10 things employers need to know about Canadian labor and employment laws

Canadian labor and employment laws can be a maze of regulations and nuances. If you’re headquartered outside Canada, you need to account for differences in labor laws between countries. But your Canadian compliance work gets even trickier when managing workers across provinces and territories—since all 13 of them set different employee rights and labor standards.

So how do you navigate through the morass of federal, provincial, and common law mandates to keep track of the most important Canadian labor rules? This guide will highlight the basics so you can tap Canada’s talent pool with confidence.

1. At-will employment doesn’t exist

In Canada, you can only terminate an employee without notice (or pay in lieu of notice) for “just cause,” which has a high burden of proof and is reserved for cases of serious misconduct. If you want to dismiss an employee without cause, you have to adhere to provincial notice periods or pay the employee out.

2. Misclassifying employees could cost you millions of dollars

Employees work exclusively under the direct supervision of an employer for an indefinite time period and are entitled to benefits. Contractors are self-employed, work autonomously for a fixed time-period, and are not entitled to benefits. Conflating these worker categories can result in misclassification penalties. This comes with fines, backpay, and retroactive benefits administration (with interest) that can cost a company millions.

3. Canada has strong anti-discrimination protections

Federal and provincial laws protect Canadians from discriminatory hiring practices. The Canadian Human Rights Act outlaws hiring on the basis of race, age, sexual orientation, and gender in federal jurisdictions. Most provinces also set their own protections. British Columbia, for instance, prohibits discrimination based on criminal convictions unrelated to employment.

4. Industries like banking, telecommunications, and transportation have special rules

The laws in the Canada Labour Code only apply to federal government workers and private sector jobs that span provincial borders, like banking, telecommunications, and transportation. This accounts for less than about 10% of the Canadian workforce, with the remainder covered by provincial employment laws and other national legislation. Canada has labor relations boards across all its jurisdictions.

5. Most Canadian workers have the right to unionize

Workers have a right to freedom of association, which allows any worker who isn’t in a management position to form trade unions without fearing reprisal from an employer. Through collective bargaining, the employer and union create a collective agreement that establishes new work conditions. Employees have a right to strike during negotiations.

6. If you fail to offer benefits, you’ll be hit with fines, penalties, and legal consequences

All Canadian employees are entitled to statutory benefits such as pension, employment insurance, workers’ compensation, vacation, and public holidays. Each Canadian province has its own Employment Standards Act, which sets minimum working conditions.

7. Non-disclosure agreements (NDAs) are legally binding in Canada—with restrictions

NDAs can protect a company’s proprietary information so long as they’re reasonable, specific, and within the public interest (i.e. not used to cover up criminal behavior). These agreements can be included as a confidentiality clause in Canadian employment contracts.

8. Employers are responsible for workplace health and safety standards

Most Canadian businesses have some form of occupational health and safety regulations. Employees under the Labour Code need to be notified of workplace hazards and have access to health and safety representatives. Canadian employees are protected from harassment. Employers are mandated to act if notified of any sexual misconduct and must protect a complainant’s anonymity.

9. You need to safeguard employees’ personal information

Canada has a federal Personal Information Protection and Electronic Documents Act (PIPEDA) that regulates the collection and use of sensitive data from private sector employees’ data. Alberta, British Columbia, and Québec have similar provincial privacy legislation. These rules mandate getting an employee’s consent before collecting any personal information, only collecting necessary data, and acquiring it legally.

10. Federally regulated workforces must ensure pay transparency

The Employment Equity Act now requires federally regulated employers to report salary data to reveal any wage gaps among demographics, in an effort to promote fair pay for women, minority groups, and persons with disabilities. Prince Edward Island recently passed legislation requiring salary data to be included in public job postings.

Frequently asked questions about Canadian labor laws

What are the minimum wages in Canada?

As of April 1, 2023, Canada has a federal minimum wage of CAD 16.65 an hour, which applies to federal workers and workers in industries that span provincial borders (like transportation, banking, and telecommunications).

Otherwise, Canadian minimum wages differ by province and territory, as shown below.

While these wages are accurate as of May 2023, provinces regularly hike minimum wages (often yearly) to adjust for inflation.

What are the overtime laws in Canada?

Most Canadian workers are entitled to overtime rates 1.5 times greater than their base rate of pay. Provinces have different rules for when overtime pay kicks in. Most provinces set 40 hours as the standard work week, but workers in Alberta and Ontario aren’t eligible for overtime until 44 hours of work, while Nova Scotia and Prince Edward Island set 48 hours as the threshold.

There are also variations in whether overtime kicks in per day or in aggregate. For example, in British Columbia, you get overtime after eight hours worked in a day, while in Ontario, you wouldn’t get any until after you surpass the 44-hour workweek.

If that sounds tricky to monitor, Rippling EOR will automatically track hours and give your Canadian employees the correct overtime rate—no matter their province or territory.

What are the required benefits in Canada?

All full-time Canadian employees are entitled to the following statutory benefits:

• Pension
• Employment insurance (which covers parental leave)
• Vacation entitlements (which vary depending on year of service)
• Public holidays
• Unpaid sick leave

Statutory minimums for these entitlements vary depending on province. British Columbia employees, for instance, get five days paid sick leave per year after three months’ work, while Ontario gets three unpaid days per year.

Most employees are also entitled to workers’ compensation insurance, with premiums set by provincial boards and paid out by employers. Some employees are exempt from this entitlement (Ontario doesn’t require it for law firms, for instance).

All Canadian workers are covered by government health insurance plans, and employers have the option of offering supplementary coverage via private providers.

For more information on mandatory benefits in Canada, read our complete guide.

How do I terminate employees in Canada?

Terminating employees might be far from your mind, it’s important to be aware of Canada’s termination laws before building out your team.

At-will employment isn’t recognized in Canada, and there are two ways an employee can be involuntarily terminated:

Termination of employment without cause: A Canadian employee is entitled to written notice of the employer’s intention to terminate their employment or pay in lieu of notice. The length of the required notice period is defined by each province and depends on how long the employee has worked for the company; see the breakdown of mandatory notice periods and termination pay for Canadian employees in our guide.

Federally regulated workers are entitled to two weeks’ advance notice and get two days’ severance pay per year they’ve worked. Ontario is the only other jurisdiction that mandates severance pay.

Termination of employment with cause: If employment is terminated with just cause, then no notice or pay in lieu of notice is required. The onus is on the employer to show just cause, which is reserved for severe cases of misconduct including theft, fraud, or violence. Since just cause is difficult to prove in Canada, employers should ensure they have strong evidence of any serious breach of conduct before letting an employee go without the minimum required advance written of termination.

In Canada, “layoffs” are periods where struggling companies don’t pay or give work to employees, but provide them the opportunity to get reinstated back to a normal employment relationship if the company can get normal business operations back up and running.

For the brass tacks on Canadian termination requirements—including notice periods and wrongful dismissal claims—consult our guide.

Hire and onboard Canadian employees with Rippling

If you're hiring employees, independent contractors, or remote workers in Canada, you need Rippling.

Rippling allows you to manage HR, IT, and Finance in one unified system. We make it easy to onboard, manage, and pay employees and contractors around the world—in a single system that helps keep you compliant with local employment laws and regulations.

Rippling and its affiliates do not provide tax, accounting or legal 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.