Employer of Record in
Canada

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Capital City

Ottawa

Currency

Canadian dollar ($)

Languages

English and French

Population size

38,005,238

Services available in this country:

Employer of Record
Contractor Management
Payroll
AI Agents
OVERVIEW

Key stats and facts

Major economic hubs

Toronto, Montreal, Vancouver, Calgary, Ottawa

Skills in demand

Registered Nurse, Software Developer, Electrician, Truck Driver, Cybersecurity Specialist

Currency

Canadian dollar ($)

Language

English and French

GDP per Capita

$56,397.41 USD per capita

Standard Tax Rate

15% federal + 5.05% provincial

Your EOR guide in 
Canada

Minimum Wage

Canada operates under a dual system where federal minimum wage applies to federally regulated employees, while each province and territory sets its own rates for most workers. The federal minimum wage is $17.75 CAD per hour as of April 1, 2025.

Provincial and Territorial Minimum Wages (2025):

Jurisdiction Minimum Wage (CAD/hour) Effective Date
Federal (Canada Labour Code) $17.75 April 1, 2025
Alberta $15.00 October 1, 2018
British Columbia $17.85 June 1, 2025
Manitoba $15.80 October 1, 2024
New Brunswick $15.65 April 1, 2025
Newfoundland & Labrador $16.00 April 1, 2025
Northwest Territories $16.70 September 1, 2024
Nova Scotia $15.70 April 1, 2025
Nunavut $19.00 January 1, 2025
Ontario $17.20 October 1, 2024
Prince Edward Island $16.00 October 1, 2024
Quebec $16.10 May 1, 2025
Saskatchewan $15.00 October 1, 2024
Yukon $17.94 April 1, 2025

Most provinces adjust minimum wage annually based on the Consumer Price Index (CPI) or other economic indicators.

Payroll Cycle

Canadian employers typically follow one of three payroll schedules:

  • Bi-weekly: 26 pay periods per year (most common)
  • Semi-monthly: 24 pay periods per year (15th and last day of month)
  • Monthly: 12 pay periods per year

Provincial employment standards dictate maximum intervals between pay periods, generally requiring payment at least monthly.

Individual Income Tax

Canada uses a progressive tax system with both federal and provincial components. Federal tax brackets for 2025:

Income Bracket (CAD) Federal Tax Rate
Up to $53,359 15%
$53,359.01 to $106,717 20.5%
$106,717.01 to $165,430 26%
$165,430.01 to $235,675 29%
Over $235,675 33%

Provincial tax rates vary significantly. Quebec operates its own tax system (Revenu Québec), while other provinces piggyback on the federal system through the Canada Revenue Agency (CRA).

Tax Residency Criteria

Individuals are considered Canadian tax residents if they:

  • Reside in Canada for 183 days or more in a calendar year, or
  • Have significant residential ties to Canada (home, spouse, dependents)

Tax residents pay Canadian income tax on worldwide income. Employers must withhold taxes based on residency status and complete proper documentation.

Employer Payroll Contributions

Employers face mandatory contributions beyond gross salary. Key contribution rates for 2025:

Contribution Type Rate Range Notes
Canada/Quebec Pension Plan 5.95% (CPP) / 6.40% (QPP) On earnings up to annual maximum
Employment Insurance 1.4-2.3% Varies by province
Workers' Compensation 0.18-2.00% Industry and claims history dependent
Provincial Health Tax 0-4.26% Varies by province and payroll size
Quebec-specific (QPIP, WSDRF) 0.69% + 1.00% Quebec employers only

Total employer cost typically ranges from 8-17% above gross salary, depending on province and industry classification.

Working Hours

The standard work week in Canada is 40 hours over 5 days (8 hours per day, Monday through Friday). However, specific regulations vary by province:

  • Daily maximums: Most provinces set 8-hour daily limits before overtime
  • Weekly maximums: 40-48 hours depending on jurisdiction
  • Flexible arrangements: Many provinces allow compressed work weeks or flexible scheduling with employee agreement

Certain categories of employees may be exempt from standard hour limits, including senior managers, IT professionals, and other professionals with autonomous schedules.

Overtime Pay

Overtime compensation is 1.5× the regular hourly rate for hours worked beyond provincial thresholds:

  • Most provinces: Overtime after 8 hours/day or 40 hours/week
  • Quebec: After 40 hours/week only
  • British Columbia: After 8 hours/day and 40 hours/week

Maximum overtime limits vary by province, typically requiring employee consent for excessive overtime. Some jurisdictions allow time-off in lieu (compensatory time) instead of paid overtime if agreed upon in writing.

Employment Classifications

Full-time vs Part-time:

  • Full-time: Generally 30+ hours per week
  • Part-time: Fewer than 30 hours per week
  • Both classifications receive proportional statutory benefits

Permanent vs Contract:

  • Permanent employees: Indefinite employment with full statutory protections
  • Fixed-term contracts: Specific end date, but still entitled to most employment standards
  • Casual employees: Irregular work schedules, may have reduced benefit entitlements

Bonus Payments

While not legally mandated, bonuses are common in Canadian compensation packages. Key considerations:

  • Discretionary bonuses: Employer's choice, but patterns may create legal entitlements
  • Contractual bonuses: Must be paid as agreed and factor into termination calculations
  • Commission structures: Subject to employment standards for payment timing and calculation

Vacation Leave

Minimum entitlements increase with tenure:

  • First 5 years: 2 weeks (4% of gross earnings)
  • After 5 years: 3 weeks (6% of gross earnings) in most provinces
  • Some provinces: 3 weeks after 4 years or different accrual rates

Vacation pay must be paid either:

  • Before vacation is taken, or
  • On each paycheque (4% or 6% of gross earnings)
  • Upon termination for unused vacation

Scheduling: Employers generally control timing but must provide reasonable notice. Employees may request specific dates subject to operational requirements.

Sick Leave

Sick leave provisions vary significantly by jurisdiction:

Federal employees: 10 days paid sick leave annually (as of December 2022)

Provincial variations:

  • British Columbia: 5 paid days + 3 unpaid days annually
  • Quebec: 2 paid days annually
  • Ontario: 3 unpaid days annually (though many employers provide more)
  • Prince Edward Island: 1 paid day annually

Medical certification may be required for extended absences, but employers cannot require doctor's notes for short-term illness in many provinces.

Maternity Leave

Duration: Up to 17 weeks of job-protected leave

Eligibility: Must have worked for the same employer for at least 90 days (varies by province)

Payment: Through Employment Insurance (EI), not employer-funded

  • Requires 600 insured hours in the 52 weeks prior
  • Pays approximately 55% of average weekly earnings up to a maximum

Job protection: Employers must guarantee the same or comparable position upon return

Parental Leave

Standard option: Up to 40 weeks (can be shared between parents, maximum 35 weeks per parent)

Extended option: Up to 69 weeks (maximum 61 weeks per parent) at reduced EI benefit rate

Combination: Can be combined with maternity leave for up to 78 weeks total

Payment: Through Employment Insurance at 55% of average weekly earnings (standard) or 33% (extended)

Other Statutory Leave

Bereavement Leave:

  • Federal: Up to 10 days (first 3 days paid)
  • Provincial: Typically 2-5 days (mostly unpaid unless company policy provides more)

Family Responsibility Leave:

  • Quebec: Up to 10 paid days for family responsibilities
  • Other provinces: Generally 3-5 unpaid days for family emergencies

Domestic Violence Leave:

  • Available in most provinces
  • Up to 10 days (some paid, some unpaid)
  • For employees experiencing domestic violence

Jury Duty/Court Appearances:

  • Job-protected leave required
  • Payment varies by province (some require employer payment, others rely on court compensation)

Leave Summary Matrix

Leave Type Duration Paid? Funding Source Job Protected?
Vacation 2-3 weeks/year Yes Employer Yes
Sick Leave 1-10 days/year Varies Employer Yes
Maternity 17 weeks Yes (55% EI) Government Yes
Parental 40-69 weeks Yes (33-55% EI) Government Yes
Bereavement 2-10 days Partially Employer/Gov't Yes
Family Emergency 3-10 days Varies Employer/Gov't Yes
Domestic Violence Up to 10 days Partially Employer/Gov't Yes

Termination Categories

Termination with Just Cause:

  • No notice or severance required
  • Must involve serious misconduct (theft, fraud, willful disobedience, conflict of interest)
  • High legal threshold - employers must prove cause
  • Immediate dismissal permitted

Termination without Cause:

  • Permitted under Canadian law if not discriminatory
  • Requires notice or pay in lieu of notice
  • May require additional severance depending on jurisdiction and circumstances
  • Most common form of termination

Notice Requirements

Notice periods are based on length of service and vary by province. Common provincial minimums:

Length of Employment Minimum Notice Period
Less than 3 months None (probationary period)
3 months to 1 year 1 week
1 to 3 years 2 weeks
3 to 4 years 3 weeks
4 to 5 years 4 weeks
5 to 6 years 5 weeks
6 to 7 years 6 weeks
7 to 8 years 7 weeks
8+ years 8 weeks

Important notes:

  • Some provinces have longer notice periods (e.g., Nova Scotia provides up to 8 weeks after 10+ years)
  • Federal employees may be entitled to longer notice periods
  • Employment contracts may provide greater notice but cannot provide less than statutory minimums

Severance Pay

Severance is separate from notice and applies in specific circumstances:

Federal jurisdiction:

  • Required after 12+ months of continuous employment
  • 2 days' pay per year of service (minimum 5 days)

Provincial variations:

  • Ontario: Required for employees with 5+ years if payroll exceeds $2.5 million
  • Most other provinces: No statutory severance requirement beyond notice

Mass Layoffs

Special rules apply when terminating multiple employees:

Federal jurisdiction:

  • 50+ employees: 16 weeks notice to Minister of Labour
  • 100+ employees: Additional consultation requirements

Provincial requirements vary:

  • Advance notice to government (typically 4-16 weeks)
  • Employee consultation requirements
  • Possible enhanced severance obligations

Final Pay Requirements

Employers must issue final pay within specified timeframes:

  • Ontario: 7 days or next scheduled payday (whichever is later)
  • Quebec: Within 48 hours
  • Alberta: Within 10 consecutive days
  • British Columbia: Within 48 hours

Final pay must include:

  • Outstanding wages
  • Accrued vacation pay
  • Any earned bonuses or commissions
  • Overtime pay owed

Legal Protections

Employees cannot be terminated for:

  • Taking protected leave (maternity, sick, etc.)
  • Filing complaints about workplace violations
  • Refusing unsafe work
  • Union activities
  • Any reason related to protected human rights grounds

Protected grounds include race, gender, religion, disability, sexual orientation, and other characteristics defined in human rights legislation.

National Statutory Holidays

Federal statutory holidays (apply to federally regulated employees):

Holiday 2025 Date Notes
New Year's Day January 1
Good Friday April 18
Victoria Day May 19 Monday before May 25
Canada Day July 1
Labour Day September 1 First Monday in September
National Day for Truth and Reconciliation September 30 Federal employees only
Thanksgiving Day October 13 Second Monday in October
Remembrance Day November 11
Christmas Day December 25

Provincial Statutory Holidays

Each province adds additional holidays:

British Columbia:

  • Family Day (February 17)
  • BC Day (August 4)

Ontario:

  • Family Day (February 17)
  • Civic Holiday (August 4) - not statutory in all municipalities

Quebec:

  • St-Jean-Baptiste Day (June 24)
  • Different Thanksgiving date (varies)

Alberta:

  • Family Day (February 17)
  • Heritage Day (August 4)

Atlantic Provinces:

  • Various provincial days and Natal Day celebrations

Holiday Pay Eligibility

To qualify for statutory holiday pay, employees typically must:

  • Have worked for the employer for at least 30 calendar days
  • Work their last scheduled day before and first scheduled day after the holiday (unless excused)

Holiday pay calculation varies by province:

  • Ontario: Average daily pay over the 4 weeks preceding the holiday
  • British Columbia: Average day's pay based on wages and hours
  • Quebec: 1/20th of wages earned in the 4 weeks preceding

Working on Statutory Holidays

When employees work on statutory holidays:

  • Premium pay: 1.5× to 2× regular wages (varies by province)
  • Substitute day off: Another paid day off, or
  • Holiday pay plus premium: Regular holiday pay plus premium for hours worked

Essential services (healthcare, emergency services) may have different arrangements through collective agreements or special legislation.

Required Documentation

Employment Contract must include:

  • Job title and description
  • Salary and benefits
  • Working hours and location
  • Vacation entitlement
  • Termination clauses (notice periods)
  • Probationary period terms
  • Confidentiality and IP assignment clauses

Government Forms:

  • TD1 Federal and Provincial: Tax withholding forms
  • Social Insurance Number (SIN): Required for all employees
  • Direct deposit information: Banking details for payroll

Identity Verification:

  • Government-issued photo ID
  • Work authorization documents (if applicable)

Work Authorization

Canadian citizens and permanent residents can work without restrictions.

Foreign workers require:

  • Work permit (various categories available)
  • Labour Market Impact Assessment (LMIA) for many positions
  • Compliance with Immigration, Refugees and Citizenship Canada (IRCC) requirements

Employer responsibilities:

  • Verify work authorization before employment begins
  • Maintain copies of work permits
  • Comply with conditions of work permits

Background Checks

Background checks are permitted but must be:

  • Relevant to the position
  • Conducted with written consent
  • Compliant with privacy legislation

Permitted checks:

  • Criminal record checks (if job-related)
  • Employment verification
  • Education verification
  • Credit checks (for financial positions only)
  • Professional licence verification

Data Privacy Compliance

Federal Privacy Legislation:

  • Personal Information Protection and Electronic Documents Act (PIPEDA)
  • Applies to federally regulated employers and interprovincial data transfers

Provincial Privacy Laws:

  • Quebec: Law 25 (comprehensive privacy reform)
  • British Columbia: Personal Information Protection Act (PIPA)
  • Alberta: Personal Information Protection Act (PIPA)

Key requirements:

  • Obtain consent for data collection and use
  • Limit collection to necessary information
  • Secure storage and transmission
  • Provide access to personal information upon request
  • Report privacy breaches where required

IP Assignment & Confidentiality

Intellectual Property:

  • Employees own work they create unless contract specifies otherwise
  • Clear IP assignment clauses essential for employers
  • Must be reasonable and related to employment duties

Confidentiality Agreements:

  • Must be reasonable in scope and duration
  • Cannot prevent disclosure of illegal activities
  • Should specify what constitutes confidential information

Probationary Periods

Standard probation: Up to 3 months (some provinces allow 6 months)

During probation:

  • Reduced notice requirements for termination
  • Full employment standards still apply (minimum wage, overtime, etc.)
  • Anti-discrimination laws remain in effect
  • Benefits may be delayed or reduced

Onboarding Timeline

Typical 10-day process:

Day Activity
1-2 Offer acceptance and contract preparation
3-4 Document collection (SIN, TD1, banking)
5-6 Background checks and reference verification
7-8 Payroll system setup and benefits enrolment
9-10 Final compliance review and employee start

Worker Classification

Employee vs Independent Contractor distinction is crucial for compliance:

Employee indicators:

  • Work under employer control and direction
  • Use employer's tools and equipment
  • Integrated into business operations
  • Regular salary or hourly wages
  • Entitled to benefits and employment standards protection

Contractor indicators:

  • Control their own work methods
  • Provide their own tools
  • Opportunity for profit and risk of loss
  • Invoice for services
  • Responsible for own taxes and benefits

Canada Revenue Agency tests:

  • Control: Who controls how work is performed?
  • Ownership of tools: Who provides equipment and materials?
  • Chance of profit/loss: Can the worker profit or lose money?
  • Integration: How integral is the work to the business?

Misclassification risks:

  • Retroactive payroll contributions
  • Employment standards violations
  • Tax penalties and interest
  • Legal liability for wrongful dismissal

Union Considerations

Unionization rates vary by sector:

  • Public sector: ~70% unionized
  • Private sector: ~15% unionized
  • Construction, healthcare, education: Higher rates

Collective bargaining impact:

  • Union contracts override employment standards (if more favourable)
  • Specific wage scales and benefit requirements
  • Grievance procedures for disputes
  • Strike/lockout possibilities

Right to organize:

  • Employees can form or join unions
  • Employers cannot interfere with union activities
  • Certification processes vary by province

Cultural Workplace Norms

Communication style:

  • Direct but polite feedback
  • Collaborative decision-making
  • Respect for hierarchy but open dialogue encouraged

Work-life balance expectations:

  • Predictable working hours
  • Respect for personal time and family obligations
  • Flexible work arrangements increasingly common

Diversity and inclusion:

  • Strong legal framework for accommodation
  • Expectation of inclusive workplace policies
  • Accommodation duties for disabilities, religious practices

Professional development:

  • Employees expect training and growth opportunities
  • Tuition reimbursement programs common
  • Professional association memberships often supported

Remote Work Framework

Legal considerations:

  • Employment standards apply regardless of work location
  • Occupational health and safety obligations extend to home offices
  • Workers' compensation may cover home office injuries

Employer responsibilities:

  • Provide necessary equipment or reimbursement
  • Ensure ergonomic workspace setup
  • Maintain communication and performance standards
  • Respect privacy in home environment

Cross-border remote work:

  • Tax implications for employees working from other provinces
  • Potential need for registration in employee's province
  • Compliance with multiple jurisdictions' employment laws

Technology and security:

  • Data protection requirements for remote access
  • Cybersecurity policies and training
  • Equipment return procedures upon termination

Ready to hire in Canada? Borderless AI handles all the complexity of Canadian employment law, from coast to coast. Our AI-native platform ensures compliant hiring, accurate payroll, and seamless onboarding across all provinces and territories. Get started with expert support and intelligent automation that scales with your team.

Built-in benefits packages for
Canada

When the world is your competition, it pays to incentivize new hires and existing alike. Borderless Ai benefits packages typically inlucde:

Medical Insurance

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Dental Insurance

United Healthcare
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Retirement Contribution

United Healthcare
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Life Insurance

United Healthcare
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Vision Insurance

United Healthcare
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