Canadian Employment Law Basics for U.S. Employers
Essential guide to understanding Canadian employment law requirements. Learn about minimum wage, vacation entitlements, termination rules, and provincial variations.
Canadian employment law differs significantly from U.S. employment law. Understanding these differences is crucial for U.S. companies hiring Canadian employees to ensure compliance and avoid legal issues.
Key Employment Standards
Fundamental requirements that apply across Canada
Minimum Wage
Each province sets its own minimum wage, which varies by province and can change annually. Current rates range from approximately $14-$16 CAD per hour.
Source: Provincial employment standards
Vacation Entitlement
Most provinces require a minimum of 2 weeks (10 days) paid vacation per year. After several years of service, this typically increases to 3 weeks.
Source: Provincial employment standards
Statutory Holidays
Employees are entitled to paid time off for statutory holidays. The number and specific holidays vary by province, typically 8-10 paid holidays per year.
Source: Provincial employment standards
Overtime Pay
Overtime rates (typically 1.5x regular rate) apply after 8 hours per day or 40-44 hours per week, depending on the province.
Source: Provincial employment standards
Termination Requirements
Rules for ending employment in Canada
Notice Period
Employers must provide advance notice or pay in lieu of notice when terminating employees. The required notice period depends on:
- Length of service
- Provincial employment standards
- Employment contract terms
- Common law requirements (may exceed statutory minimums)
Severance Pay
Some provinces require severance pay for employees with long service, typically after 5+ years. Severance is separate from notice pay.
Record of Employment (ROE)
Employers must issue a Record of Employment (ROE) when an employee stops working. This is required for Employment Insurance (EI) claims.
Provincial Variations
Each province has its own Employment Standards Act
Employment standards vary significantly by province. Key differences include:
- Minimum Wage: Varies by province (e.g., Ontario $16.55, Quebec $15.25, BC $16.75)
- Vacation: Most require 2 weeks minimum, some provinces have additional requirements
- Statutory Holidays: Number and specific holidays vary
- Termination: Notice requirements vary by province and length of service
- Workplace Safety: Each province has its own workers' compensation board (WSIB, CNESST, WorkSafeBC, etc.)
It's essential to comply with the specific province where your employee works.
Workplace Safety Requirements
Provincial workplace safety and insurance
Employers must register with and contribute to provincial workers' compensation programs:
- Ontario: Workplace Safety and Insurance Board (WSIB)
- Quebec: Commission des normes, de l'équité, de la santé et de la sécurité du travail (CNESST)
- British Columbia: WorkSafeBC
- Alberta: Workers' Compensation Board (WCB)
- Other provinces have similar programs
These programs provide insurance coverage for workplace injuries and illnesses. Premiums are based on industry classification and payroll.
Employee vs. Contractor Classification
Understanding the difference is critical
The CRA has strict rules for classifying workers as employees vs. independent contractors. Misclassification can result in:
- Penalties and interest charges
- Back payment of CPP, EI, and income tax
- Legal liability for employment standards violations
Key factors the CRA considers include control over work, ownership of tools, financial risk, and integration into the business.
Ensure Compliance with EOR Services
We handle all employment law compliance for you
Navigating Canadian employment law requires understanding complex provincial variations and ongoing compliance. Our Canadian Employer of Record services ensure full compliance:
- Provincial employment standards compliance
- Proper employee classification
- Termination and severance compliance
- Workplace safety registration and compliance
- Employment contract compliance
- Ongoing legal updates and compliance