist. Instead, layoffs are periods during which employers don’t provide work to employees, but where employees retain certain reinstatement rights should the company situation improve. During layoffs, employees may keep their entitlement to benefits. In Ontario, an employer can lay off an employee for 13 weeks (out of 20) without benefits, or 35 weeks (out of 52) if benefits are continued.

For a layoff to turn into a definite dismissal, a certain period must pass, which varies by jurisdiction as follows:

Non-unionised companies don’t need to consult employees when making decisions about layoffs. Employers simply provide employees with a notice of layoff in writing, which sets out the potential recall date, but with no other procedural requirement, which gives the employer the power to choose whom to recall once work becomes available. Layoff provisions should be included in employment agreements to allow them to be enforceable and to try to protect employees against constructive dismissal claims. This is true for, at least, Ontario wherein a layoff without a contracted right is likely to lead to a constructive dismissal.

On the other hand, unionised companies have collective agreements that set out the procedures to follow regarding layoffs and employee recall. Collective agreements typically dictate the order in which employees are to be recalled, which is normally on the basis of seniority. Collective agreements also usually include “bumping” provisions, which provide laid-off employees the right to displace an employee with less seniority. Any obligation to consult the union with regard to collective redundancies is also negotiated in the collective agreement.

In the event of a termination, employees have to be given the appropriate termination pay according to the relevant employment standards legislation in effect.

Notice period

In Canada, an employee’s statutory notice period varies by province/territory and is influenced by the employee’s tenure at the company, age, and job-specific factors such as availability of comparable work. There are two sources of notice: (1) statutory, which is remedial and (2) common law, which is more flexible and generous. Employers may choose to pay in lieu of notice, but, at a minimum, the notice period by province/territory is as follows:

Alberta
British Columbia
Manitoba
New Brunswick
Newfoundland and Labrador
Northwest Territories
Nova Scotia
Nunavut
Ontario
Prince Edward Island
Quebec
Saskatchewan
Yukon
Federal jurisdiction

The Canadian courts have found that based on the combination of employee’s length of service, age, position, and other factors relevant to the employee’s ability to secure new employment, employees should be given anywhere between two and six weeks’ notice per year of service at common law. In some cases, long-service employees may be entitled to up to 24 months’ notice of termination, which may be exceeded in “exceptional circumstances”.

Severance

Employees who have been employed for a certain period are entitled to severance pay when dismissed by their employers. The pay and tenure vary by province/territory and aren’t applicable in every jurisdiction, as follows:

Federal jurisdiction
Ontario

Other jurisdictions don’t impose mandatory severance pay.

Employee Termination Protection in Canada

Employees in certain situations are protected from being dismissed. These situations include (but are not limited to) maternity, parental, domestic violence, compassionate, and critical illness leaves. In addition, the Human Rights Code provides protection from any dismissal motivated, in whole or in part, by a prohibited ground of discrimination, or in reprisal for the employee’s attempt to enforce their rights under human rights legislation.

Unemployment funds

Employees who have been dismissed through no fault of their own, and who have been without work or pay for at least seven consecutive days in the last 52 weeks, who are ready, willing, and actively looking for employment, and who have made Employment Insurance (Social Security) contributions for the last 52 weeks are entitled to unemployment funds.

The exact amount of the benefit varies on a case-by-case basis, but most people get 55% of their average insurable weekly earnings, capped at CAD$595 weekly (with the maximum of yearly insurable earnings being CAD$56,300). The benefit is provided for 14 to 45 weeks, depending on the region’s unemployment rate and the amount of EI contributions the person has accumulated in the last 52 weeks.

Holiday Leave in Canada

Vacation entitlement varies according to each province/territory, but the federal legislation mandates at least two weeks of paid time off for employees after one year of employment, three weeks after five years of employment, and four weeks after ten years of continuous employment. In addition to that, employers sometimes decide to top the statutory time off and as they do, they follow a similar progressive philosophy — commonly three to four weeks, often up to six weeks. However, most employers mandate that employees cannot take more than two weeks off at a time.

Paid time off is accrued based on a percentage of earnings and varies by province/territory, as follows:

Federal:

British Columbia, Alberta, Manitoba, Ontario, Northwest Territories, Nunavut:

Saskatchewan:

Quebec:

New Brunswick:

Nova Scotia, Prince Edward Island:

Newfoundland and Labrador:

Yukon:

Bank holiday

Canada has nine national holidays yearly, and some provinces/territories have additional holidays. Employees are entitled to their regular pay on a public holiday. If they’re required to work during the holiday, they’re entitled to an additional day off in lieu or being paid at a premium rate for the day.

Many employers give employees the 24th and 31st of December as a paid holiday.

Canada 2022 Holiday Calendar

DATEWEEK DAYHOLIDAY
1/1/2022SaturdayNew Year’s Day
21/2/2022MondayFamily Day* (Ontario, Prince Edward Island, Alberta, British Columbia, New Brunswick, Saskatchewan, Manitoba, Nova Scotia only)
15/4/2021FridayGood Friday (except Quebec, but some employers choose to give it as a holiday)
18/4/2021MondayEaster Monday (Nunavut only)**
23/5/2021MondayVictoria Day*
21/6/2021TuesdayNational Aboriginal Day (Northwest Territories, Yukon, and Newfoundland and Labrador only)*
24/6/2021FridaySaint-Jean-Baptiste Day (Quebec only)
1/7/2021FridayCanada Day
9/7/2021SaturdayNunavut Day (Nunavut only)
1/8/2021MondayCivic Holiday* (except Ontario, Quebec, and Yukon)***
15/8/2021MondayDiscovery Day (Yukon only)
5/9/2021MondayLabour Day
10/10/2021MondayThanksgiving Day (except Nova Scotia)
11/11/2021FridayRemembrance Day (except Ontario, Quebec, and Nova Scotia)
25/12/2021SundayChristmas Day
26/12/2021MondayBoxing Day (New Brunswick, Newfoundland and Labrador, Nova Scotia, Alberta, and Ontario only)

* Called differently depending on the region

** Widely observed in Alberta and Quebec

*** Widely observed in Ontario

Saint Patrick’s Day on the 17th of March (observed on the second Monday in March), St. George’s Day on the 26th of April, and Orangeman’s Day on the 12th of July are government holidays in Newfoundland and Labrador.

New Year’s Eve on the 31st of December is a government holiday in Quebec.

Types of Leave in Canada

Sick leave

There is no statutory sick pay in Canada, except for illness and injuries that are work related. Some employees may be entitled to an allowance from the Employment Insurance due to their social security’s contributions. Many employers choose to provide employees with sick leave and pay for a certain number of days of illness, which may be eligible for government Employment Insurance premium reductions.

Every province/territory organises the number of days employees are entitled to unpaid leave, as follows:

Alberta
British Columbia, Nova Scotia (can be used to care for a family member or doctor’s
appointment in Nova Scotia as well):
Manitoba:
Federal jurisdiction:
New Brunswick, Northwest Territories:
Newfoundland and Labrador (30 days of employment):
Prince Edward Island:
Ontario:
Quebec:
Saskatchewan:
Nunavut:
Yukon:

The remaining provinces don’t impose a sick leave entitlement on employers, leaving it to the company’s discretion.

Employees who have been working for their employers for at least three months are protected against dismissal, demotion, and layoffs during their absence caused by illness. Depending on the province, this can be up to 17 weeks. Employees on sick leave keep on accruing pension, health, seniority, and disability benefits as long as they keep on making their contributions, which obliges employers to also keep on making their share of contributions.

Employers can request medical proof of illness if the leave lasts for more than three days. If an employer requests a written medical certificate within 15 days of the employee’s return to work, employees must provide them with one. Other leaves, such as parental, compassionate, and disappearance, can be interrupted to take a sick leave and resumed immediately after the sick leave ends.

Maternity leave

Pregnant employees are entitled to 15 weeks minimum and up to 17 weeks (12 weeks in case of a miscarriage or stillbirth) of maternity leave paid by the government through the Employment Insurance. The cash benefit is 55% of the employee’s average salary, capped at CAD$595 per week; however, employers can choose to top up the employee’s allowance. In Quebec, the government payment is capped at CAD$900.

To be eligible for a paid leave, an employee must have worked and accumulated 600 insured hours in 52 weeks. The leave length varies by province/territory, as follows:

Federal jurisdiction, Alberta, Nova Scotia: 16 weeks

Ontario, British Columbia, Manitoba (after seven months of employment), New Brunswick, Newfoundland and Labrador (20 weeks of employment), Prince Edward Island (20 weeks of employment), Northwest Territories, Nunavut, Yukon (12 months of employment): 17 weeks

Quebec: 18 weeks

Saskatchewan: 19 weeks, including the primary caregiver of an adopted child. Can be extended by 6 weeks (for a total of 25 weeks) if there is a medical reason for not returning to work.

Paternity leave

There is no statutory paternity leave in Canada, except in Quebec, where employees are entitled to five uninterrupted weeks of leave. The five weeks of paternity leave are part of the leave entitlement bank from their parental leave. The leave is paid by the Social Security authorities, as described in the Parental Leave section.

Five-day leave

Quebec only: biological and adoptive parents may be absent from work for five days (the first two are paid) for the birth or adoption of a child or a termination of pregnancy, which occurs as of the 20th week of pregnancy.

Employees are entitled to this leave regardless of the length of their employment. However, if the mother is already on maternity leave or the father is on paternity leave, they are not entitled to this leave.

Parental leave

All parents are entitled to a parental leave after birth or adoption, which can be taken at the same time by both parents. Length of a leave varies by province/territory and is divided as desired by the parents. The leave is paid by Social Security, also called Service Canada, through the Employment Insurance. The benefit equals to 55% of the employee’s average salary, capped at CAD$595 weekly (CAD$900 in Quebec), but some employers choose to top the leave pay up to 100%.

Federal: 71 weeks combined if both parents take it

Alberta, British Columbia, New Brunswick, Prince Edward Island: 62 weeks

Manitoba (must have been employed for at least 7 months), Yukon (12 months of employment): 63 weeks

Ontario, Newfoundland and Labrador (20 weeks of employment), Nova Scotia, Northwest Territories (in NT, total of 69 weeks if shared between parents): 61 weeks

Quebec: 78 weeks for biological parents, inclusive of paternity and maternity leave. In case of adoption, each parent is entitled to 65 weeks.

Saskatchewan: The parent that was on maternity or adoption leave is eligible for 59 weeks of parental leave. Parents who didn’t take either maternity or adoption leave are eligible for up to 71 weeks.

Nunavut: 37 weeks. Maternity and parental leave combined cannot exceed 52 weeks.

Parental leave must be used within the first year of the child’s birth. To be eligible for the paid leave, the employee must have been employed for at least three months and made contributions to Social Security.

Employees on leave are protected from being dismissed and have the right to return to their previous job at the end of the leave. Employment benefits keep on building up during their absence, including seniority.

Personal & family responsibility leave

Employees are entitled to a minimum of three days per year to a personal leave after having been employed for three months.

The following circumstances can be used for taking a personal leave:

Duration may vary by province/territory, as follows:

Bereavement leave

Employees are entitled to a minimum of three days of a bereavement leave, following the death of an immediate family member. Employees become eligible for a bereavement leave after three months of employment. Duration may vary by province/territory as follows:

Compassionate care leave

Employees are entitled to an unpaid compassionate leave to care for a family member who has a serious medical condition or is at risk of death, which varies by province/territory as follows:

Federal jurisdiction, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Manitoba, Prince Edward Island, Saskatchewan, Yukon: 28 weeks within any 52-week period

Alberta, British Columbia, Quebec, Northwest Territories: 27 weeks within any 52-week period (in Quebec, the first two days are paid)

All other provinces/territories: eight weeks within any 52-week period

The leave is paid by the Employment Insurance at a rate of 55% of an employee’s average salary and is capped at CAD$595 weekly.

Domestic violence & sexual assault leave

Employees are entitled to a minimum of ten days, up to 26 weeks of leave, paid or unpaid, depending on the province/territory, as follows:

Critical illness leave

Employees are entitled to time off in case of a family member’s critical illness. Duration may vary by province/territory as follows:

Employees may be eligible for critically ill or injured children/adult benefits under the federal EI program.

Child death leave & crime-related child disappearance leave

Employees are entitled to a 52-week unpaid leave, following a crime-related disappearance of a child, and 104 weeks in case of a child’s death. In New Brunswick, each leave is 37 weeks long. In Quebec and Saskatchewan, the leave for disappearance of a child is 104 weeks. The Labour Standards Act doesn’t cover this leave in Nunavut.

Employees may be entitled to financial assistance from the Federal Income Support for Parents of Murdered or Missing Children grant.

Aboriginal employee leave

Federally regulated employees with aboriginal heritage are entitled to five days of unpaid leave yearly to observe aboriginal customs and events. These can include cultural activities, including hunting, harvesting and fishing, holidays, and traditional ceremonies.

To be eligible, the employee must have been working for the company for at least three months.

Other leaves

Certain provinces have specific leaves for certain situations, as follows:

Covid-19 leave

Employees are entitled to an unpaid leave if they need to quarantine, shield, and/or are recovering from the virus or caring for a relative who tested positive. The length of the leave depends on the province and specifics of the situation. The government of Canada is also offering various benefits to Canadians who are unable to work due to COVID-19, including the Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB), and Canada Recovery Caregiving Benefit (CRCB).

In Alberta, employees are entitled to 14 days of unpaid leave due to reasons related to COVID-19.

British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Ontario, Saskatchewan, and Prince Edward Island don’t specify how long the unpaid leave can last. Employers should refer to the relevant regulation in each province to determine who is eligible and to follow the proper protocol/procedure.

This leave is in place until the end of September 2021.

Leave of absence for members of the reserve force

Employees who have been working for their employer for at least three months are entitled to unpaid leave to assist the country in the following situations:

Duration of a leave may vary by province/territory, as follows:

General Employee Pay Regulations in Canada

Minimum wage

Canadian minimum wage is set by each province/territory. The hourly rates for full-time employees are indicated below:

Frequency

Salaries are usually paid on a monthly or semi-monthly basis. Some provinces/territories impose a pay frequency on employers. Many employers also pay on a weekly or bi-weekly basis.

Payday

Monthly pay schedules are usually paid on the last day of the month, while semi-monthly pay schedules are usually paid on the first and the fifteenth day of the month, or the sixteenth and the last day of the month. Some provinces/territories, however, may impose a pay date on employers.

Payment requirements

It isn’t mandatory to make payments to both employees and the authorities from a Canadian bank account.

Maximum Working Hours & Overtime Laws in Canada

Standard hours

The standard working hours in Canada are Monday to Friday, between 8:00 a.m. or 8:30 a.m. and 5 p.m., for a total of 37.5 – 40 hours per week (7.5 or 8 hours per day).

Maximum hours

In most cases, employees can work a maximum of 48 hours weekly; however, after the standard 8 hours daily or 40 hours weekly, employers must compensate employees with overtime pay. The exact amount depends on the employee’s regular schedule, role, and what is agreed upon in the contract. Employers cannot force employees to work more than their scheduled hours. There’s no limitation on how many hours an employee can work in New Brunswick.

Opt-out option

Employers and employees can agree through an opt-out agreement to opt out of the maximum weekly working hours imposed by the Working Time Regulations. Employees may also enter into an hours averaging plan with their employer.

Overtime compensation

Hours worked beyond (1) the standard weekly 40 in British Columbia, Manitoba, Newfoundland and Labrador, Quebec, Saskatchewan, Northwest Territories, Nunavut, and Yukon (44 in Ontario, Alberta, New Brunswick; 48 in Nova Scotia and Prince Edward Island) and (2) 40 hours for federally regulated employees except when special regulations or modified work schedules apply trigger overtime pay. Overtime compensation is a fixed rate of 1.5 times the employee’s regular wage.

Weeks that contain holidays must reduce the standard working hours by 8 hours for each holiday. In a week when a holiday occurs, overtime would apply after 32 hours.

The Federal Employment Standards dictate that employees can choose to substitute overtime pay for time off at a rate of 1.5 hours for every overtime hour worked.

Certain professions, such as doctors and lawyers, and high-level salaried employees, superintendents, and managers aren’t entitled to overtime pay. However, other salaried exempt employees are entitled to overtime pay.

In Ontario, information technology professionals are usually excluded from many of the protections awarded in the Employment Standards Act, including daily/weekly limits on hours of work, daily rest periods, time off between shifts, eating periods, and overtime pay. This is also true of high technology professionals in BC. Specific exclusions vary according to each province/territory.

Break rights

Employees are entitled to a 30-minute unpaid meal break for every five hours of work (one hour in Newfoundland and Labrador). If the employee is required to remain available for work during their break, employers are required to provide employees with paid meal breaks.

Although coffee breaks aren’t mandatory, if an employer decides to grant it to an employee, it must be paid.

Employees are also entitled to one full day of rest each week, which usually falls on a Sunday. In British Columbia and Quebec, an employee must have at least 32 straight hours free from work each week.

Night workers

There are no limitations on the timing of an employee’s night shift schedule other than the statutory rest breaks already mentioned above. Moreover, employers aren’t required to provide transportation to and from work if an employee works late.

Time-tracking Obligations in Canada

For 36 months, employers must keep records of all hours worked by employees regardless of whether the employee is paid hourly or is salaried or is entitled to overtime pay. Some records are required to be retained for longer (e.g., retention of vacation time records in Ontario are required to be kept for five years).

Penalties

Fines start at CAD$500 for one infraction, but the penalties become more severe if an employer violates the time tracking repeatedly (CAD$2,500 for the second time, CAD$10,000 for the third time) and even more if an employer is caught with unpaid overtime claims due to the lack of time tracking.

Working From Home Policy in Canada

The COVID-19 pandemic has pushed companies into remote work. While some employers may plan to bring employees back to the office fully or partially when it’s safe to do so, many others have seen the benefits of the new arrangement and plan on carrying on with it for the foreseeable future. Companies adhering to remote work need to update or create Work from Home (WFH) policies and decide how requests for remote work are to be handled, who is entitled to it, and who is responsible for additional costs brought by working from home (e.g., a workstation setup).

In addition to the location-independent arrangement, federally regulated employees in Canada who have been employed for six months have the right to request schedule flexibility on a permanent or temporary basis. Requests must be made in writing, and employers may refuse them based on the following grounds only:

Employers have 30 days to respond to the request, must not discriminate when making their decision, must give it reasonable consideration, and must provide the employee with a written explanation, including in case of rejection.

General guidelines

Companies employing people working from home must (1) ensure that their workplace policies apply to WFH or (2) create new policies to accommodate it. These policies should address eligibility criteria and time limitations, requirements for any physical workspace, as well as guidelines on the supervision, performance management, time tracking, privacy, confidentiality, IT and document management, and insurance. Furthermore, employers should also be aware of their obligations under applicable legislation, including employment standards, health and safety, and human rights.

The Canadian government recommends that employers and employees create a written telework agreement or policy that addresses the main points of the work from home arrangement, which outlines the expectation of both sides. The most important aspects to address are as follows:

Moreover, employers should consider the following points for those working from home:

Employers aren’t obligated to pay for the employees’ WFH workstations or contribute to any additional costs, except if those are incurred for the business. Employees that cover their home office expenses may be entitled to a tax deduction, for which they need to ask their employer to complete the CRA Form T2200 Declaration of Conditions of Employment.

Employers should be aware that employees working from home who are non-exempt are still entitled to be paid at a rate of 1.5 times their ordinary hourly wage if they work beyond the agreed hours. Employers should also reiterate the employees’ responsibilities regarding passwords, system protections, and data security.

Health and safety at home

Employers have the same duty in regards to the health and safety of employees working from home as in regards to that of the employees working from the office. Employers must provide employees with a safe working environment and to take reasonable precautions to protect the health and safety of workers. Home offices are considered extensions of the company’s workspace.

However, it’s important to highlight that some health and safety authorities define the term workplace broadly. In Ontario, there is a statutory exemption of the applicability of the Ontario Health and Safety Authority of work performed in a private residence from the owner or an occupant. Given the recent developments in response to COVID-19, the nature and scope of this exemption remains unsettled.

As with employees who go to the office, employers must ensure that their workers’ compensation policy covers employees working from home. Employers remain liable, for employees who are injured while working from home are entitled to workers’ compensation if the injury arose out of or in the course of their employment, and must report it to the workplace safety authority and document the incident.

While some health and safety concerns are obviated by the removal of workers from the physical workspace, remote workers may face different health and safety risks. Opportunities for in-person workplace violence and harassment may be reduced by social isolation, but opportunities for online bullying and harassment and instances of domestic violence may increase. Employers should reiterate workers’ responsibilities to contribute to a discrimination- and harassment-free workplace, including the remote workplace, and ensure policies are specifically updated to encompass virtual violations of the policy.

In addition, employers may have special obligations under occupational health and safety legislation to take every reasonable precaution to protect workers from domestic violence in the workplace. Employers should (1) be alert to the signs of domestic violence and (2) work with employees to develop precautions such as updating emergency contacts, keeping in regular contact with employees, and contracting authorities to perform wellness checks if necessary.

From a health and safety viewpoint, employers should consider the workstation design and arrangement (ergonomics and home work environment), procedures in case of an emergency, work scheduling and distribution, and the mental impact of working alone on an employee, when agreeing to telework. The Occupational Health and Safety Act requires employers to ensure employees conduct an assessment of their home workspace and report hazards. If employees have ergonomic issues in their home workspace, the employer has an obligation to investigate and try to resolve the issues.

Employers have the right to make on-site visits of the employee’s remote work location with a 48-hours advance notice so they can determine whether it’s safe and free from hazards and to maintain, repair, inspect, or retrieve company-owned equipment, software, data, or supplies. Such visits have to be agreed to in the employment contract. Alternatively, employers can ask employees to fill out a questionnaire or a checklist about the work setup and to send photos or videos of the workstation.

The Canadian government also places responsibility on employers in regards to employees working alone, where they should minimize the risks associated with isolation, including establishing a system of communication and periodic check-ins with the employee.

Security of information

Companies have the same duty to safeguard confidential and personal information of employees, the company, and its clients regardless of place of work. Employers should be extra careful that personal data and confidentiality isn’t being breached as a consequence of employees’ working and having access to the company’s system from home.

Canadian privacy laws require organisations to implement reasonable and appropriate safeguards in order to protect personal information in their custody and control. Employers should ensure the employees who have access to the company’s internal system and data have secure software guaranteeing the safety of data that is exchanged, transmitted, stored, and disposed of.

Some recommended steps companies can take to safeguard information are installing an antivirus and a VPN on the computer, using only encrypted Internet connections, and training employees to recognize potential threats.

Workspace Guidelines in Canada

A home office should meet the same health and safety requirements as those available at the office, where possible. An appropriate workstation at home may include the following:

Working conditions

Across the country, remote employees have the same rights and entitlements and are protected by the same Employment Standards Act statutes as office employees — for example, right of being protected against discrimination, harassment, bullying, and domestic violence; entitlement to overtime, work breaks, and maximum working hours regardless of the work location. Employers have the obligation to record hours worked by employees, excluding exempt employees, as described in the Hours of Work section. 

If an employee receives a fixed salary, which remains unchanged (with the exception of overtime), the employer must record only the excess hours. 

Moreover, employers have the obligation to accommodate employees to the point of undue hardship, which goes beyond a financial burden. This includes not discriminating against entitlement and protecting employees’ human rights as described in the Human Rights Code. In a work-from-home context, an employer may have to be more flexible with expected working hours for employees, ongoing child care or eldercare responsibilities in their homes, and/or accommodating employees with physical disabilities who are required to perform their duties from their homes and may require additional support to establish or modify their working space. This duty may be triggered when employees request office furniture, specific devices, or other tools. While employers don’t have a general obligation to furnish home offices, they should review equipment with accommodation responsibility in mind.

As for employee surveillance, employers are allowed to monitor employees’ work computer, email, and telephone usage to determine whether employees are actively working. It is recommended that employers have an IT policy that expressly explains the employees’ rights. However, other ways of tracking, such as intercepting calls, taking random screenshots, and monitoring keystrokes can be ruled invasive and not justified for general use, depending on the circumstances.

Canadian employers are legally allowed to use such tracking software only if they inform their employees that they will be monitored and in what ways. However, the Personal Information Protect Act imposes limits on the scope of technological monitoring to avoid over-collection of personal data. Monitoring should have a purpose and be conducted in a reasonable manner. The best way for employers to implement telework surveillance is by getting the employee’s consent. 

Terms & Conditions of Employment in Canada

Probation period

In Canada, the probationary period varies by province/territory as follows:

IP rights

Employers own the copyright of works created by their employees—who aren’t contractors—under an employment contract if the works were created in the course of the employment.

Employees who invent something during the course of their employment are presumed to own the intellectual property rights in their invention unless there is an express term to the contrary in their employment contract or they were employed for the purposes of inventing.

Employers should include clauses regarding intellectual property ownership and transfer rights in the employment agreements, including all moral rights in addition to ownership.

Restraint of trade

It’s fairly common in Canada for employers to include employment agreement clauses (1) requiring exclusive service to the employer during the course of employment and/or (2) restricting employees from holding other jobs to exclude a conflict of interest.

The enforceability of these clauses depends on the level of restriction imposed on the employees. Broad clauses restricting employees from holding any other employment regardless of the nature and character of that employment are unlikely to be enforceable, while specific clauses that prohibit working with competitors or holding employment that is likely to result in a conflict of interest are more likely to be enforceable.

Employers can restrict employees’ post-employment activities through restrictive covenants that limit or prohibit competition with the employer’s business or the solicitation of customers, suppliers, employees, or contractors. Restrictive covenants in employment agreements are prima facie unenforceable unless the covenant is reasonable between the parties and in relation to the public interest, and the terms are unambiguous. To be reasonable, a covenant must minimally impair the employee’s ability to earn a living.

Employers can also attempt to limit employees’ post-employment activities through the use of confidentiality clauses. Confidentiality clauses limiting the use and disclosure of non-public, proprietary information about the employer’s business during and following employment are generally enforceable.

There is no obligation for an employer to pay a former employee while they are subject to a post-employment restrictive covenant or confidentiality clause, but a restrictive covenant or confidentiality clause will be valid only if consideration is provided at the time the covenant or clause is imposed. If the covenant is imposed at the point of hire, then the offer of employment is sufficient consideration. However, if the covenant is imposed at a later date, additional payment or benefit to the employee will be required.

General Employee Rights in Canada

In Canada, each province/territory is free to set the minimum employment standards legislation that governs the employment relationship for that region. Some employee rights have already been discussed in this country guide and are detailed under their specific sections, such as minimum wage, hours of work and overtime, leaves and termination.

Employment contract

In Canada, employment is regulated by statutes and by common law in all provinces/territories except for Quebec, where civil law governs. With the exception of Quebec, there are no rules governing the language of the employment contract, which is often in English. In Quebec, employment agreements must be drafted in French but can also be accompanied by an English translation.

Even though written employment contracts aren’t mandatory, most employers provide employees with written contracts to define the terms of the relationship, including, most importantly, rights on termination.

The employment standards legislation of each province/territory sets out the minimum statutory rights of employees, which are implied terms of the agreement. However, the minimum requirements don’t prohibit employers and employees from agreeing to greater rights or benefits.

Payslip

Employees have the right to receive payslips when they get paid, which can be done electronically as long as employees get access to them confidentially. Employers must provide payslips to be in either English or French, as preferred by the employee.

Payslips must include the following:

Employers who don’t provide payslips to employees are fined CAD$25 per day of failure. The minimum penalty is CAD$100 and the maximum is CAD$2,500.

Flexible working

Employees working for federally regulated companies (such as airlines, radio/television, Schedule 1 banks, and inter-provincial/territorial trucking) have the right to request flexible work arrangements from their employers. Flexible work (“flex work”) arrangements can be requested on a permanent or temporary basis and can alter the number of hours worked, work schedule, or location.

To request flex work, employees must meet the following criteria:

Employers have 30 days to respond in writing to the request, which they can approve as is or in part, propose an alternative to, or deny. Employees cannot suffer any consequences to their employment because of the request.

Employers can deny the request, based on the following reasons:

Health and safety

Employers must provide and maintain a safe and healthy working environment for employees. Since this is a legal responsibility, employers have various obligations regarding the design, installation, operation, use, or maintenance of protective devices, machinery, equipment, buildings, and structures, among other things. Each jurisdiction prescribes its own detailed standards regarding workplace health and safety.

In Ontario, employees are protected from being dismissed, demoted, or penalized for raising health and safety concerns, seeking enforcement of safety regulations, and refusing to perform unsafe work according to the Occupational Health and Safety Act. If an employee is terminated for raising such concerns, they have a statutory right to reinstatement.

Unsafe work

As part of Occupational Health and Safety regimes in Canada, employees have the right to refuse unsafe work as long as they have reasonable cause to believe that it presents a danger. Specifically, the regime states that an employee may refuse to do the following:

Equal pay

In Canada, employers cannot pay one employee less than another on the basis of gender if they perform the same kind of work in the same establishment; their work requires substantially the same skill, effort, and responsibility; and their work is performed under similar working conditions. Therefore, in most provinces/territories, employees who do equal work are entitled to equal pay (e.g., Ontario has equal pay, whereas BC doesn’t).

Scheduling notice

Employees, whether hourly or salaried, whose schedule can change weekly have the right to be notified of a new shift schedule at least four days in advance. In unforeseen circumstances, the notice may be of a minimum of 24 hours (e.g., in Alberta, it’s 24 hours; in Saskatchewan, it’s a week).

Employee Protections in Canada

Protection from discrimination & unequity

Under the federal regime, the Canadian Human Rights Act (CHRA) prohibits discrimination in employment, from the interview stage to termination, based on the following grounds:

Under the federal regime, alongside the CHRA, there is the Employment Equity Act (EEA), which protects the rights of the following groups and requires the employer to use measures that improve employment opportunities for these groups:

Employers must prepare and implement an employment equity plan that removes barriers and achieves equitable representation while maintaining equity records. Failure to comply with the requirements imposed by the EEA could result in monetary penalties.

Protection from harassment and violence

Employers and their policy committees (if applicable) have the obligation to care for the welfare of the employees and create a safe place for workers (physically, verbally, and mentally). Employers must develop a policy on the prevention of workplace harassment and violence. They also have to clarify behavioural expectations and notify employees of their rights if they feel they have been harassed or discriminated against. Furthermore, employers should carry out workplace assessments to identify risk factors, and within six months develop and implement preventative measures that address those risks. In Ontario, the legislation outlines that employers have 90 days to carry out an investigation into the allegations.

Employers must also provide employees with a training program that addresses workplace harassment and violence. If an employee makes a complaint, employers mustn’t disclose their identity and are obliged to act.

Protection against dismissal

Employees in certain situations benefit from additional protection against being dismissed. Employees taking certain leaves—including but not limited to maternity, parental, domestic violence, compassionate and critical illness—are all protected from being dismissed during the leave (with the protection periods varying by province/territory). In addition, the Human Rights Code provides protection from any dismissal (1) motivated by a form of discrimination or (2) performed in reprisal for the employee’s attempt to enforce their rights under human rights legislation.

Whistleblower protection

Employees are protected from reprisals by their employers for exercising their legal rights, demanding that their employers comply with legal requirements, and making complaints or reporting unlawful conduct to law enforcement officials.

In Canada, it’s a criminal offence to threaten an employee with disciplinary action, demotion, or termination so they don’t provide information to law enforcement officials about an offence by the employer, their officers, directors, or other employees.

Data protection

Employers have the duty to protect employees’ data. There are 10 basic principles that govern data protection, which extend to the collection, use or disclosure of employees’ personal information: consent, accountability, accuracy, limiting collection and use, identifying purposes, safeguards, openness, challenging compliance, individual access and disclosure, and retention.

In Quebec, British Columbia, and Alberta, there is additional legislation regarding employees’ personal data that requires employers to inform employees of the purpose of collecting data, which limits the data collected, used or disclosed to be used solely and reasonably for the purposes of recruitment, management, or dismissal. Employees must also be notified in advance if the information is to be transferred abroad for any purpose.

Outside British Columbia, Alberta, Quebec, and the federal jurisdiction, there is no binding privacy legislation that governs private-sector employers, other than employees’ personal health information.

Protection in case of a business transfer

Employees aren’t specifically protected from dismissal either before or after a business transfer. During a business ownership transfer through shares transactions, employees, whether unionized or not, retain their uninterrupted employment.

On the other hand, in an asset transaction the common law considers that the employees’ employment ends at the point of sale, even if they accept new employment with the purchaser. Employees cannot be transferred without their consent. If an employee refuses to accept an offer of employment with the new employer, this is not seen as a resignation from their employment, but it may impact their entitlements.

When it comes to statutory entitlements (vacation, leave, notice), most Canadian jurisdictions (including British Columbia and Ontario) consider employment to be uninterrupted. However, employers who aren’t willing to recognize the continuity of the accrued entitlements must make it explicit through the contract, although the contracts may not always be enforceable in court.

It isn’t mandatory to offer employees harmonized employment terms after a business transfer, but, in practice, most new employers offer similar employment as a result of terms reached during the transaction to minimize liability for dismissal pay and other employee entitlements.

Required Employee Benefits in Canada

Maternity-related reassignment

In some provinces/territories, such as Ontario, pregnant or nursing employees have the right to request a change in their duties or role if the present situation poses a health risk to them or their baby.

Requests for reassignment must (1) be done in writing and (2) include a confirmation letter from the doctor about the need for the change, specifying which duties must be stopped and for how long.

While employers are in the process of considering the request, employees are entitled to having a paid leave. If the employer finds the reassignment not to be practical or achievable, employees have the right to an unpaid protected leave for the period of impossible continued employment.

Benefits during a leave of absence

Employees can continue contributing to and participating in benefit plans when they take any job-protected leave of absence, including pregnancy and parental leave, personal emergency leave, or sick leave.

Workers' compensation

In every province/territory in Canada, it is an employee right to be covered under the statutory workers’ compensation and to receive compensation for injuries that happen at work. However, there are some exemptions.

Job Security in Canada

Union

Labour unions are relatively common in Canada, especially in the trade and manufacturing industries. Specific rules regarding joining a union and engaging in collective bargaining with the employer vary according to the province/territory. It’s important to note that in unionized workplaces employees don’t have a choice on whether to join the union.

Employees in certain industries and roles aren’t entitled to join a union or enter into a collective bargaining relationship with their employer. This applies to those in managerial functions or those who are employed in a confidential capacity in matters relating to labour relations.

Further, in many jurisdictions, employees who work in education, government, and specialised industries (e.g., agriculture) are governed by specific legislative schemes that establish labour relations regimes different from those under the general legislation. Unionized employees are governed by the relevant provincial/territorial relations act specifics.

Mandatory Employee Benefits in Canada

Pension

The Canada Pension Plan (or Québec Pension Plan) that is described under both Employer Contributions and Employee Contributions contributions is a mandatory social security benefit that employers and employees must contribute towards.

Employers and employees must contribute 5.45% of the employee’s taxable salary towards the benefit, capped at CAD$3,166.45 yearly. In Quebec, the contribution rate is 5.9%, capped at CAD$3,427.90.

Employment Insurance

Employment Insurance (EI) is part of the Canadian social security program that employers and employees must contribute towards. Employers contribute 2.212% of the employee’s taxable salary, capped at CAD$1,245.36. Employees contribute 1.58%, capped at CAD$889.54.

In Quebec, the employer’s contribution rate is 1.652%, capped at CAD$930.08 annually, and the employee’s contribution is 1.18%, capped at CAD$664.34 annually.

The EI contributions fund the unemployment benefits and employees’ leaves related to illness, maternity, paternity and parental leave, and compassionate care leave. The benefits pay is 55% of the employee’s average insurable weekly earnings, capped at CAD$595 weekly.

Depending on the reason for the benefit, the employee’s entitlement ranges from 14 to 45 weeks.

Workers’ compensation insurance

Most provinces/territories require companies in certain industries to register with the provincial/territorial workers’ compensation insurance.

Ontario

The insurance protects businesses from workers’ lawsuits, no-fault insurance, lost earnings, health care related to injuries at work, and supports return to work. The requirements and premiums related to the insurance depend on the company’s industry and the work environment.

Several industries are exempt from the mandatory workers’ compensation insurance. In Ontario, for example, engineers, private health care practices such as doctors and chiropractors, private daycares, travel agencies, photographers, and taxidermists are exempt. However, it’s important to remember that industries that are exempt in one province/territory may not be exempt in another and vice versa.

Non-Mandatory Employee Benefits in Canada

Non-mandatory benefits, as the name suggests, are offered by employers at their discretion. However, if the company decides to offer a benefit, they must ensure they comply with the rules against discrimination when extending the benefits and the benefit contribution to employees, their dependents, beneficiaries, or survivors. The grounds for that include but are not limited to age, sex, religion, or marital status of the employee.

Benefits can, however, vary among employees without being discriminatory if they are based on tenure, occupation, management level, and hours worked.

Some benefits trigger benefit-in-kind taxation for employees, as the Canadian Revenue Agency considers them part of the employee’s income. The following are taxable benefits:

Extended health care

Canada has high-quality free, public health care available for all residents. But it is common for companies to provide employees and their families with extended health care as a supplement. That often covers more affordable prescription drugs, hospital, paramedical practitioners, coverage abroad, dental care, and eye exams. Many employers elect to pay 100% of the benefit’s premium; alternatively, there is often a co-pay arrangement between the employer and employee.

Supplementary pension

The supplementary pension is a common benefit in Canada, where employers often contribute at least 50% of the pension premium. It can take various forms such as group Registered Retirement Savings Plan (RRSP), Canadian Savings Bonds, or Pension Plan.

The most common retirement benefit is the RRSP, where employers match the employees’ contributions (usually capped at 3% of the base salary).

Additional paid days off

Some employers give above the statutory minimum days off to their employees annually, often three to four weeks of paid vacation. Some go further by also giving up to an additional week of paid sick leave or personal emergency leave.

Maternity and parental leave

Some companies give employees above statutory maternity and parental leaves, where they top up the government paid leave to 75%–100% for three to four months.

Some employers also provide employees with a breastfeeding or pumping room for privacy.

Wellness programs

Employers often have different approaches to what’s included in wellness benefits, but these benefits tend to involve a gym membership either on-site for bigger companies or subsidised/discounted for smaller employers.

Another approach is to offer more flexibility to employees by creating allowances that are 100% funded by employers and that are allocated to wellness outside gym memberships and can range from yoga, Pilates, and digital and mental wellness to other classes and sports. This is known in Canada as health care spending, and the Canada Revenue Agency (CRA) dictates which expenses are eligible for the program.

Health coaching

Some companies provide employees with health coaching and health risk assessments. Programs vary and can help those suffering from a high cholesterol level, back and neck pain, stress, depression, diabetes, and musculoskeletal conditions.

Virtual care

Employers often provide employees with online employee assistance programmes (EAP) and virtual care. The virtual care is a 24/7 health tool, using which employees can access and talk to a doctor, nutritionist, naturopath, and mental health specialist.

Training

Some employers provide employees with learning and career opportunities that range from trainings and workshops to paid educational programs.

Flexible working

More and more employers in Canada are offering various flexible workplace arrangements to their employees. Flexibility often involves workplace flexibility (the option of full-time working from home or a hybrid arrangement) and/or flexible work hours (with mandatory core hours as part of reduced or compressed workweeks).

Transportation allowance

Some employers cover employee transportation costs to and from work — often in the form of paid travel passes for the public transportation, a transportation allowance, or even a company car for high-level employees.

Disability and life insurance

There are various insurance levels that employers choose to give employees in Canada. From short-term to long-term disability insurance to disability and death insurance. Many employers provide group plans at discounted rates for employees, which are often paid by employees and not employers.

Cash bonus

Companies often give employees annual incentives in the form of cash bonuses in Canada, some as high as 100% bonus pays, depending on the performance and role. There are no restrictions or guidelines on the type or size of bonuses that can be awarded to employees, but they trigger additional taxes for employees.

Another alternative popular with tech start-ups is Employee Stock Option Plans, especially for the executive level employees.

Employer Contributions in Canada

Social security

The Canadian social security is composed of the Canada Pension Plan (CPP) and Employment Insurance (EI) contributions. In 2019, the government introduced a seven-year gradual enhancement to the CPP, where both employers and employees must contribute a higher percentage to the pension.

Canada Pension Plan

Employers must contribute the same amount of CPP or QPP (if in Quebec) that employees do until the maximum annual contributions are reached. For the year of 2021, the CPP contribution rate (excluding Quebec) is 5.45%, capped at the CAD$3,166.45 annual contribution. For Quebec, the rate is 5.9%, capped at CAD$3,427.90.

Canada has established social security agreements with a number of countries for individuals who have worked in both countries and have been contributing to a pension plan elsewhere. The requirements under such agreements vary from agreement to agreement. More information can be found here.

Employment Insurance

The EI provides security for individuals who lose their jobs and/or end up in situations involving leaves such as maternity, parental, illness, adoption, and caring for seriously ill family members with serious risk of death.

For the year of 2021, the employer’s EI contribution rate (excluding Quebec) is 2.212%, capped at CAD$1,245.36 annually. For Quebec, the rate is 1.652%, capped at CAD$930.08 annually.

Employer health tax (EHT)

In certain provinces, employers pay taxes based on the total annual gross salaries earned by their employees who report to work, or are deemed to report for work, at an office or other permanent location of the employer located within the relevant jurisdiction:

Employers must include the salary of any non-resident employees earned from working in the province with the salaries of the employer’s regular employees who report for work there, even when there is no chargeback to the Canadian company for that salary.

Québec only

Labour standards

For companies where the total annual gross salaries exceed CAD$2 million, employers must pay a labour standard contribution of 0.07% on the employees’ annual gross salary, capped at CAD$83,500.

Health services fund (HSF)

Companies in sectors other than the primary and manufacturing must make contributions to the health services fund, based on payroll processed. For companies who process less than CAD$1 million, contribution is 1.65%. Those processing between CAD$1 million and CAD$6.5 million in payroll contribute up to 4.26%. And those processing more than CAD$6.5 million contribute 4.26%.

Québec Parental Insurance Plan (QPIP)

Both employers and employees in Quebec must also make contributions to the Québec Parental Insurance Plan (QPIP), based on the employee’s earnings. The employer’s contribution rate is 0.692%, capped at CAD$577.82.

Contribution to the Workforce Skills Development and Recognition Fund (WSDRF)

Employers in Quebec must also contribute to the workforce skills development by investing 1% of annual payroll in training or paying the non-invested difference to the Quebec government if the annual payroll exceeds CAD$2 million.

Commission des normes, de l'équité, de la santé et de la sécurité du travail (CNESST)

The role of CNESST is to promote employment rights and obligations and to ensure compliance among Quebec employers and employees. The contribution is based on the employer’s classification, and it is determined by establishing the average rate and calculating the unit rates. This contribution is company-specific, but the maximum yearly insurable salary is capped at CAD$83,500.

Employee Contributions in Canada

Canadian residents pay tax on their worldwide income (double taxation reliefs are applicable for multiple countries where Canada has signed international tax treaties). In contrast, non-residents are subject to tax on the income generated only within the country. To be considered a resident, an individual must meet specific rules. Cases are usually decided based on the application to an individual’s facts and their durable ties with Canada, as follows:

Individuals may also be considered residents if they spend more than 182 days a calendar year in Canada. Individuals who are deemed to be primary residents of another country are considered non-residents of Canada regardless of the Canadian residency rules.

Income tax

Income taxes are levied on both federal and provincial/territorial levels, but filing is done once with the federal government, which repasses the provincial/territorial portion accordingly. Quebec is the only province/territory that collects its own taxes on a separate tax return.

The Canadian tax system operates on a self-assessment basis. Individuals must determine their own liability for income taxes and file the required returns for any taxation year in which taxes are payable. Couples don’t file jointly.

Canadian federal income tax 2021

GROSS INCOME (CAD)PROGRESSIVE TAX RATE
Up to $49,02015%
$49,020 - $98,04020.5%
$98,040 - $151,97826%
$151,978 - $216,51129%
More than $216,51133%

Benefits in kind, also known as fringe benefits, are benefits employers provide employees, and they are taxed as employment income.

Additionally, Canada also levies income tax on a provincial/territorial level. Every province/territory has its individual rate. A full list can be found here.

Ontario income tax 2021

GROSS INCOME (CAD)PROGRESSIVE TAX RATE
Up to $45,10515%
$45,105 – $90,20020%
$90,200 – $109,75524%
More than $109,75525.75%
British Columbia income tax 2021

GROSS INCOME (CAD)PROGRESSIVE TAX RATE
Up to $42,1845.06%
$42,184 - $84,3697.7%
$84,369 - $96,86610.5%
$96,866 - $117,62312.29%
$117,623 - $159,48314.7%
$159,483 - $222,42016.8%
More than $222,42020.5%
Québec income tax 2021

GROSS INCOME (CAD)PROGRESSIVE TAX RATE
Up to $45,10515%
$45,105 – $90,20020%
$90,200 – $109,75524%
More than $109,75525.75%
Social security tax

The Canadian social security tax funds benefits for disability, death, family allowances, medical care, old age, sickness, and unemployment. The program is funded by contributions from both employers and employees and is composed of the Canada Pension Plan (CPP) or Québec Pension Plan (QPP) and Employment Insurance (EI).

Since 2019 and for the seven years following, the government will be increasing yearly the contribution from employers and employees into the CPP/QPP.

Canada Pension Plan

Employees must contribute the same amount of CPP or QPP that employers do until the maximum annual contributions are reached. For the year of 2021, the CPP contribution rate (excluding Quebec) is 5.45%, capped at the CAD$3,166.45 annual contribution. For Quebec, the rate is 5.9%, capped at CAD$3,427.90.

Canada has social security arrangements with multiple countries, designated to coordinate the pension plan of individuals who have lived and made contributions into two different plans. The requirements under the social security agreements vary according to the agreement with each individual country.

Employment Insurance

Employees’ contributions into the EI for the year of 2021 are 1.58% of their gross salary (excluding Quebec), capped at CAD$889.54 annually. For Quebec, the rate is 1.18%, capped at CAD$664.34 annually.

Provincial health premiums

Residents of Ontario, Northwest Territories, and Nunavut must contribute into the province’s/territory’s health system by paying a premium in these jurisdictions. This is applicable to those who are subject to income tax in the territories mentioned.

Ontario

The provincial/territorial health premium is based on the individual’s income and kicks in for those with taxable income higher than CAD$20,000. The premium is capped at CAD$900 annually. For those who pay taxes automatically, it is included as part of the income taxes deduction (otherwise the premium is paid when filing annual taxes).

Northwest Territories

Residents of Northwest Territories must contribute 2% of their taxable salaries to the health tax of the territory. Employers are responsible for deducting and remitting it to the authorities.

Nunavut

Residents of Nunavut must contribute 2% of their taxable salaries to the health tax of the territory. Employers are responsible for deducting and remitting it to the authorities.

Québec only

Québec Parental Insurance Plan (QPIP)

Both employers and employees in Quebec must make contributions into the Québec Parental Insurance Plan (QPIP), based on the employee’s taxable earnings. The employee’s contribution rate is 0.494%, capped at CAD$412.49.

Tax-Free Allowance in Canada

Rather than using a tax-free allowance system, Canada implements a system of tax credits for those employed.

Personal tax credits

Federal tax credit

The following credits apply for 2020:

* A federal proposal increases the basic/spouse/equivalent to spouse amounts from CAD$1,845 to CAD$1,984 for taxpayers with taxable income below the second top tax bracket, with the benefit of the proposed increased personal amounts eliminated when taxable income reaches the top tax bracket.

** In some circumstances, the unused portion of the credit can be transferred to a spouse, parent, grandparent, child, grandchild, sibling, aunt, uncle, niece, or nephew.

*** In Quebec, federal values are reduced by 16.5%.

Provincial/territorial tax credits

Each province/territory sets up its own amount for tax credits. Some provinces/territories have many personal tax credits that are similar to the federal personal tax credits.

Childcare expenses

Working parents who meet the following conditions qualify for a deduction on their child care expenses:

The deduction can be claimed for a variety of childcare services such as babysitting, day nursery, and attendance at a boarding school or camp.

If more than one person is supporting a child, the deduction generally must be taken by the supporting person with the lowest employment income. The maximum yearly deduction is generally CAD$8,000 per child under the age of 7 and CAD$5,000 per child between the ages of 7 to 16.

Other tax credits

Taxes not related to employment, applicable on a federal level:

Overview

CURRENCY
$ Canadian Dollar (CAD)
WORKING HOURS
37.5 - 40 hours per week (average)
PUBLIC/BANK HOLIDAYS
9 days per year
CAPITAL
Ottawa
LANGUAGE
English & French
REMOTE WORKERS
4.7 Million
MINIMUM HOURLY SALARY
CAD $11.81 - $16.00 depending on province / territory
TAX YEAR
1st Jan - 31st Dec
DATE FORMAT
MM / DD / YYYY and YYYY / MM / DD in Quebec
MISCLASSIFICATION PENALTIES
Penalties for misclassification trigger a variety of statutory rights and benefits, such as minimum wage, overtime, paid vacation, pension and employment insurance contribution. Moreover, the back payments also include an interest of either 10% or 20%, depending on the severity and number of cases.
FUN FACT
Canada is ranked as the most educated country in the world—more than 50% of the population has a post-secondary education.
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