The complete guide to offering employee benefits in Canada

When hiring employees in Canada, it's crucial to offer them the right benefits package to stay compliant with Canadian labor laws, as Canadian employees enjoy more rights and protections than workers in many other countries (including the US).

Here's everything you need to know to offer benefits that meet statutory requirements under Canadian labor laws—and how to go above and beyond for your employees in Canada.

Where can I get quotes for Canadian employee benefits?

Rippling partners with brokers and insurance carriers around the world to give your Canadian employees access to big business benefits at affordable prices—including health insurance, registered retirement savings plan, etc.

What employee benefits are mandatory in Canada?

Mandatory benefits programs are required by Canadian law—primarily, the Employment Standards Act, which establishes the rights and responsibilities of employers and employees in Canada. If you employ a Canadian worker and fail to offer them these mandatory employee benefits, you could wind up with a hefty fine. Keep in mind that the benefits required by the government of Canada are statutory minimums, and employers can always offer more than these mandatory benefits. Also, note that these benefits are mandatory for employees—independent contractors in Canada aren't entitled to any benefits.

Pension

The Canada Pension Plan (CPP) is a mandatory, contributory savings plan for most employed Canadians outside of Quebec. There are a few exemptions to pension contributions in Canada—like if an employee makes less than C$3,500 per year.

Employers and employees both contribute a percentage of the employee's earnings to the CPP: 5.95% in 2023, up to the maximum of C$3,754.45, then an additional 4% on earnings between the maximum and an upper earning limit that increases yearly.

Canadians in Quebec are covered by the Quebec Pension Plan (QPP), a taxable public insurance plan that covers employees and their families for retirement, accidental death, or disability. Similar to the CPP, employers and employees equally split contributions to the QPP: 5.4% each on all earnings between C$3,500 and C$64,900 in 2022.

Canadian workers can start withdrawing from the CPP or QPP at age 60 (or CPP withdrawals can be deferred up to age 70). The amount they will receive depends on their average earnings, their pension contributions, and the age at which they decide to start receiving their pension.

Employment insurance

Employment insurance (EI) provides income to Canadian employees who lose their jobs and struggle to find new employment. It replaces income for employees who are unable to work as a result of:

• Sickness
• Parental leave, including maternity and paternity leave to care for a newborn or newly adopted child
• Critical illness leave
• Compassionate care leave

Most employees in Canada are entitled to EI that totals 55% of their average weekly earnings up to a maximum (C$61,500 in 2023). Canadian workers can receive EI for up to a maximum of 14-45 weeks, depending on regional unemployment rates and the number of working hours they've accumulated over the previous 52 weeks or since their last claim (whichever is shorter).

EI is commonly used to provide income to Canadians who take parental leave. In Canada, natural or adoptive parents are entitled to a minimum of 15 weeks of leave, which is not paid by their employer. Parents can submit EI claims to receive income during parental leave.

Canadians in Quebec are covered by the Quebec Parental Insurance Plan (QPIP), which provides financial assistance to eligible parents who take time off work to care for a newborn or newly adopted child. The QPIP was introduced in 2006 to replace the federal government's parental leave program in Quebec.

Under the QPIP, eligible parents can receive up to 55% of their average weekly income for a maximum of 32 weeks of maternity leave. In addition, there is an optional 8-week period of paternity leave available to fathers or partners, and an optional 12-week period of extended parental leave available to either parent. The program is funded by contributions from both employees and employers, with the rate of contribution based on the employee's salary.

Vacation entitlements

Vacation entitlements are based on the province or territory where the employee is located. They can be accrued or front-loaded and should be prorated for the employee's first year. Minimum vacation entitlements by years of service are listed below.

Statutory holidays

Employees in Canada are entitled to different statutory holidays, depending on the province or territory of employment. If a statutory holiday falls on a weekend, employees are typically given a substitute holiday (usually on the first working day following the statutory holiday).

Below are the statutory holidays for Canada's provinces and territories.

Benefits that may be mandatory in Canada?

A number of other benefits may be mandatory in Canada, depending on the province or territory of employment, industry, and other factors. 

Workers compensation

In Canada, workers compensation is controlled by independent, provincial Workers Compensation Boards (WCB) and funded by premiums paid by employers. Premiums are set by WCBs and are regularly updated. Workers comp is primarily to pay employees for lost wages since Canada has a social healthcare system.

In most cases, employers are required to register with the WCB in their province or territory of employment. However, there are exceptions related to the size of the company,  the number of employees, and the industry. Some workers comp exemptions in different parts of Canada are listed in the table below.

Sick leave

Minimum sick leave entitlements for each province and territory are listed below.

• Sick leave is not accrued; it's always front-loaded, meaning employees receive a set number of days off at the beginning of the year.
• Employees that start work partway through a calendar year are entitled to the full entitlement for that year.
• Sick leave doesn't roll over to the next calendar year and it is not paid out upon termination.

Minimum sick leave entitlements for each province and territory are listed below.

What employee benefits are optional in Canada?

The statutory benefits we've covered so far are all minimums that must be provided by employers in Canada. In addition to these required benefits, many Canadian employers also provide additional benefit plans and perks to help them attract and retain employees. Some of the most common supplementary benefits are below.

Health, dental, and vision insurance

While all Canadian employees are covered by government health insurance plans, it's common for employers to offer supplemental insurance benefits with more robust coverage.

Extended healthcare coverage may include things like prescription drug coverage, paramedical services like massage therapy or physical therapy, dental, and vision coverage—all health benefits that are not standard offerings under Canada's social healthcare.

Retirement savings plans

In addition to pension plan contributions, many employers offer supplemental retirement plans (for example, Group Registered Retirement Savings Plans, or RRSP) to help employees build long-term savings at a higher rate of return. These can be funded through payroll deduction, employee contribution matching, and other schemes.

Paid time off

Many employers offer paid time off beyond Canada's statutory minimums to make their workplaces more attractive to top workers. Paid time off can include additional vacation time, extra paid sick days, paid personal days, or flexible leave policies.

Life coverage

Life coverage insurance (similar to life insurance in the US) helps a late employee's surviving family members with the financial impact of their death. It can be used to pay for funeral expenses, pay off debts, provide for dependents, replace lost income, or even make charitable donations in the deceased's name. Employers can pay part or all of the premiums for supplemental life coverage for their employees, even though this isn't a required benefit.

Long-term disability

Employment insurance covers some lost wages for employees who are unable to work due to short-term disability. Many Canadian employers offer additional long-term disability insurance, which can provide additional financial assistance for employees while they are unable to work or replace their wages once they've received the maximum from their EI coverage.

How to hire employees in Canada and offer them affordable benefits in minutes—with Rippling

Running a global workforce isn't easy. It can be a challenge for global companies just to keep their benefits compliant—let alone managing offer letters, equipment, payroll, and everything else global employees and contractors need.

That's why, if you're going to hire employees, contractors, or remote workers in Canada, you need Rippling. Rippling makes it easy to onboard, manage, and pay employees and contractors around the world—in one system that helps keep you compliant with local employment laws and regulations.

We offer a native Employer of Record (EOR) service, which allows you to hire employees in Canada, enroll them in benefits, and run payroll in 90 seconds—even if you don't have a legal entity there.

Rippling’s EOR is built on top of our native payroll rails, which means that when the time comes to bring HR in-house, you can move from our EOR to Global Payroll through your own entities—in minutes.

Disclaimer: Rippling and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.