Canadian Employment Law Basics for U.S. Employers

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

Minimum wage

Each province and territory sets its own general minimum wage, and most adjust it every year. The Government of Canada keeps current and forthcoming rates for every province and territory.

Vacation entitlement

Most provinces require at least two weeks of paid vacation a year, rising to three weeks after a set length of service (for example, after five years in Ontario).

Statutory holidays

Employees are entitled to paid time off on statutory holidays. How many there are, and which days, varies by province.

Overtime pay

Overtime is usually paid at 1.5 times the regular rate after a daily or weekly threshold set by the province: for example, after 44 hours a week in Ontario, or after 8 hours a day or 40 a week in British Columbia.

Termination requirements

Notice period

Employers must provide advance notice or pay in lieu of notice when terminating employees without cause. The required notice depends on:

• Length of service
• Provincial employment standards
• Employment contract terms
• Common law requirements, which may exceed the statutory minimums

Severance pay

Some jurisdictions also require severance pay for long-service employees, separate from notice: in Ontario, for example, after five years of service with larger employers.

Record of Employment (ROE)

Employers must issue a Record of Employment (ROE) when an employee stops working. It is required for Employment Insurance (EI) claims.

Provincial variations

Each province has its own employment standards legislation. Key differences include:

• Minimum wage: set and updated by each province
• Vacation: most require two weeks minimum, some with additional requirements
• Statutory holidays: the number and specific days vary
• Termination: notice requirements vary by province and length of service
• Workplace safety: each province has its own workers' compensation board (WSIB, CNESST, WorkSafeBC, and others)

Apply the rules of the province where your employee works. The province explorer lists the employment standards law and compensation board for each one.

Workplace safety

Employers must register with and contribute to the provincial workers' compensation program, for example:

• 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-Alberta)

These programs insure workplace injuries and illnesses. Premiums are based on industry classification and payroll.

Employee vs. contractor classification

The CRA has strict rules for classifying workers as employees or 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 the work, ownership of tools, financial risk, and integration into the business. Learn more about contractor vs. employee classification.