When hiring, negotiating, and doing business in Canada, it’s essential to stay up-to-date and compliant with all of Canada’s compensation and benefits laws. The country has strict employment laws, and it is best practice for employers to provide additional benefits.
Compensating Canadian Employees
Compensation rules vary by province in Canada. Most provinces have a fixed overtime rate of 1.5 times an employee’s regular pay. Since every province has different maximum work hours, overtime can begin at 40 and go up to 44 hours of work. Employers are not allowed to refuse overtime rates, and they cannot always force employees to work past their scheduled hours.
Managers and supervisors may be exempt from overtime pay requirements. Managers and supervisors are typically employees that have work duties that are managerial or supervisory in character and exercise discretion and independent management of the affairs of the company and have the ability to impact the employment of others (such as hiring or firing of employees, disciplining employees, and scheduling employees).
According to Canada payroll regulations, employers must pay their employees weekly, bi-weekly or semi-monthly. Every province sets its own minimum wage, which can change frequently. For example, Quebec’s minimum wage is CAD 15.25 as of May 01, 2023. Employees in federally regulated industries like air transportation and telecommunications are subject to the federal minimum wage rather than the provincial rates. Effective March 21, 2023, the federal minimum wage has been adjusted to CAD 16.65 per hour.
Canada benefits management
Performing Canada benefit management duties internationally can prove difficult. Provincial and federal employment laws are complex, and you may find that you have to hire a lawyer who understands federal and provincial law and regulation.
As a rule, the employer is responsible for workers’ compensation and is liable for employee health and safety. Sourcing additional health benefits in Canada may also prove difficult, as you can only do so if you have a head office in Canada or a signatory in the country.
Restrictions for benefits and compensation
Canadian employment regulations and laws impose restrictions on both benefits and compensation. Many of those restrictions pertain to a particular province and are not standard across the entire country. Before you establish a subsidiary in Canada, closely examine each province’s employment laws concerning benefits and compensation.
You can also choose to work with G-P to take some of the stress out of understanding Canada employment compliance. We do everything from providing statutory and supplemental benefit plans, to compliantly running payroll and appropriate tax witholding, and implementing a locally compliant employment contract. Contact us to learn more about our services today.
Canada competitive benefits planning
When you take your company to a new country, benefits planning will play a role in your expansion process. As you develop a Canada employee benefits plan, you will need to consider compliance and what provisions can make you competitive in the labor market.
Canada employee benefits plans
Creating a competitive benefits package will be one of the first steps in building a team internationally. You will need to consider the legal requirements set by Canadian employment laws and the expected provisions in the market at large. Providing the minimum benefits in the employment regulations will keep you compliant, but considering market expectations will help you attract and retain workers.
Every employer must provide a few required benefits, but most businesses also offer a range of supplemental provisions. These additional benefits will look different depending on the size of your company, your available resources, and what employees expect in your field. Possible extra benefits include:
- Health and dental insurance benefits which can include vision and several other benefits as well
- Sign-on bonus or productivity bonuses
- Severance packages
- Tuition reimbursement
- Remote work opportunities
- Different types of allowances such as transportation, home office, telephone or general allowance
Requirements for employee benefits
Canada’s employment laws mandate the following benefits for employees:
- Statutory pension plan contributions
- Employment insurance
- Workers’ compensation insurance
- Paid annual leave
- Paid statutory holidays
Statutory holidays and paid annual leave regulations will vary depending on the province where your employees work. Make sure you understand the rules in the applicable provinces to remain compliant. Please note that many employers provide more than the minimum leave requirements.
Designing employee benefit plans in Canada
Designing an employee benefits program requires careful planning. As an employer, you have to balance employees’ needs with your company’s resources to retain workers and stay in business. With these 3 steps, you can find the appropriate benefits plan for your international company.
1. Evaluate your resources.
Employees will receive benefits paid for by company earnings, so you need to evaluate your company resources. During this initial phase, you should take time to consider what your business goals are.
2. Assess employee needs.
While you want to remain within your company’s abilities, your benefits plan will not be meaningful if it doesn’t address employee needs. This phase can include surveying workers in your area or researching other company benefits packages to see what employees want and need.
The standard for supplementary benefits will change based on your area and industry. For instance, a transportation allowance might be more common in an urban region with a bus or train system. Think about your employees’ lifestyles and what benefits would suit them best.
3. Create a benefits plan.
Once you’ve determined what your business can afford and what your team needs, you can develop your employee benefits plan. As you work through this development phase, establish the required benefits first and decide upon supplemental benefits from there.
Average cost of benefits
Benefits expenses will vary depending on the size of a business, its priorities, and how many supplemental benefits it offers. All companies need to take the time to evaluate their benefits plans based on their financial capabilities.
How to calculate employee benefits
For most provinces in Canada, the national statutory pension plan requires an employer contribution of 5.7% as of 2023. For employment insurance, employers have to contribute 1.4 times the amount of worker premiums.
Regarding paid annual leave and holidays, employees should receive the amount of pay they would receive for a standard day of work. However, some particular rules may apply depending on the province or territory. This pay may be an hourly calculation or a portion of a salary.
How are employee benefits taxed in Canada?
A benefit is taxable if an employee is the primary beneficiary and receives an economic advantage because of it. Many benefits will fall under this category, like a transportation allowance or holiday bonus. Nontaxable benefits would typically fall under allowable expenses if they are submitted with receipts, such as cellphone or tuition reimbursement.
Supplemental employee health and pension benefits
Canada has a universal healthcare system, which allows eligible residents to benefit from public health insurance and get most care for free. However, public health insurance doesn’t cover every expense. For example, not every provincial healthcare system covers drug costs, prescription glasses, or dental care. Hence, many employers opt to offer a supplemental group insurance plan.
Similarly, outside of the required statutory pension contributions, many employers choose to offer a supplemental pension plan with additional contributions to help boost their employees’ retirement savings. While these plans are not required, they can make open positions more competitive in the market.
Partner with G-P to build your everywhere workforce
As your partner in global expansion, G-P will handle payroll and compliance, so you can focus on growing your team and scaling your business. Our market-leading Global Growth Platform™ is powered by the first fully customizable suite of global employment products and backed by the industry’s largest team of in-country HR and legal experts to streamline payroll management and help you offer competitive, compliant local benefits.
Learn more about our platform and request a proposal today.