Employer of Record in

Canada

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

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:

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):

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:

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

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