Canada Labor Law Guide for Hiring Employees and Contractors
Minimum Wage
CAD 17.3 per hour
Overtime Wage
1.5 of regular wage
Meal Breaks
30 minutes after 5 hours of work
Rest Breaks
Not mandated
Working hours
8 hours per day, 40 hours per week
Salary Payment Cycle
Bi-weekly or monthly
Payroll Taxes
CPP, EI, Employer Health Tax
Paid Vacation
Minimum 2 weeks (4% of earnings)
Overtime Hours
After 40 hours in a week or 8 hours in a day
Night Shift Hours
Not mandated
Holidays
5-10 days
No Work Days
Saturday and Sunday
When hiring workers in Canada, businesses need to be aware of several legal and regulatory requirements.
Generally, a business must be registered in Canada to hire employees. The cost and time to establish a business entity vary by province but typically involve several hundred dollars and can take anywhere from a few weeks to a couple of months.
Employment agreements in Canada must be in writing and should include clauses on job duties, salary, benefits, confidentiality, non-compete, and termination terms.
Canada’s labor laws treat employees and contractors differently, and it is crucial for businesses to correctly classify workers to avoid legal issues.
Employees are entitled to benefits such as paid leave and overtime, while contractors typically are not. Misclassification of employees as contractors can lead to significant legal and financial penalties.
Canada has a minimum wage law that varies by province. The federal minimum wage as of April 2024 is CAD 17.3 per hour, applicable in federally regulated sectors. Each province and territory sets its own minimum wage, which ranges from CAD 14.00 to CAD 19.00 per hour.
Some workers, such as those in the hospitality industry, may be subject to different minimum wage rates. Additionally, provinces like Alberta, Ontario, and British Columbia have their own minimum wage rates that may differ from the federal rate.
Employers in Canada are not required to pay holiday pay unless stipulated by provincial law or collective agreements.
Standard working hours in Canada are 8 hours per day and 40 hours per week. Any work beyond these hours is considered overtime and must be compensated at 1.5 times the regular hourly wage. Night shift work does not generally require additional pay unless specified in a collective agreement or employment contract.
Canada has strict regulations on child labor, with the minimum age for employment typically set at 14 years, though this can vary by province and industry. Additionally, there are restrictions on the types of work and the number of hours that minors can work.
Employers in Canada are required to deduct certain amounts from employees’ wages and contribute to federal and provincial programs. These deductions include:
Canada Pension Plan (CPP): A contribution of 5.95% of the employee’s earnings up to a maximum amount, matched by the employer.
Employment Insurance (EI): A contribution of 1.58% of insurable earnings, with employers paying 1.4 times the employee contribution.
Employer Health Tax (in some provinces): A provincial tax paid by employers based on payroll size.
Income tax in Canada is progressive, with the following federal tax rates:
Income Level | Federal Tax Rate |
Up to CAD 53,359 | 15% |
CAD 53,359 to CAD 106,717 | 20.5% |
CAD 106,717 to CAD 165,430 | 26% |
CAD 165,430 to CAD 235,675 | 29% |
Over CAD 235,675 | 33% |
Employers in Canada must provide statutory leaves to their employees, which include:
Paid Vacation: A minimum of 2 weeks after each year of employment (increases with seniority).
Maternity Leave: Up to 17 weeks of unpaid leave.
Paternity Leave: Varies by province; often combined with parental leave.
Sick Leave: Generally unpaid but varies by province and employment contracts.
Adoption Leave: Similar to maternity leave, typically up to 17 weeks.
Statutory Holidays: Varies by province, usually between 5 and 10 days per year.
Eligibility for these leaves often depends on the length of service with the employer, and some leaves may require medical or other documentation.
Employees are eligible for several holidays in Canada. The following is a list of official holidays in Canada:
Holiday Name | Date |
New Year’s Day | January 1 |
Good Friday | April 5 (2024) |
Easter Monday | April 8 (2024) (only for federal employees) |
Victoria Day | May 20 (2024) |
Canada Day | July 1 |
Civic Holiday | August 5 (2024) (not a statutory holiday in all provinces) |
Labour Day | September 2 (2024) |
Thanksgiving Day | October 14 (2024) |
Remembrance Day | November 11 (2024) (not a statutory holiday in all provinces) |
Christmas Day | December 25 |
Boxing Day | December 26 |
Please note that some holidays may vary by province or territory, and not all are considered statutory holidays in every region. For example, Remembrance Day and Easter Monday are statutory holidays in some provinces but not others.
Civic Holiday is also not a statutory holiday in all provinces.
In Canada, employers must provide certain benefits to employees, including:
Canada Pension Plan (CPP): Retirement benefits funded through employer and employee contributions.
Employment Insurance (EI): Provides income support during unemployment, sickness, or parental leave.
Healthcare: While basic healthcare is provided by the government, many employers offer supplementary health insurance.
Gratuity and Bonuses: Not mandatory, but often included in employment contracts or collective agreements.
Canada does not follow At-Will Employment laws. Instead, employment termination is governed by both federal and provincial labor laws, which require just cause or sufficient notice. The notice period varies depending on the length of service but is generally a minimum of 1 week per year of service, up to a maximum of 8 weeks. Severance pay may also be required depending on the circumstances of the termination.
Employers must follow a structured termination process, which includes providing written notice, paying out any owed wages or benefits, and possibly offering a severance package. Employees have the right to challenge wrongful termination through legal channels or labor unions.
Employers can legally terminate an employee for reasons such as misconduct, performance issues, or redundancy. However, terminations cannot be based on discriminatory factors such as race, gender, or disability.