Canada

Currency CurrencyCanadian Dollar (CAD) Working Time Work Week40 hours Employer Taxes Employer Taxes 7.66% - 11.92%

Hire in Canada

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One of the reasons why hiring remote workers in Canada is such an attractive option for foreign companies is obviously the non-existing language barrier. What’s more, Canada’s workforce ranks among the best educated in the world, with more than half of the country’s active workers aged between 25 and 64 holding a degree from a tertiary education institution.

Basic Facts about Canada

  1. official state name Canada
  2. capital Ottawa
  3. population 37.74 million
  4. languages English, French
  5. currency Canadian Dollar (CAD)
  6. time zones UTC -3.5 to UTC -8
  1. Show public holidays
    01 Jan New Year
    02 Apr Good Friday *
    05 Apr Easter Monday
    24 May Victoria Day *
    01 Jul Canada Day
    02 Aug Civic Holiday
    06 Sep Labour Day *
    11 Oct Thanksgiving Day *
    11 Nov Remembrance Day
    25 Dec Christmas Day
    26 Dec Boxing Day

    * movable holiday; There are several additional public holidays which are only observed in certain provinces and territories

Employment Contract

Although not legally required, it is best practice to put a written employment contract in place when hiring an employee in Canada, especially as it provides both parties with better legal grounds. 

Unless stated otherwise, employment contracts are considered to be indefinite – however, fixed-term contracts are possible. Regardless of their length, employment contracts in Canada should at least outline the following basic employment terms:

  • Identification of both parties 
  • Date of commencement (and employment duration for temporary contracts) 
  • Work location
  • Job title, duties and responsibilities 
  • Basic salary as well as other compensation and benefits
  • Working hours 
  • Total number of holidays
  • Notice periods for employment termination
  • Non-competition clause

Except for Quebec where language policies enforce the use of French, employment contracts in Canada should be written in English and state salaries and other compensation in Canadian Dollars. 

Probation Period

In most provinces and territories, probation periods usually last for three months – except for New Brunswick, Prince Edward Island and Yukon where probation periods can extend to up to six months. Regardless of their length, probation periods should always be clearly stated in an employee’s employment contract. 

Working time

Basic employment standards in Canada – including working time, sick pay, leave entitlements, taxation and notice periods – vary between provinces and territories. Unless stated otherwise, the information provided in this guide refers to industries and companies which are subject to federal regulations as detailed in Canada’s Labour Code. 

Working Hours and Breaks

In federally regulated industries, a standard working week is 40 hours, i.e. five eight-hour days, with a minimum weekly rest period of one full day – usually Sunday. In no case should an employee’s weekly working time exceed 48 hours. 

Overtime

Any work performed beyond standard working hours is considered overtime and must be remunerated at a rate of at least 150% of normal wages – common standard set by most provinces and territories. However, provincial and territorial legal standards vary when it comes to the definition of overtime and its limitations.

Payroll

Payroll cycles throughout Canada vary greatly. While some employees are paid on a weekly or bi-weekly basis, semi-monthly and monthly pay is equally possible. Under no circumstances should employees get paid less often than once a month. 

Minimum Wage

There is no national minimum wage in Canada. Instead, each province or territory has a separate minimum wage which is compulsory for all companies whose business is located within the territorial borders. As of 2021, minimum wages in Canada are set as follows:

  • Alberta: CAD 15.00 per hour
  • British Columbia: CAD 14.60 per hour
  • Manitoba: CAD 11.90 per hour
  • New Brunswick: CAD 11.70 per hour
  • Newfoundland and Labrador: CAD 12.15 per hour
  • Northwest Territories: CAD 13.46 per hour
  • Nova Scotia: CAD 12.55 per hour
  • Nunavut: CAD 16.00 per hour
  • Ontario: CAD 14.25 per hour
  • Prince Edward Island: CAD 12.85 per hour
  • Quebec: CAD 13.10 per hour
  • Saskatchewan: CAD 11.45 per hour
  • Yukon: CAD 13.71 per hour

Sick Pay

An employee under federal law who is unable to work because of sickness or injury is entitled to 17 weeks of unpaid sick leave. In case absence from work lasts for longer than three days, a medical certificate must be presented upon the employee’s return to work. 

Paid sick leave may be granted to an employee as an additional benefit. Some provinces and territories mandate a minimum number of paid sick days employees can claim. However, most provinces in Canada do not provide for paid sick leave.

Bonuses

There is no legislation in Canada which provides for a 13th salary. 

Taxes and Social Security Contribution

As of 2020, tax and social security contribution rates are set as follows:

taxes
Employers

15% federal corporate tax rate (8% – 16% provincial and territorial)

5% federal GST standard rate – five provinces have a Harmonized Sales Tax  (HST) of either 13% or 15%

employees

Federal income tax rates range from

15% to 33% *

provincial or territorial income tax: up to 25.75% *

social security
Employers

7.66% – 11.92% of employee’s salary including:

5.45% to Canada Pension Plan (CPP) – different pension plan in Quebec

2.21% to Employment Insurance (EI)

1.95% – 4.26% Employer Health Tax – only in some states

Additional charges apply in Quebec.

employees

7.03% of employee’s salary including:

5.45% to Canada Pension Plan (CPP) – different pension plan in Quebec

1.58% to Employment Insurance (EI)

Read more

Federal taxation of individual income is progressive. Tax brackets are as follows (percentage rates given only apply to income exceeding the respective tax bracket threshold):

– up to CAD 48,535: 15%

CAD 48,536 – CAD 97,069: CAD 7,280 + 20,5% on excesses

CAD 97,070 – CAD 150,473: CAD 17,229 + 26% on excesses

CAD 150,474 – CAD 214,368: CAD 31,115 + 29% on excesses

– over CAD 214,368: CAD 49,644 + 33%

In addition to federal income tax, employees in Canada also have to pay provincial or territorial income tax. Rates vary between provinces and territories with top rates ranging from 11.05% (Nunavut) to 25.75% (Québec).

Employee Benefits

Annual Leave

After completing one year of employment, employees in Canada are entitled to two weeks of paid annual leave – general standard in most but not all provinces. After five years of employment, annual leave increases to three weeks and after ten years, employees receive four weeks of paid annual vacation. 

In addition, employees receive vacation pay which depends on the amount of paid annual leave earned and which should be paid out to the employee at least 14 days prior to the commencement of the vacation. While provincial rates vary, federal legislation rules that vacation pay must be calculated as follows:

  • two weeks = 4% of annual earnings
  • three weeks = 6% of annual earnings
  • four weeks = 8% of annual earnings

Employees who fall under federal legislation also receive eleven paid days off on the occasion of the statutory holidays. As Canada’s provinces and territories have their own public holiday schedules, employees who fall under provincial or territorial law receive between six and nine paid public holidays per year.

Maternity Leave and Paternity Leave

Pregnant employees who fall under federal law can take up to 15 weeks of maternity leave during which they receive maternity benefits amounting to 55% of their usual wages – capped at CAD 595 per week. Depending on the province, maternity leave may be longer but, in return, unpaid. 

While paternity leave generally falls under parental leave, Quebec has introduced special unpaid paternity leave.

Parental Leave

Both mother and father of a newborn child are allowed to take parental leave which can be either 40 (standard) or 69 weeks (extended) – also applies to adoptive parents. While the benefit rate for standard parental leave is fixed at 55%, extended parental leave benefit only amounts to 33% of the parent’s normal wages – capped at CAD 357 per week. 

Parental leave is a family entitlement, i.e. the 40 (or 69) weeks have to be shared between both parents. The maximum amount of parental leave which can be taken by one parent is 35 weeks – 61 when opting for extended parental leave.

Additional Leave and Benefits

In addition to the leave entitlements mentioned above, employees who are employed under federal law can take time off under the following circumstances:

  • 5 days of bereavement leave
  • 28 weeks of unpaid compassionate care leave – given to employees who have a seriously ill family member they need to look after
  • 52 weeks of unpaid leave in case an employee’s child is missing and 104 weeks of unpaid leave in case an employee’s child dies
  • 5 days of either paid or unpaid personal leave which can be used to sort out family matters
  • 10 days of either paid or unpaid leave in case of family violence
  • unpaid leave for appearances at court

As statutory sick leave in Canada is generally unpaid, most employers offer their employees a paid sick leave scheme as well as additional health insurance plans.

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Employment termination

In addition to employment termination by default – i.e. in case of a fixed-term contract – resignation and mutual agreement, employment in Canada may be terminated due to one of the following reasons (non-exhaustive list):

  • collective dismissal – regulations vary between provinces and territories
  • redundancy
  • liquidation or other business-related reasons such as downsizing
  • breach of employment contract
  • summary dismissal due to gross misconduct, e.g. theft, dishonesty, harassment 
  • employee’s underperformance – in theory possible but hard to prove in practice

Under federal employment law, employers have to give their employees at least two weeks’ notice when terminating the employment – that is if the employee’s length of service exceeds three months.

However, notice periods vary between provinces and territories and range from one up to eight weeks. Pay in lieu of notice is possible. Notice period regulations do not apply to employees who are employed on the basis of a fixed-term contract. 

After having worked for an employer for no less than twelve months, employees can claim severance pay equal to two days’ pay for each completed year of service.

Hiring in Canada?

Not sure if you should start with a contractor or go ahead and hire a full-time teammate in Canada? The Lano platform makes it easy to go from freelance to full-time employee. Get expert guidance from the Lano team to compare your options and keep growing.