How To Hire And Pay Employees In Canada

Emerald Technology's guide to hiring employees in Canada.

CURRENCY

Canadian Dollar is the official currency of Canada. Its currency symbol is $, CAD.

CAPITAL CITY

Ottawa has been the capital city of Canada since 1855, and gets its name from the Algonquin word for "trade".

LANGUAGE

English and French are the co-official languages of Canada and are by far the most spoken languages in the country.

POPULATION The current population of Canada is 38.25 Million 2021 based on World bank numbers.
PAYROLL FREQUENCY

Employees in Canada can be paid on either a weekly, bi-weekly, or monthly basis.

PUBLIC HOLIDAYS

Canada benefits from public holidays

GROW YOUR TEAM IN CANADA

NO ENTITY, NO PROBLEM

To start growing your team in Canada, you must establish a local entity- including an account with a local bank, a local office and an address registered as a subsidiary. This allows you to manage payroll, tax, benefits and compliance for your employees, but can take several months. 

Emerald can hire and payroll your workers, quickly and compliantly with their ready to go entity. Make growing your team simple with Emerald as a global partner.

PROS AND CONS OF HIRING IN CANADA

Canada is an attractive country with a rich history, diverse population and thriving economy. The country’s entrepreneurial spirit is one of the reasons companies are choosing to expand here.

Businesses that expand to Canada have the potential to grow quickly as the country’s economy is one of the strongest in the world, with low unemployment rates and a highly skilled and educated workforce. According to Statistics Canada, the workforce has a high rate of education attainment compared to other countries around the globe. Meaning, Canadian employees are well equipped with the skills necessary for success.

Canada has a very low corporate tax; this means you will be able to keep more of your businesses profits- gaining more competitive advantage. Also, start-ups have access to a wide range of financial programs and services to help them get started in the country.

The challenges of expanding to Canada can be difficult to companies with no experience. Gaining clarification on the government regulations and laws is needed, which can be challenging to navigate with no experience in the market.

WHY CANADA IS GOOD FOR REMOTE WORKERS

Canada’s labour market is one of the most competitive in the world. There are a number of reasons for this, including its advanced technology and generous social benefits. Canada is home to a thriving tech sector that benefits from being able to work from home. The country also has some great policies in place that make it easier and a good place for remote workers. It has easy access to healthcare and public services compared to other countries.

START GROWING YOUR REMOTE WORKFORCE NOW

WORKING TIME AND OVERTIME IN CANADA

The standard working hours in Canada can vary according to jurisdiction as well as job and industry, on average it is 40 hours per week. Overtime rules may also vary significantly across Canada, most jurisdictions have an overtime rate of 1.5 times the regular rate of pay. Some positions are exempt from hours of work and overtime rules such as doctors, lawyers, managers, supervisors, and IT professionals. Below is a guide per territory and province.

  • British Columbia

Daily: standard rate + 1/2 after 8 hours, double time after 12 hours

Weekly: standard rate + 1/2 after 40 hours

  • Alberta

Standard rate + 1/2 after 8 hours a day or 44 hours a week

  • Saskatchewan

Standard rate + 1/2 after 8 or 10 hours a day or week

  • Ontario

Standard rate + 1/2 after 44 hours a week

  • Quebec

Standard rate + 1/2 after 40 hours a week

  • New Brunswick

No less than minimum wage + 1/2 after 44 hours a week (minimum overtime wage rate is $17.25)

  • Nova Scotia and Prince Edwards Island

Standard rate + 1/2 after 48 hours a week

  • Newfoundland

Minimum overtime wage $17.10 in excess of 40 hours per week

  • Manitoba, Yukon, Northwest Territories, Nunavut and Federal 

Standard rate + 1/2 after 8 hours a day or 40 hours a week

ANNUAL LEAVE AND PUBLIC HOLIDAYS

Most employees are entitled to paid annual leave in Canada. In most jurisdictions employees are entitled to 2 weeks of annual leave after completing 12 months of service. Typically, employees in professional level positions can expect 3 – 4 weeks of annual leave.

Some jurisdictions offer vacation pay, where from the first day of employment an employee will begin to accrue an additional allowance for vacation, usually at 4% of the standard salary. Most jurisdictions do not allow a ‘use it or loose it’ policy.

Canada has 5 nationwide public holidays, there are also a number of other public holidays that are recognised in provinces and territories.

January 3rd: New Year's Day 
April 15th: Good Friday 
July 1st: Canada Day 
September 5th: Labour Day
December 25th: Christmas Day 

PROBATION PERIOD IN CANADA

A probation period in Canada is permitted for up to 3 months in most jurisdictions.

RESIGNATION AND DISMISSAL IN CANADA

Unlike the U.S, Canada does not recognise ‘at will’ dismissal. An employer must provide an employee with at least two weeks written notice of their intention to terminate employment. In lieu of written notice, the employer must pay two weeks salary at the regular rate to the employee. This will apply to any employees except for the following circumstances. An employee who has not completed three consecutive months of continuous employment, an employee who resigns, and employee dismissed with just cause, an employee on a fixed contract where an end date is included in the contract of employment and the work ends on this date, and an employee who is on a lay-off that does not account for a termination of employment. An employee who has completed at least 12 consecutive months of continuous employment qualifies for severance pay. Severance payments are 2 days for each full year of service. Notice periods, severance payments, and certain termination laws can vary between provinces and territories. Any collective agreements often provide protection against termination without cause in Canada. 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 must be paid by the next pay date.  

If an employee feels they have been unjustly dismissed they can request in writing, a written statement from their employer giving the reasons for dismissal. This request must be responded to within 15 days by the employer. Or the employee can file a complaint alleging unjust dismissal at any Labour Program office no later than 90 days from the date of the dismissal.

If an employee wishes to resign, then notice period will vary from province or territory. This will also depend on factors such as length of service and job specific factors. Many employers will choose to include in a contract of employment any notice period requirements.

In Canada, the concept of redundancy is not recognised as it is within other countries. Instead, layoffs are recognised. These are periods during which employers do not provide work to employees, but where the employee will retain certain reinstatement rights should the company situation improve. During layoffs, employees may keep their entitlement to benefits. For a layoff to turn into dismissal, a certain period must pass, this does vary as per the below.

  • Alberta : A layoff for one or more periods exceeding 90 days within a 120-day period 
  • Ontario: 35 weeks of layoff in a 53-week period when benefits are continued. Or 13 weeks of layoff in a 20-week period when no benefits are provided.
  • Labrador, Newfoundland, British Columbia and Yukon: 13 weeks of layoff in a 20-week period. 
  • Manitoba: 8 weeks of layoff in a 16-week period.
  • New Brunswick and Nova Scotia: A layoff lasting 12 months, or longer. 
  • Quebec: A layoff that is continuous for 6 months.
  • Prince Edward Island: Currently no time limit specified. 
  • Nunavut and Northwest Territories: 45 days of layoff within 60 consecutive days 
  • Saskatchewan: A layoff of 6 consecutive working days.

RESTRICTIVE COVENANTS

Any restrictions should go no further than to protect an employers legitimate business interests.  Non-complete clauses are generally not enforceable for employees unless they hold a senior, position of trust, or where a non-solicitation provision could have been sufficient. Non-compete clauses must be reasonable in scope geographically, in some authorities they must also specify the type of restricted employment, and restricted job functions. Non-solicitation agreements are generally more enforceable but must still be reasonable in terms of geographical scope, and length of time. Employee non-solicits can be enforceable if clear and reasonable. Any kind of enforcement and agreements will vary between province and territory.   

READY TO HIRE YOUR EMPLOYEES IN CANADA?

CONTRACT OF EMPLOYMENT IN CANADA

A written contract of employment is not required by law but is recommended. Canada has two official languages, French and English. If a contract is provided in writing this will be in either English or French depending on the territory or province.

MATERNITY LEAVE IN CANADA

Most jurisdictions in Canada offer 17 weeks of unpaid maternity leave, however, this can vary slightly. In most jurisdictions new parents also have the option to take parental leave between 52 and 65 weeks. There is the option to apply for government paid employment insurance (EI) benefits if the employee meets the eligibility requirements. Women on maternity leave maybe able to receive up to 55% of their standard salary, the maximum amount is 638 CAD per week. Parental leave maybe lower. One of the eligibility requirements will be based on the number of hours worked in the 12 months before the claim was requested.  

SICKNESS LEAVE IN CANADA

Sick leave is generally without pay in most jurisdictions, an exception to this is British Columbia which offers 5 days paid sick leave and Quebec offers 2 days. Employees can apply for paid sick leave from the government employment insurance (EI). A medical certificate must be provided and there are limits on the number of hours that must have been worked in the last 12 months. Employees maybe entitled to up to 55% of their standard salary. Some companies do offer company sick pay as a benefit to employees.

SOCIAL SECURITY

Every employee and employer in Canada must pay social security contributions. It is the employers responsibility to make the relevant deductions from an employees salary. Social security will assist in covering items such as retirement, unemployment, maternity leave, and sick leave.  

HEALTHCARE AND INSURANCE

Canada has a universal health care system funded through taxes known as Medicare. Each province and territory are responsible for its own healthcare services, so the standard of care may vary depending on location. Medicare will not cover all health services, generally it will only cover essential services such as emergency hospital treatment, primary care to diagnose and treat injuries or illness, and maternity services. However, this can vary according to the province or territory.

Additional services are available for people on low incomes, over the age of 65, and children. Anyone moving to Canada on a work visa can apply for a Medicare health insurance card in the province they will be moving to. This will take approximately three months to be issued, once this is issued the person is able to access Medicare coverage in their province or territory. Many Canadians choose to also enrol for private health insurance. It is estimated that approximately over 60% of Canadians have some form of private medical cover, commonly through an employer.    

Employment of

FOREIGN NATIONALS IN CANADA

Most foreign nationals will need a visa to work in Canada. There are two types of work permits in Canada, employer specific works permits, and open work permits.

An employer specific permit

An employer specific permit allows the applicant to work for a specific employer according to any conditions within the permit. It is important to consider that the applicant will only be authorised to work for one employer, generally at a specific location, for a certain duration. This type of permit will need a Labour Market Impact Assessment (LMIA) showing that there are no Canadian citizens or permanent residents available to fill the job. The employer is responsible for applying for a LMIA and paying the application fee.

Open work permit

Open work permits generally do not require a LIMA. A foreign national with a valid open work permit may work for multiple employers, in multiple locations. Some open work permits may have additional requirements or restrictions which must be respected by foreign nationals. Even with an open work permit, foreign nationals are not able to accept employment from employers listed as ineligible for having been non-compliant with IRCC regulations. The eligibility requirements, and application procedure vary depending on the situation, or skills the foreign national may meet.

Salary Taxes

MINIMUM WAGE IN CANADA

The federal minimum wage is $15.55 Canadian Dollars per hour (CAD). Provinces and territories do also set their own minimum wage, this varies from between $11.81 per to hour to $16 per hour.

INCOME TAX

The Canadian tax year runs from January to December. It is the employer’s responsibility to ensure taxes are paid from salaries before payments are made to employees. Income tax is composed of federal, provincial, and territorial income taxes based on the province and territories where employees are paid. Below are federal income tax rates. Provincial and territorial taxes vary.  

Tax Payable Salary
15% $0 - %50,197
20.5% $50,197 - $100,392
25% $100,392 - $155,625
29.38% $155,625 - $221,708
33% $221,708+

 

SALARY PAYMENTS IN CANADA

Employees in Canada can be paid on either a weekly, bi-weekly, or monthly basis.

SOCIAL SECURITY CONTRIBUTIONS IN CANADA

Social security in Canada is the responsibility of the employer to deduct from an employee’s salary before payment. Both the employer and employee are subject to social security contributions. Typical employer contributions are 7.46%, and employees 6.83%. This covers contributions for Employment Insurance and the Canada Pension Plan. Please note these can vary, and there maybe additional contributions depending on the province or territory the employee is based in.

WORKER MISCLASSIFICATION IN CANADA

Similar to other countries, Canada has strict rules on classifying individual contractors and full-time employees differently. Misclassifying your workers can put your business at risk of fines.

ENQUIRE ABOUT OUR GLOBAL HIRING SOLUTIONS

Start a conversation on how we can assist you to grow your remote team.