Canada

Overview

Canada mainly has a service-based economy. The current GDP growth rate of Canada is 0.6%, and the annualized growth is 2.6%. The threshold for foreign investment in Canada is CAD 5 million for direct investments, and CAD 50 million for indirect investments. Globally Canada ranks as the 12th largest exporter. The country is also a key member of the World Trade Organization (WTO) since 1995. It also has extensive trading ties with many nations due to its bilateral and regional Free Trade Agreements (FTAs). Due to an educated workforce, multicultural/multilingual coexistence, a thriving economy, and the government’s support for setting up business make Canada a preferred investment destination.

Currency: Canadian Dollar ($)

Principal language: English and French

Government: Constitutional Monarchy

Capital City: Ottawa

Major Cities: Toronto, Ontario, Montreal, Vancouver, British Columbia

Employment Contracts

In Canada, it is not mandatory to have a written employment contract with nonunionized employees. Typically, senior executives or an organization receive written employment contracts that contain the employer's obligations to its employees. These types of contracts are not enforceable if the terms and conditions are below par than the statutory minimum employment standards or if an employee has been coerced to sign the contract.

In cases where no written employment contract exists, or the contract does not fully address the terms and conditions of employment, the standards set under the common law govern the employment relationship. For Quebec, it is according to standards set by the Civil Code.

Work/Time Regulations

The standard work schedule in Canada comprises 8 hours per day or 40 hours per week. The maximum permissible limit for the weekly schedule is 48 hours.

Employees in certain professions are exempt from the 48-hour work schedule in a week. The restrictions on the work hours also do not apply to management-level employees and some high priority jobs without regular work schedules. Employees also may have to work on a modified schedule that may compress the total weekly hours into fewer days.

Leave

Holidays
General holidays for federally regulated employees in Canada are as follows:

  • January 1: New Year's Day
  • Good Friday: Last Friday before Easter Sunday
  • Victoria Day: Last Monday in May before May 25, observed as Patriots Day in Que´bec
  • July 1: Canada Day - Observed as Memorial Day in Newfoundland and Labrador
  • Labor Day: 1st Monday in September
  • Thanksgiving Day: Second Monday in October
  • November 11: Remembrance Day/Armistice Day
  • December 25: Christmas Day
  • December 26: Boxing Day

The following provinces recognize some additional holidays for which paid time off is required:

  • Alberta: Family Day – 3rd Monday of February
  • British Columbia: Family Day – 2nd Monday of February, unlike other provinces that celebrate the holiday; British Columbia Day – 1st Monday of August
  • Manitoba: Louis Riel Day – 3rd Monday of February
  • New Brunswick: Family Day – 3rd Monday of February, beginning in 2018; New Brunswick Day – 1st Monday in August
  • Northwest Territories: Easter Monday – The day after Easter Sunday; National Aboriginal Day on June 21
  • Nova Scotia: Nova Scotia Heritage Day – 3rd Monday of February
  • Nunavut: Easter Monday – The day after Easter Sunday; Nunavut Day on July 9
  • Ontario: Family Day – 3rd Monday of February
  • Prince Edward Island: Islander Day – 3rd Monday of February
  • Que´bec: Easter Monday – The day after Easter Sunday may be offered as a replacement paid day off to Good Friday; Saint-Jean-Baptiste Day/National Holiday on June 24
  • Saskatchewan: Family Day – 3rd Monday of February; Saskatchewan Day – 1st Monday of August
  • Yukon: National Indigenous Peoples Day/National Aboriginal Day on June 21; Discovery Day – 3rd Monday of August

The Holidays Act provides that, when Canada Day falls on a Sunday, the following Monday, July 2, is a public holiday, even though the holiday still is formally celebrated July 1.

Annual Leave
All the Canadian provinces have specific laws and regulations regarding paid leave governed by the Labour Code. Usually, employees in Canada are entitled to 2 weeks of paid leave if they have worked with the same employer during their first 5 to 6 years of employment. Subsequently, the paid leave is extended to 3 weeks annually.

  • Non-Que´bec Canadians
    Full-time employees among non-Que´bec Canadians are entitled to a minimum of 2 weeks’ paid vacation, which accrue annually. After completing 6 years in a job, employees are entitled to at least 3 weeks of annual paid leave. Employees get compensation for annual leave at 4% of their gross annual salary, or 6% of their gross annual salary when eligible for a minimum of 3 weeks of paid leave.
  • Que´bec Canadians
    Que´bec Canadians get paid annual leave that is accrued annually. During the first year of employment, 1 day leave accrues per month. Between the first and fifth years, employees are eligible for 2 weeks of uninterrupted annual leave. This extends to 3 weeks annually after completing 5 years in a job. Before the fifth year, employees receive compensation during their leave with 4% of their annual salary. Subsequently, employees get compensated at 6% of annual salary. A slightly different rule for annual leave applies to the employees in the clothing industry, though it does not include retail employees of clothing stores.

Maternity Leave
Women employees who work for a minimum of 6 months with an employer are entitled to 15 weeks' unpaid maternity leave under the Federal regulations. Maternity leave can commence any time 11 weeks before the expected delivery date and end after 17 weeks. Under the federal Employment Insurance Act, maternity leave benefits provide substantial income replacement for employees on leave.

Parental Leave
Employees are entitled to maternity and paternity benefits if they accumulate a minimum of 600 hours of insurable employment. This applies to employees who are expecting a child, have given birth, adopted a child; or nursing a newborn. Both parents are entitled to a combined total of 35 weeks of parental benefits, which they can use entirely for one parent or split between themselves. The same time period also applies to adoptive parents. A waiting period of 2 weeks is required before receiving benefits payments. Parents are also entitled to 50 weeks of paid leave when combined with sickness and compassionate care leave.

Sick Leave
Full-time employees in Canada earn sick leave at the rate of 9.375 hours per month for which they receive pay for 75 hours. For part-time employees, sick leave is prorated. Sick leaves that are earned, but unused, employees would not get paid for leave credits when quitting a job.

Sick Child Leave
Women employees can take 16 weeks of maternity leave and 2 additional weeks for each child in case of multiple births. Out of these 16 weeks, at least 6 should be taken immediately The Canada Labour Code provides up to 37 weeks' unpaid leave to employees to care for a critically ill child who is below 18 years. A doctor must support the fact of the child’s illness by providing a medical certificate.

An employee is required to work for a minimum of 6 months with the employer to be eligible for this leave. The concerned employee must take this leave in complete weeks. As with compassionate care leave, employees may be entitled to benefits under the Employment Insurance Act when taking unpaid leave to care for a critically ill child.

Bereavement Leave
Federally regulated employees are entitled to paid bereavement leave of 3 days if an immediate family member dies. A family member can be a spouse or common-law partner, the employee's or partner's parents, grandparents, siblings, grandchildren, or any other relative with whom the employee lives.

Compassionate Care Leave
The Canada Labour Code permits unpaid leave of up to 28 weeks to care for a seriously ill family member who has a significant risk of death within 26 weeks. Employees taking compassionate care leave may be entitled to benefits under the Employment Insurance Act.

Murdered and Missing Children
Federally regulated employees who are parents of children under 18 and who have worked for 6 or more consecutive months with an employer are entitled to up to 104 weeks' leave of absence if the children's death is due to a crime. In the case of disappearance of a child, 52 weeks' leave is granted.

Reservist Leave
Employees under the federal jurisdiction can also get unpaid leaves of absence for serving in the Canadian Armed Forces if they have worked for a minimum of 3 months with an employer. The reservist leave can be for annual training or to participate in activities in Canada or abroad. Leave must also be approved to recover from any physical or mental health issue that have resulted from training or deployment. Employees can rejoin their work by giving the employer a minimum notice period of 4 weeks.

Benefits

Pension and Social Security

Canada Pension Plan (CPP)
Employers are required to withhold contributions to Canada Pension Plan or CPP for employees aged between 18 and 70 years. Employers also need to make contributions matching the amount of employees' contribution.

Effective from 2017, the CPP contribution rate for employees is 4.95%, and for employers, the contribution rate is 4.95%

Que´bec Pension Plan (QPP)
Employers must withhold contributions to QPP for employees who are 18 years and older. Employers and employees equally share the QPP taxes.

Effective for from 2017, the rate of QPP contribution for employees is 5.4%. The QPP contribution rate for employers is 5.4%.

Que´bec Parental Insurance Plan (QPIP)
Employees in Que´bec also get benefits through QPIP, which is also known as the Provincial Parental Insurance Plan, or PPIP. Employees’ age does not affect maximum insurable earnings for the QPIP. The maximum insurable earnings or MIE is the maximum income level up to which contributions are made through premium.

Workers' Compensation
Workers’ compensation is provided to employees who get injured or sick when performing their job responsibilities. In such cases, workers' compensation serves as a replacement income.

Provincial and territorial workers’ compensation board administer this insurance. Usually, the provinces and territories set coverage premium rates, which vary based on the degrees of workplace risk in different industries.

How GPS can Help

With our Global PEO/Employer of Record services, companies can expand into Canada and hire their employees without having to establish a branch office or subsidiary in Canada.

  • Your candidate is hired via our Canada PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
  • Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Canada laws.
  • Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
  • With no contractor risks, pass on the compliance burden to Global PEO Services.

Spin Off/M&A Support

  • Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.

24/7 Support in 100+ Countries

  • Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
  • We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.

Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and managements. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcounts.

Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Lean more about our end-to-end international expansion services.