Before hiring employees in Canada, there are a few important things you’ll need to know. Firstly, each province and territory in Canada has its own legislation when it comes to employment standards, and the intertwined federal and provincial legislation can make it challenging to understand which to meet.
Employees in Canada will typically expect an extended health benefits plan that goes beyond the free public healthcare they receive as residents, and if your organization employs Canadians directly, you will be liable for the day to day management of employee health and safety, including Worker’s Compensation.
We know this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform.
Get an overview of what you need to know when hiring in Canada below.
Employees typically work eight hours a day, 40 hours per week. Overtime is paid for every hour after 44 hours weekly in Ontario and 40 hours weekly in Québec. In most jurisdictions, overtime is paid at a rate of at least 150% the regular pay (or “time and a half”).
Employment contracts should be written in English in most provinces. However, all employment documents in Québec should be written in French.
Typically, the probationary period lasts three months for most provinces.
If an employee has been employed for at least three months, the employer is obligated to provide them with a written notice of termination or termination pay. The notice period for an employer dismissing an employee depends on how long the employee has been employed and can range between one and eight weeks.
While paid vacation time varies across provinces, typically employees that have been working for less than five years are entitled to a minimum of two weeks’ paid leave each year. However, some employers provide annual vacation benefits up to three to four weeks.
Policies around sick leave, including its duration and whether or not employers are required to pay for it, vary by province.
Parents who are caring for a newborn or newly adopted child may qualify for maternity and parental benefits. Those who qualify for Employment Insurance maternity benefits are entitled to receive up to 55% of their earnings (up to a maximum of $573 a week) for 15 weeks.
Maternity benefits can be followed by parental benefits (which can also be used by fathers):
In Québec, fathers are entitled to paternity leave for five weeks. In all other jurisdictions, fathers can use parental leave.
Employers of Canadian employees are required to deduct income tax, Canadian Pension Plan contributions, and Employment Insurance contributions. Canadian Pension Plan and Employment Insurance taxes are subject to a maximum contributions cap for employee and employer contributions combined, after which no additional taxes in these categories will be collected for the year. Current rates can be found here.
Employees in Canada are taxed federally from 15% to 33% depending on their income bracket. Provincial taxes are applied on top of these taxes with significant variations between provinces.
In Canada, employees are entitled to termination pay if they don’t receive a written notice of their termination. Termination pay is a lump sum payment equal to the regular wages that the employee would otherwise have been entitled to during the notice period. An employee earns vacation pay on their termination pay. For the employee to qualify for severance pay:
The severance pay amount is usually equal to the weekly wages multiplied by the number of years the employee has been employed (to a maximum of 26 weeks).
Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast.
We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities.
With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.
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