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EOR IN Canada
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A guide to employing and growing your team in Canada
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Canada is the second-largest country in the world by land area, split into 10 provinces and three territories. Canada’s labor market is characterized by a high degree of regulation split between federal and provincial jurisdictions. While most private-sector employees fall under provincial laws, those in “federally regulated” industries (e.g., banking, telecommunications, interprovincial transport) are governed by the Canada Labour Code. The country is known for its robust social safety net, including a publicly funded healthcare system and mandatory pension contributions. As of April 1, 2026, the federal minimum wage is $18.15 per hour, while provincial rates vary significantly (e.g., $17.50+ in British Columbia and $16.55+ in Ontario).
Employer Contributions
Canada Pension Plan (CPP): 5.95% (Capped at earnings of $74,600)
Enhanced CPP (CPP2): 4.00% (On earnings between $74,600 and $85,000)
Employment Insurance (EI): 2.28% (Employer pays 1.4x the employee rate; capped at $68,900)
Workers’ Compensation (WSIB/CSST): ~0.2% – 6.0% (Varies by province and industry risk)
Total Employer Contribution: ~9.5% – 12.5%
Employee Payroll Taxes
Canada Pension Plan (CPP): 5.95%
Enhanced CPP (CPP2): 4.00% (On earnings above $74,600)
Employment Insurance (EI): 1.63%
Total Employee Contribution: ~7.58%
Employee Income Tax Rates
Up to $58,523: 14%
$58,524 – $117,045: 20.5%
$117,046 – $181,440: 26%
$181,441 – $258,482: 29%
Above $258,482: 33%
Statutory Leave
Employees are typically entitled to 2 weeks of paid vacation per year after 12 months of service, increasing to 3 weeks after 5 or 10 years depending on the province. Canada observes 5 to 10 statutory holidays annually, such as Canada Day and Labour Day. Unused vacation pay must be paid out upon termination, usually calculated as 4% to 6% of gross annual earnings.
Pregnancy and Maternity Leave
Birth mothers are entitled to 15 weeks of maternity leave, which is job-protected. While the leave itself is unpaid by the employer, the government provides Employment Insurance (EI) maternity benefits at 55% of average weekly earnings, up to a maximum of $668 per week in 2026.
Paternity Leave
New parents (including adoptive and same-sex parents) can choose between Standard Parental Leave (up to 40 weeks, with 35 weeks for one parent) or Extended Parental Leave (up to 69 weeks). Standard benefits are paid at 55% of earnings, while Extended benefits are paid at 33%. Both options include “use it or lose it” weeks specifically for the second parent to encourage shared caregiving.
Work-Related Injury Leave
Sick Leave: Federally regulated employees receive up to 10 days of paid medical leave per year. Provincial rules vary, with many provinces only mandating unpaid sick days.
Compassionate Care Leave: Up to 28 weeks of unpaid, job-protected leave to care for a family member at risk of death.
Personal Leave: 3 to 5 days for family responsibilities or emergencies (often unpaid at the provincial level).
Termination Process
Termination “without cause” is permitted as long as the employer provides proper notice or pay in lieu of notice. Termination “for cause” (e.g., serious misconduct) requires a high burden of proof and no notice is required. Federally regulated employees with 12+ months of service are also entitled to severance pay of 2 days’ wages for each completed year of service (minimum 5 days).
Notice Period
Federal and provincial laws use graduated notice based on tenure. Under the Canada Labour Code for federally regulated employees, notice requirements have been updated to provide one week of notice per year of service, ranging from a minimum of 2 weeks (after 3 months) up to 8 weeks (after 8 years). For provincial jurisdictions like Ontario, notice typically ranges from 1 week (after 3 months) to 8 weeks (after 8 years). If an employer terminates without notice, they must pay an indemnity in lieu of notice equal to the wages the employee would have earned. Resignation notice is generally expected but often ranges from 2 weeks to 1 month depending on the contract or local custom.
Probation Period
A standard probation period is 3 months. During this time, employers can generally terminate an employee without notice or severance pay under most provincial and federal standards, provided the termination is not discriminatory.