Hire in Canada

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Last updated at June 14, 2022
beautiful scenery in the country of canada

Currency

Canadian Dollar (CAD)

Capital

Ottawa

Time Zone

GMT-6

Key Country Facts

Introduction

Canada is the world’s second largest country by total area. It is a parliamentary democracy, a constitutional monarchy and a realm within the Commonwealth of Nations. The capital city is Ottawa, although the largest metropolitan areas are Toronto, Montreal and Vancouver. Canada ranks amongst the world’s leaders on measurements such as civil liberties, government transparency and quality of life. Canada has a total population of just over 35 million.

Area

Canada covers a vast area, nearly ten million square kilometers, in the northern part of North America. To the south it borders the United States of America and is otherwise surrounded by ocean; the Pacific to the west, the Artic in the North and the Atlantic to the East.

Climate

As Canada is such a large country, the climate varies considerably from region to region. Winters can be very harsh particularly in the North and in the interior. Snow cover at ground level for six months of the year is not uncommon. Conversely summer temperatures can be quite high, whilst both east and west coast are usually more temperate.

Culture

The constitution of Canada promotes a just, equal and multi-cultural society. Indeed, Canada has one of the highest per-capita immigration rates in the world. It has significant historical influences from British and French culture. An integral part of the Canadian identity is humor, particularly satire and parody.

Religion

Canada has no official church and is religiously diverse. The constitution protects individual freedom of religion. Around 65% of Canadians identify as Christian of one denomination or another. Around 25% declare no religious affiliation. Islam is the largest non-Christian religion and is also the fastest growing.

Official Language

English and French are the official languages and have equal status in parliament and federal institutions. Other widely spoken languages include; Chinese (mother tongue to over one million inhabitants), Punjabi, Spanish and several indigenous language groups.

Canada HR at a Glance

Employment Law

In Canada law making power in general is shared between the federal and the provincial governments. Employment law matters generally fall under the jurisdiction of the provinces. However, given that it is also legislated by common law, laws from province to province are generally quite similar with Québec being the notable exception (operating on a civil law based on French Napoleonic code). Additionally, in Quebec, language laws require that all written communications to employees (including offers and contracts of employment) must be prepared in French. Only if the employee consents to receiving the documentation in English is this obligation waived.

Only a few distinct industries, which are considered to be of national or international character, are legislated directly by federal law. They include, shipping, air transport, banking and telecommunications amongst others.

As a result, most employers that operate in multiple Canadian provinces are required to comply with a range of legislation in each of these provinces.

Employment Contract

Canadian law does not require a written contract, but this is always recommended. An employment contract should set out the terms and conditions of the employment relationship. If the contract is either unwritten or only partially written, many terms may be implied by common law.

In order to be enforceable, an employment contract must fulfil the essential elements of a binding contract at common law (offer, acceptance and consideration), and must not contravene any applicable legislation. In the case of most employment contracts, the consideration is the exchange of remuneration for work. Employment contracts are subject to scrutiny and will not be enforceable if they do not comply with minimum employment standards, occupational health and safety legislation and human rights legislation. Any ambiguity in an employment contract will generally be interpreted in the employee’s favor.

Fixed term contracts

Most employment agreements are for an indefinite term. Where an employment agreement is for a fixed term, the employee may not be entitled to notice of termination if his or her employment is terminated when the contractual term expires. However, where an employee continues to be employed once the contractual term has expired, or where the employee continues to be employed by the same employer under consecutive fixed-term employment contracts, law courts are likely to find that the employment contract was in substance one of indefinite duration. Employment standards legislation may also establish maximum time frames for fixed term employment contracts to operate as such.

Contract Terms

Employment contracts may be Indefinite, fixed-term, full-time, part-time or casual. Employers can generally provide for differential treatment between these categories of employees; however, basic employment standards apply to all categories in each Canadian jurisdiction. These employment standards set minimum legislative standards in respect of matters such as minimum wages, hours of work, overtime pay, vacations and holidays, and leaves of absence. Employees and employers may not waive or contract out of these rights except to provide more favorable conditions to employees.

Background Checks

Even when an individual has consented to a background check, the collection, use and disclosure of personal information must be reasonable under the circumstances, given the purpose for which it is being collected, used or disclosed. Employers must therefore have some justification for requesting that employees consent to a background check, criminal or otherwise.

British Columbia and Quebec require that any criminal background check, and any decision relating thereto, must be directly relevant to the particular staff position at issue. At the other end of the spectrum, Alberta currently has no restriction on criminal background checks in its legislation at all. Other provinces are somewhere between these two extremes.

For the foregoing reasons, employers generally should not conduct record checks until a conditional offer of employment has been made, and then only with employee’s consent (and, often, participation).

Probation Period / Trial Period

If an employer wishes to hire an employee on a probationary basis to determine their suitability for the position, this should be clearly set out in a written employment contract. In most jurisdictions, a probationary period of up to 3 months is permitted. During the probationary period, an employer, in most provinces, may be able to terminate an employee without being required to provide statutory notice of termination or pay in lieu.

Once a person has been employed for three months, the minimum notice requirements for termination will apply. Any agreement for a probationary period that exceeds three months should clearly state that the employee will be provided with his or her statutory entitlements upon termination.

Working Hours

Most provinces have legislation that governs the maximum hours that employees may work. Such legislation sets out maximum daily and weekly figures (typically 8 hours per day and between 40 hours per week). In certain situations, these maximum hours of work may be exceeded, such as: where overtime is paid; where employees agree; or where there is an emergency. Specific provisions also exist in some provinces, which permit employers to implement “compressed” four-day work weeks or “continental shifts” with 12-hour work-days where the requirement for such can be reasoned. Additionally, some professions (for example, doctors) and certain roles such as managers and supervisors may be exempt from such minimum standards and overtime rules.

Overtime

Overtime rules vary by province with some jurisdictions having daily overtime thresholds (often 8 hours) and others having weekly overtime thresholds (often 40 to 44 hours per week). Overtime is generally payable at 1.5 times the regular rate and in some jurisdictions, 2 times the regular rate once a particular threshold is passed. Overtime entitlements apply to both salaried and hourly employees. However, most jurisdictions specifically exclude certain employees from this entitlement, such as managerial or supervisory employees and certain types of professionals.

Timesheets

Records are required which show the daily hours worked, unless the employee is excluded as a manager as provided for under Section 24 of the Canada Labour Code. If hours of work are averaged, records must include the posting of the 30-day notice, as well as identify the periods of averaging; start date of averaging; details of the reductions in hours; and the number of overtime hours paid if applicable.

Health and Safety in the Workplace

Most provinces require a written health and safety policy with certain contents based on the number of employees and/or the scope of the employer’s operations. Specific training for employees on health and safety standards may also be a requirement. Each jurisdiction is governed by its own health and safety legislation, but generally they all have broad and sweeping powers to investigate and ensure safe workplaces.

Bonus

Bonuses are not required. However. many employers will choose to offer bonuses as an incentive both to attract and retain employees. For the employer, it is extremely important that the wording of any bonus policy is very clear. Clarity is key in limiting liability for payment of bonus, particularly upon termination. Employers must consider using explicit language and clear examples in defining the bonus criteria, the payment dates, and the entitlement, if any, applicable in the event of resignation, retirement or termination of any kind. Merely calling a bonus “discretionary” in the employment contract does not insulate an employer from claims for bonus amounts by terminated employees.

Termination

Grounds

Termination for cause without notice or pay in lieu is permissible. It is very difficult to establish just cause for dismissal; the standard is high. However, in general, if an employee engages in conduct that is incompatible with the fundamental terms of the employment contract, such as gross and willful misconduct, willful neglect of duty, fraud, theft, or repeated insubordination he or she may be dismissed without notice.

Termination without cause is permissible in most jurisdictions, provided that proper notice of termination or pay in lieu is provided.

Employees entitled to termination protection

Generally, employees in Canada cannot be terminated without just cause or without proper notice or pay in lieu and severance pay, if applicable, under statute and at common/civil law. The right to reinstatement, however, is generally limited to unionized employees, employees terminated contrary to human rights legislation, employees terminated for exercising a statutory right with respect to working conditions or legislated employment standards (such as the right to a pregnancy leave).

Federally regulated employers may not terminate a non-managerial employee with at least one year of service without sufficient reason (generally just cause or a discontinuance of the job function). Employers are federally regulated if they operate in industries that fall within the federal government’s constitutional jurisdiction and concern matters of national interest.

In Quebec and Nova Scotia, additional protections exist for certain employees who have acquired tenure (achieved a certain length of service), and in those circumstances, termination may not be possible except for bona fide reasons, such as position elimination or lack of work.

Notice tendered by Employer

The statutorily required minimum length of notice of termination varies by province and, for individual terminations, is typically based on an employee’s length of service. For individual terminations, most jurisdictions limit notice of termination to 8 weeks. If a written employment contract that is otherwise enforceable provides that the employee will receive only his or her minimum entitlements under the applicable statute, this may be sufficient to rebut the legal presumption that the employee is entitled to reasonable notice at common law.

However, statutory entitlement only sets out an employee’s minimum entitlements upon dismissal. Unless the parties have expressly agreed otherwise, there is a legal presumption that an employee will also be entitled to reasonable notice period under common law, and such period may be significantly longer. Factors that will be considered by an adjudicator in determining the appropriate notice period include: the character of employment; the employee’s length of service; the age of the employee; and the availability of other employment. The range of the notice period that may be awarded by a court generally may range from two or three months up to twenty- four months.

In Quebec, similar entitlements exist and generally cannot be limited by contract at the outset of the employment relationship.

Notice tendered by Employee

Similarly, employees are also obliged, under common law, to give a “reasonable amount” of notice. Again, the calculation of this reasonable amount will depend on specific circumstances. Alternatively, parties can displace the common law requirement for an employee to provide “reasonable” notice by including in the employment contract, at the time of hire, a specific amount of notice an employee must give when he or she resigns.

Payment in Lieu

Pay in lieu of notice is permitted. “Garden leave” is becoming more common and, with appropriate care and planning, an employer can often achieve this objective for a reasonable period.

Redundancy / Severance Pay

Ontario is the only Canadian jurisdiction that provides employees with severance pay, which is distinct from payment for notice of termination. Eligible employees in Ontario and employees under the federal jurisdiction are eligible for severance pay. In Ontario, eligible employees are those with 5 or more years of service. They will receive 1 week for each year of service, with partial years prorated to a maximum of 26 weeks. In the federal jurisdiction, eligible employees receive the greater of 2 days’ wages per year of service or 5 days’ wages.

Post-Termination Restraints / Restrictive Covenants

Non-compete clause

Will typically not be enforceable for regular employees and particularly not where a non-solicitation provision would have been sufficient to protect the employer. Such clause must be reasonable in scope geographically and temporally, and in some jurisdictions, must also specify the type of restricted employment and the restricted job functions. The language should be clear and unambiguous. A requirement not to interfere with business relationships might also be more likely to be enforced if it is reasonable, clear and unambiguous.

Customer non-solicit clause

A customer non-solicit clause is more likely to be enforced than most non-competition agreements. Non-solicitation agreements must still be reasonable in scope geographically and temporally and be clear and unambiguous.

Employee non-solicits

Again, these are likely to be enforced if reasonable, clear and unambiguous.

Trade Unions / Collective Agreements

In Canada, the level of union participation is low and declining in the private sector. Unions continue to have high levels of representation in the public sector, especially in certain traditionally unionized industries such as automotive, construction and transportation. Many businesses have no union or other worker representation and there are no works councils. Industry-level collective bargaining agreements are rare other than in Quebec for certain industries.

Tax and Social Security

Personal Income Tax

Income tax is levied at two different levels; Federal and Provincial. Provincial tax is computed in much the same way as federal tax, but applying the applicable province’s tax brackets, rates, and credits to taxable income. The Canada Revenue Agency (CRA) administers both federal and provincial taxes (except Québec’s). Taxpayers calculate their federal and provincial taxes on one return (other than in Québec, which will require filing of both a Federal and separate Québec tax return).

Residents

All individual resident in Canada are subject to Canadian income tax on their worldwide income, regardless of where it is earned or where it is received. However, they may be eligible for a credit or deduction for foreign taxes paid on income derived from foreign sources.

Non-residents

Non-resident individuals are subject to Canadian income taxes, at the same rates applicable to residents, on the following types Canadian earned income:

  • employment income
  • business income
  • Gains from the disposition of “Taxable Canadian Property” (see definition provided in the “taxation of investment income and capital gains” section).
From CAD To CAD Tax Rate %
0 48,535 15.0
48,535 97,069 20.5
97,069 150,473 26.0
150,473 214,368 29.0
241,368 and over 33.0

Newfoundland and Labrador

  • 8.7% on the first $37,929 of taxable income, +

  • 14.5% on the next $37,929, +

  • 15.8% on the next $59,574, +

  • 17.3% on the next $54,172, +

  • 18.3% on the amount over $189,604

Prince Edward Island

  • 9.8% on the first $31,984 of taxable income, +

  • 13.8% on the next $31,985, +

  • 16.7% on the amount over $63,969

Nova Scotia

  • 8.79% on the first $29,590 of taxable income, +

  • 14.95% on the next $29,590, +

  • 16.67% on the next $33,820, +

  • 17.5% on the next $57,000, +

  • 21% on the amount over $150,000

New Brunswick

  • 9.68% on the first $43,401 of taxable income, +

  • 14.82% on the next $43,402, +

  • 16.52% on the next $54,319, +

  • 17.84% on the next $19,654, +

  • 20.3% on the amount over $160,776

Quebec

  • 15% $44,545 or less

  • 20% More than $44,545 but not more than $89,080

  • 24% More than $89,080 but not more than $108,390

  • 25.75% More than $108,390

Ontario

  • 5.05% on the first $44,740 of taxable income, +

  • 9.15% on the next $44,742, +

  • 11.16% on the next $60,518, +

  • 12.16% on the next $70,000, +

  • 13.16 % on the amount over $220,000

Manitoba

  • 10.8% on the first $33,389 of taxable income, +

  • 12.75% on the next $38,775, +

  • 17.4% on the amount over $72,164

Saskatchewan

  • 10.5% on the first $45,225 of taxable income, +

  • 12.5% on the next $83,989, +

  • 14.5% on the amount over $129,214

Alberta

  • 10% on the first $131,220 of taxable income, +

  • 12% on the next $26,244, +

  • 13% on the next $52,488, +

  • 14% on the next $104,976, +

  • 15% on the amount over $314,928

British Columbia

  • 5.06% on the first $41,725 of taxable income, +

  • 7.7% on the next $41,726, +

  • 10.5% on the next $12,361, +

  • 12.29% on the next $20,532, +

  • 14.7% on the next $41,404, +

  • 16.8% on the amount over $157,748

Yukon

  • 6.4% on the first $48,535 of taxable income, +

  • 9% on the next $48,534, +

  • 10.9% on the next $53,404, +

  • 12.8% on the next $349,527, +

  • 15% on the amount over $500,000

Northwest Territories

  • 5.9% on the first $43,957 of taxable income, +

  • 8.6% on the next $43,959, +

  • 12.2% on the next $55,016, +

  • 14.05% on the amount over $142,932

Nunavut

  • 4% on the first $46,277 of taxable income, +

  • 7% on the next $46,278, +

  • 9% on the next $57,918, +

  • 11.5% on the amount over $150,473

SOCIAL SECURITY

Canada has well developed and extensive social security system that provides benefits such as disability, death, family allowances, medical care, old age, sickness, and unemployment. Funding for the social security system is by wage and salary deductions and employer contributions. It is the employer’s responsibility to collect both employer and employee contributions.

 

 

 

Type of Social insurance Paid by employer Paid by employee Total Maximum Contributions (per annum)
Canada Pension Plan 5.25% 5.25% 10.50% Employee CAD 2,898 Employer CAD 2,898
Employment Insurance 2.21% 1.58% 3.79% Employee CAD 856 Employer CAD 1,199
Total 7.46% 6.83% 14.29%  

*The above table serves as a broad guideline. Actual rates charged will differ.

Employees

Salary Payment

Canadian law requires that employees are paid at regular intervals, this can be weekly, bi-weekly or semi-monthly, but regular monthly salary payments are most common.

Payslip

A statement of wages (often known as a pay stub) must be issued on or before the day of the related salary payment. The pay stub must include:

  • the employees’ rate of pay

  • the pay period

  • wages for that period, before and after any deductions, and how that was calculated

  • the amount and reason for any deductions.

Annual Leave

  • Employment standards legislation provides employees with a statutory entitlement to vacation and vacation pay. Amounts and related requirements vary by jurisdiction but in all provinces, employees are entitled to at least two weeks of vacation per year and vacation pay of 4% which begins to accrue immediately upon the commencement of employment. In many provinces this entitlement will increase with an employee’s length of service, for example typically 3 weeks and 6% vacation pay after 5 years of service.

  • Many employers provide a greater (than statutory) vacation entitlement and allow vacation to be taken in the first year of employment as the vacation time accrues.

Carry over rules

In most jurisdictions carry over of annual leave is allowed; that is to say “use or lose” policies are not permissible.

Sick Leave

Entitlements to sick leave vary by province but generally employers are not obliged to pay for these absences. Employees in most jurisdictions will have the statutorily protected right to a certain number of days unpaid sick leave. Many employers do however provide paid sick leave.

Some provinces provide for a certain number of statutorily protected but unpaid days to deal with responsibilities in relation to caring for family member.

Importantly, employers also have a duty to accommodate for an employee on the basis of any disability and family status etc. Therefore, an employer may be required to permit an employee to be absent (without pay) for more than the mandated statutory leave days.

Compassionate & Bereavement Leave

Under the Employment Standards Act, there is no statutory entitlement for employees to receive paid bereavement leave in Canada. Under most circumstances, employees are entitled the right to take at least 2 days of unpaid job-protected leave per calendar year for the death of immediate family members. The employees’ job is protected in the event of them taking such leave. Many employers will both pay for this leave and indeed extend the number of days allowed via agreement in the Employment Contract or in an emergency leave policy.

The definition of immediate family members is: Their siblings; Their spouse; Their or their spouse’s parent, step-parent or foster parent; Their or their spouse’s grandparent or step-grandparent; Their or their spouse’s child, step-child or foster child; Their or their spouse’s grandchild or step-grandchild; Their child’s spouse; A dependent relative.

Maternity & Parental Leave

Maternity and parental leave entitlements differ by province to province. In general, pregnant employees have the right to take Maternity, or pregnancy, leave of up to 17, 18 or 19 weeks depending on the province. This leave is unpaid. In Quebec, birth fathers are also eligible for up to 5 weeks of unpaid paternity leave.

Additionally, in most jurisdictions, new parents (also parents by adoption) have the right to unpaid parental leave of between 59 and 63 weeks (depending on the jurisdiction) when a child is born or comes into their care for the first time. Parental leave does not have to commence immediately following the birth of the child (or in the case of adoption when the child first comes into the care of the parents). Timeframes and rules for this leave vary in different jurisdictions. However, in most jurisdictions, birth mothers who have taken pregnancy leave must commence parental leave immediately after the end of the pregnancy leave.

An employer cannot in anyway penalize any employee that is eligible, or will be eligible, to take pregnancy/parental leave, or for taking such pregnancy/parental leave. Generally, benefits must be maintained and in almost all cases employees have the right to return to their job following the leave, whilst the employee’s seniority and length of service will also be maintained.

As often Employment Insurance benefits only cover a fraction of the employee’s regular income, many employers will have a scheme to offer a “top up” of benefits for a further portion of the regular income.

Public Holidays

Public holidays in Canada are typically know as statutory holidays. They are legislated at Federal, Provincial and Territorial levels. There are five nationwide (federal) statutory holidays and six additional holidays for federal employees. Each of the provinces and territories observes a number of holidays in addition to the nationwide days.

Most workers are entitled to take the day off with regular pay. Some employers may require employees to work, but the employee must either receive a day off in lieu of the holiday or must be paid at a premium rate – usually 1½ or twice the regular pay for their time worked that day, in addition to the holiday pay.

Benefits to the Employee in Canada

Statutory Benefits

The Canadian social security system is broad and encompassing, incorporating federal law on welfare issues such as unemployment insurance and old age security, as well as provincial policies and programs on welfare issues, such as education, social services and social assistance.

The benefits system also provides for benefits including retirement, unemployment, disability and healthcare benefits and are available to residents of Canada.

Additionally, the federal Employment Insurance (EI) system provides benefits in the event of a loss or interruption of employment. Canada’s public health care system also greatly decreases the cost to employers of providing private medical insurance to employees when compared to countries without such systems. Participation in a government-run workers compensation program in each province is either mandatory or optional, depending on the type of work the employer is engaged in.

Other Benefits

Typically, employees in senior roles are offered supplementary benefit packages, which may include:

  • Private pension programs

  • Supplementary health care/dental plan (which typically cover costs of items or care that are not covered by Canada’s universal healthcare system such as prescription drugs or vision ware)

  • Additional paid annual leave/emergency leave

  • Corporate bonus program

  • Vehicle allowance

Visas and Foreign Workers

General Information

Work Permits

Most people will require a work permit to work in Canada. (There are very few exceptions for particular work types such as: academic experts evaluating or supervising academic projects, proposals or university theses).

There are two types of work permit – Open work permit and Employer-specific work permit. Most permits will be Employer-specific. To commence an application there will be various requirement but typically and most importantly, proof of an offer of employment and a Labour Market Impact Assessment (LMIA) confirmation letter. A LMIA is a document that an employer in Canada may need to get before hiring a foreign worker. A positive LMIA will show that there is a need for a foreign worker to fill the job. It will also show that no Canadian worker or permanent resident is available to do the job.

Getting a Tax Number

The Canadian Social Insurance Number (SIN) is a 9-digit number that is required in order to work in Canada or to have access to government programs and benefits. A SIN is issued to one person only and it cannot legally be used by anyone else. Applications to the Social Insurance Registration Office can be made online or by post. There is no fee.

For individual’s resident in Canada, their authorized tax identification number is their nine-digit Canadian Social Insurance Number (SIN). Every individual resident in Canada with income tax filing obligations is required to have a SIN.

Public Holidays in 2022

S.No Occasion Date Observance
1 New Year’s Day January 1st National (Observed on January 3rd)
2 Louis Riel Day February 21st MB
3 Islander Day February 21st PEI
4 Family Day February 21st AB, BC, NB, ON, SK
5 Heritage Day February 21st NS
6 Good Friday April 15th National
7 Easter Monday April 18th National
8 National Patriot’s Day May 23rd QC
9 Victoria Day May 23rd National
10 National Indigenous Peoples Day June 21st NT , YT
11 Saint-Jean-Baptiste Day June 24th QC
12 Canada Day July 1st National
13 Civic Holiday August 1st National, NT, NU, BC, NB, SK
14 Labour Day September 5th National
15 National Day for Truth and Reconciliation September 30th National
16 Thanksgiving October 10th National, AB, BC, MB, NT, NU, ON, QC, SK, YT
17 Remembrance Day November 11th National, AB, BC, NB, NL, NT, NU, PEI, SK, YT
18 Christmas Day December 25th National (Observed on December 26th )
19 Boxing Day December 26th National (Observed on December 27th )

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