Employer of Record in Canada

Businesses can only operate smoothly in Canada if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Canada below, to avoid any compliance issues.

Employment Contract Requirements

Each region has its own set of legislation, and the interplay between federal and provincial laws adds complexity to understanding and meeting the specific requirements. The employer should also provide a contract of employment that is signed by both parties detailing:

• The contract must include the employee's name
• Provide a comprehensive job description
• Outline the compensation details
• Include details regarding the termination process

Onboarding Process

We can help you get a new employee started in Canada quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Canada

The standard practice involves employees working eight hours per day, amounting to a total of 40 hours per week.

Overtime in Canada

Work conducted outside regular working hours is classified as overtime and must be compensated at a minimum rate of 150% of the standard wages. This is a widely accepted standard across most provinces and territories. However, there are variations in provincial and territorial legal standards regarding the definition of overtime and its constraints.

Probation Period in Canada

Probationary periods are common in Canada, approximately three months. While there is no statutory limit for probation, each province has established maximum allowable timelines, varying from one month to six months. In certain provinces, mandatory probationary periods may be imposed, offering employers a level of protection even when the specific probationary duration is not explicitly outlined in the employment agreement.

Fiscal Year in Canada

1 January - 31 December is the 12-month accounting period that businesses in Canada use for financial and tax reporting purposes.

Payroll Cycle in Canada

The payroll cycle in Canada is usually bi-monthly, with employees being paid before 15th and by the end of month.

Minimum Wage in Canada

The minimum wage for employees in Canada is typically 17.30 CAD per hour, amounting to ~2,768 CAD per month for a typical 40 hour work week.

Bonus Payments in Canada

Canada does not have any legislation that mandates the provision of a 13th salary.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 8.23% - 16.864% (varies by province) on top of the employee salary in Canada.

Employee Payroll Tax Contributions

In Canada , the typical estimation for employee payroll contributions cost is around 7.28% - 8.542% (varies by province)%.

Individual Income Tax Contributions

In Canada, employees are subject to federal taxation ranging from 15% to 33%, determined by their income bracket. Additionally, provincial taxes, which vary across the provinces, are imposed on top of these federal taxes.

Pension in Canada

The Canada Pension Plan retirement pension is a monthly taxable benefit that serves as an income replacement for retirees aged 60 and above. To qualify, individuals must have made at least one valid contribution to the CPP, which can stem from their work in Canada or be credited from a former spouse or common-law partner. Both employees and employers in Canada and Quebec are required to contribute to the pension plan.

In Canada, work permits and visas are essential for employers hiring foreign workers. The process involves understanding the different work permit types, meeting eligibility criteria, submitting applications, and paying required fees. Key visa types include the Temporary Work Permit, which allows foreign nationals to work for a limited time, the Open Work Permit, which allows workers to work for any employer, the LMIA-Based Work Permit, which requires a Labour Market Impact Assessment (LMIA) to prove the need for foreign workers, and the Post-Graduation Work Permit for international students who have completed their studies in Canada. Employers must ensure compliance with Canadian labor laws and immigration regulations when sponsoring foreign workers.

Mandatory Leave Entitlement in Canada

The annual leave entitlement in Canada is 14 days (varies by province) for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Canada

Employees get paid for public holidays, and if a holiday falls on a weekend, it shifts to the next workday.

Paid Time Off in Canada

Annual leave regulations in Canada differ from province to province. According to employment standards legislation, employees are entitled to two weeks of paid time off after completing one year of service. After five years of employment, the minimum entitlement for annual leave increases to three weeks, and it further extends to four weeks after completing 10 years of service.

Maternity Leave In Canada

A minimum of 15 weeks of maternity leave is guaranteed, with certain provinces establishing a higher baseline. Employers are not obligated to directly cover the costs of this leave, as Canadian social programs extend payments to support new parents during this period.

Paternity Leave In Canada

There is no specific statutory provision for paternity leave in Canada apart from the 35 weeks provided for either parent as parental leave. However, in Quebec, there is a provision for five weeks of paternity leave.

Sick Leave In Canada

In Canada, employees are entitled to protected time off for sick leave, with the specific annual entitlement varying across provinces. Policies concerning sick leave, encompassing its duration and whether employers are obligated to provide compensation for it, differ from province to province.

Parental Leave In Canada

The maximum duration of parental leave for a single parent in Canada is 35 weeks, extending to 61 weeks when opting for extended parental leave. But certain provinces may establish a higher maximum limit.

Bereavement Leave

Federal legislation ensures that employees are entitled to a minimum of five days of paid protected bereavement leave following the passing of an immediate family member.

Family Violence Leave

Employers are mandated to provide a minimum of 10 days of protected leave for employees to utilize in instances of family violence, with five of these days being compensated. Employees facing allegations of perpetrating family violence are not eligible for this leave.

Termination Process in Canada

Terminating employment contracts in Canada can be complicated. Unlike the concept of at-will termination commonly found in some jurisdictions, Canadian employers do not have the same flexibility, especially once the probationary period concludes. In Canada, terminations must be based on just cause to comply with legal requirements. The reasons for termination may include:

• Breach of employment contract
• Gross misconduct
• Redundancy
• Underperformance

Notice Period in Canada

According to federal employment regulations, employers are required to provide a minimum of two weeks' notice when terminating an employee, but this applies only if the employee has been in service for more than three months. It's important to note that notice periods differ across provinces and territories, ranging from one to eight weeks. Notice period regulations do not pertain to employees under fixed-term contracts.

Severance in Canada

Upon completing a minimum of twelve months of employment with an employer, individuals are entitled to severance pay equivalent to two days' pay for each year of service completed