Employment Law

Canadian Employment Contract

Canadian employment law is governed by Canada's federal and provincial employment laws, so you need to familiarize yourself with all the information relevant to your location. Written contracts are not a legal employment requirement in Canada, but their use is highly recommended: Using a written employment contract ensures clear agreement on key employment terms such as benefits, salary/wages, paid time off and so on, reducing disputes later on possibility. Additionally, without a written contract, courts will read certain "implied terms" into the contract, which may be detrimental to the employer. Canada is a bilingual country, with both English and French widely spoken. In every province except Quebec (where French is the official language), English is the most common language used for employment contracts and is usually expected. By working with our Canadian PEO and employer of record, Remoly can provide draft employment contracts that comply with applicable federal and provincial regulations.

Fixed Term

Indefinite

Canadian Working Hours

Generally speaking, most employees work a standard five-day week, Monday through Friday. Provincial legislation determines working hour rules for each location. For example, in Ontario, the most populous province, the maximum working hours are 48 hours per week and 8 hours per day (or a standard working day). Note, however, that this can be extended by agreement between employer and employee. Other provinces work similarly (British Columbia, for example, expects 40 hours of work, above which overtime is required), but it's important to understand the laws of the industry and geographic area in which you're employed. For overtime, the rules (set by the province) usually require around 1.5-2.0 times the regular wage.

Holiday Policy

Vacation in Canada

Under federal law, the Canada Labor Act, nearly every employee in Canada has the legal right to paid time off. Most provinces have a federal minimum of two weeks of paid leave, while a few, such as Saskatchewan, have three weeks. After six years of continuous employment with the same employer, the minimum paid annual leave will increase to three weeks. Most employers across the country offer two to four weeks of paid time off, in addition to public holidays, with the amount of available paid time off increasing with the number of hours worked. Employees may also carry over unused vacation time into subsequent years, subject to consultation with their employer.

Taking Sick Leave in Canada

Under Canadian labor law, employees are entitled to at least five days of sick leave, including three days of paid sick leave after three months of employment. Additional days may be required under provincial law.

Maternity and Paternity Leave in Canada

Women who have worked continuously for at least six months can receive up to 17 weeks of paid maternity leave after submitting a medical certificate as proof. This leave can begin up to 12 weeks before the date of birth. In addition, each parent can take 37 weeks of unpaid parental leave, or 61 to 63 weeks of unpaid standard leave (depending on the province).

Employee Severance Pay and Termination in Canada

When terminating an employee in Canada, an employer must comply with a "reasonable" period of notice or provide payment in lieu of notice. The minimum notice period varies by location and may be set out in the employment contract. Several factors can be considered when determining a “reasonable” notice period, such as the employee’s age, the nature of their role, and so on.

Additionally, employees who are fired without just cause are entitled to severance pay. At the federal level, employees who have worked continuously for more than one year are entitled to two days' pay or five days' pay per year, whichever is higher.

For companies expanding overseas for the first time, dealing with employee layoffs and dealing with severance packages can be complicated. Remoly's Canadian PEOs can reduce risk for foreign companies and provide guidance during the process.  

Canadian Taxes

Taxation in Canada is complex and is another area where both federal and provincial laws apply

Canada has a progressive tax system, with high-income earners paying a significantly higher proportion of their income in income tax. As of 2022, the federal tax rate ranges from 0% to 33%, which includes a portion of pension plans and employment insurance, as well as additional provincial tax rates, which can vary widely depending on income level and location.

With the exception of federal pensions and employment insurance, other tax-funded social programs operate on a provincial basis, with funding from income taxes and vary by location.

Canadian Health Insurance

Canada has a social health care system that provides most necessary health care services to residents and workers. While the system is primarily funded by federal taxes, each province/territory takes a different approach to funding and delivery. For example, Ontario requires both employers and employees to make certain contributions: Employees pay between $0 and $900 per year for health insurance. Employees pay a special payroll tax called the Employer Health Tax (EHT), which ranges from 0.98% to 1.95% of the employer's wages. Coverage levels vary by province, with some offering more comprehensive coverage (such as drug costs and dental costs), but core medical expenses are covered nationally by taxes. It is relatively common, but not required, for employers in Canada to offer additional health-related benefits, such as dental, life insurance, etc.

Salary and Benefits

Canadian Compensation Law

Canada's minimum wage varies by province and territory and changes regularly. The latest rates are:

Canada's Welfare Administration

As a foreign employer, establishing Canada's welfare and social contribution system is a complex process. The law is complex, with federal and provincial differences to consider, and local representation may be required. All of this can make it a lengthy and expensive process. Outsourcing your Canadian benefits administration is a quick, easy and effective way to get everything up and running in full compliance with federal and provincial laws. Remoly Canada Employer of Record and PEO can provide expert guidance to help streamline the process of expanding into Canada.