Benefits & Compensation In Canada

What are Employee Benefits?

Employee benefits are the perks and benefits that companies offer to their employees over and above their annual salary. This includes medical benefits for employees, paid holidays, allowances, and ESOPs, among other things. Certain benefits may vary from company to company, but there are several benefits guaranteed by the country where the employee is employed. 

Employee benefits are an excellent way to ensure the long-term retention of employees. Such perks help in gaining the employees’ trust and confidence. They also give employees a sense of personal growth and security. Thus benefits and compensation packages in Canada are a big factor for talents to decide where they want to work. 

This article details the compensation and benefits policy in Canada.

Compensation Laws in Canada

The compensation and benefits policy in Canada is governed both by a central statute and by a law common to 9 of its ten provinces. Only the province of Quebec has replaced the system of common law with the Civil Code of Quebec. So, compensation laws in Canada differ by region while following some uniform principles.

The provinces each have their statutory provisions, but factors like employment standards, occupational safety and health standards, labor laws, and just employment practices remain uniform.  In Canada, all jurisdictions – federal or provincial, account for minimum statutory employment standards for all Canadian employees. These minimum standards include:

  • Minimum wage
  • Maximum number of daily or weekly work hours
  • Overtime rules
  • Minimum off-work time
  • Equal pay
  • Public holidays and vacations
  • Secured and paid leaves
  • Termination laws and severance entitlements

In most provinces of Canada, the overtime rate is fixed at 1.5 times the employee’s regular pay. The actual overtime can range between 40 to 44 hours, depending on the province of employment. Paying overtime by the rates set by the provincial laws is binding on the employers, and they cannot force their employees to work beyond the permissible overtime hours.

The minimum wage varies by province, and employees must be paid weekly, bi-weekly, monthly, or annually. If someone is a federal employee, i.e., employed by federally regulated industries such as telecommunications, then federal minimum wage applies to them instead of provincial rates.

How to Design an Employee Benefits Program for Employees in Canada?

Designing a benefits program can be challenging, but it is also a critical component of calculating the total employment costs that a company will incur. Employers in Canada are legally bound to develop a comprehensive and efficient design to cater to the needs of their employees. An ideal benefits and compensation plan balances the employer’s interests with those of the employees while following Canada’s federal and provincial laws.

Some of the factors that employers should take into consideration while coming up with a compensation and benefits policy in Canada are:

  • Legal requirements of the Canada benefits and compensation laws.
  • Market expectations and trends.
  • Minimum benefits that you are needed to provide.

Any employee benefits Canada plan must account for a few required provisions detailed by federal and provincial laws. Additionally, companies choose to provide additional benefits depending on the size and turnover of the company. 

Compulsory benefits include:

  • Paid annual leave and statutory holidays, depending on the province 
  • Employee benefits insurance
  • Statutory pension plan contributors

Some possible additional benefits are:

  • Severance packages
  • Remote work
  • Transportation or work from home allowances
  • Tuition reimbursement
  • Productivity bonus
  • Vision or dental benefits

With these factors in mind, an employer can create the perfect compensation and benefits policy in Canada in three simple steps

Resource evaluation

Taking stock of the company’s resources beforehand can help an employer allocate comfortable budgets for benefits programs.

Employee needs assessment

Thoroughly researching and surveying the needs of the employees to come up with the best tailor-made benefits and compensation plans.

Creating a relevant, effective, and contemporary benefits plan

Once you understand what your company can afford and what your employees need, the next and most important task is to put the knowledge into creating the most suitable employee benefits plan.

Types of Guaranteed Benefits in Canada

Certain benefits are guaranteed to all employees across Canada. These include:

Health care benefits

All employees have access to health care benefits through Canada’s national social security system. Every province also has a respective provision of a Medicare card for free benefits in healthcare and childcare. Companies in different provinces also offer versions of Group Benefits Plans along with free coverage. 

Maternity leave

Companies across Canada uniformly guarantee up to 17 weeks of maternity leave to pregnant employees who have worked for six months or more. Employees must submit a valid medical certificate of their condition, and then, no employer can reject maternity leave. 

Holidays‍

There are four recognized federal public holidays in Canada for which employees are entitled to paid time off. These include – New Year’s Day, Canada Day, Labour Day, and Christmas Day. On top of that, employees are also entitled to provincial public holidays specific to the province. 

Employee Benefits for Expatriates

Expatriates working in Canada enjoy several benefits and compensations that make their transition as comfortable as possible. These include and are not limited to:

  • Relocation packages
  • Housing allowances
  • Travel allowances
  • Home travel packages
  • Language courses or club access

How are Employee Benefits Taxed in Canada?

Despite the verbal meaning of their names, all compensation and benefits policy are taxable. In Canada, this happens if the employee is the primary beneficiary and incurs a monetary gain from the benefits received. Benefits under this category include transportation allowances or home travel packages. However, allowances submitted with a bill or expense vouchers are exempted from taxation. Examples are tuition or mobile phone reimbursements.

Restrictions for Canada Benefits and Compensation

Restrictions for benefits and compensation laws vary from province to province in Canada. Hence, it is important for any employer to thoroughly research the compensation laws of the specific region where they want to set up their subsidiary. Some employers also hire onboarding partners like Multiplier to navigate the Canada employment regulation.

Supplemental Benefits for Employees in Canada

Even though Canada has a universal healthcare system, public health insurance does not effectively cover all medical expenditures like drug costs or dental care. This is where an employer’s supplemental insurance plans make a huge difference.

Similarly, there are many other supplemental benefits in Canada, such as supplemental pension plans.

How Multiplier Can Help With Benefits Management in Canada?

Every employer of Canadian citizens, who pays their employers directly, is obligated to provide worker’s compensation and employee health and safety benefits. It is binding and Canadian workers and benefits laws are stringent. Failure to meet the requirements of the law can lead to grave consequences like a license cancellation or even hefty reparations.

If you are an employer of Canadian citizens from abroad, then executing a compensation and benefits policy in Canada by the law can be difficult. The Canadian laws for labor, benefits, and compensation are very complicated. Foreign employers often have to travel to Canada or have representatives in Canada with a concrete understanding of the country’s rules and regulations to manage benefits duties effectively. 

Hence, outsourcing these legalities to a co-employee like Multiplier is an excellent option. With Multiplier, a company can build a solid and effective employee benefits program to ensure employee retention and business growth.

Frequently Asked Questions

The minimum wage of all federal employees or employees in federally managed industries in Canada is set at 15.00 CAD as of January 2022.

The workplace insurance system in Canada pays benefits and compensations to an employee who is hurt or gets sick due to some aspect of their employment.

The Canada Pension Plan (CPP) is a retirement income scheme. It is a tax-free monthly payment service that stores a portion of your employment salary for your retirement.

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