Employer of Record in Canada

What is an Employer of Record in Canada?

An Employer of Record (EOR) in Canada is a strategic partner that acts as the legal employer for your employees residing in Canada. The EOR takes on all employment responsibilities and liabilities on your behalf, handling payroll, benefits, taxes, and regulatory compliance.

By partnering with an EOR, you can hire employees in Canada without the need to establish a local entity or navigate complex labor laws.

General Information

• Currency: Canadian Dollar (CAD)
• Employer Taxes: 16.864%
• Payroll Frequency: Bi-Monthly / Monthly
• Employee Costs: 8.524%
• Capital: Ottawa
• Fiscal Year: 1 January – 31 December

Main Aspects of the Labour Code

Minimum Wage

General: As of May 1, 2023, General minimum wage has increased to 15.25 CAD per hour, up from the previous rate of 14.25 CAD per hour. For tipped workers, the minimum wage is 12.20 CAD per hour. Employees of federally regulated organizations will receive the minimum wage applicable in the jurisdiction where they perform their work.

Payroll

Payroll Cycle: An employer has 1 month to remit an employee’s first pay. After this, wages must be paid at regular intervals of no more than 16 days, or 1 month in case of managerial personnel. If pay day falls on a statutory holiday, the wages must be paid on the preceding working day.

13th Salary

There is no legislation for 13th-month payments in Canada.

Working Hours

General: Under the Employment Standards Labour Code § 16, the standard maximum working hours are:

• 8 hours a day
• 44 hours a week
• 12 hours in a day (inclusive of overtime)

However these limits can vary by industry:

Security without Surveillance: 60 hours maximum per week

Clothing Industry: 39 hours maximum per week

Forestry or Sawmill: 47 hours maximum per week

Remote Area or James Bay Territory: 55 hours maximum per week

Security with Surveillance: 44 hours maximum per week

Overtime: An employer must pay an employee overtime pay at a rate that is at least 150.00% of the employee’s regular rate of pay or one hour of time off in lieu.

Certain job types are exempt from overtime rules, for example, many managerial and IT positions.

Leave

Annual Leave (Vacation):

In Canada, the vacation leave entitlements are as follows:

After five years of employment, the vacation pay increases to 6.00% of the regular salary.

Vacation Leave:

Employees are entitled to two consecutive weeks of vacation leave after completing one year of employment.

After five years of employment, employees are entitled to three consecutive weeks of vacation leave.

It is common practice to offer vacation leave from the start of employment.

Vacation Pay:

For the first five years of employment, employees are entitled to vacation pay of 4.00% of their regular salary.

Public Holidays

There are 8 national holidays in Canada. If a holiday falls on a weekend, it the holiday is observed on the Friday before the weekend or on the following Monday.

Sick Days

The Canada Labour Code was updated, effective December 1, 2022, to provide 10 days of paid sick leave to employees in the federally regulated private sector, which applies to specific industries. Here are the key details:

• Qualifying Period: There is a 30-day qualifying period for covered employees. Therefore, on December 31, 2022, employees who had been continuously employed for at least 30 days gained access to their first three days of paid sick leave.
• Accumulation of Sick Leave: Starting February 1, 2023, employees began acquiring an additional day of paid sick leave each month, up to a maximum of 10 days per year.

Additionally, effective December 18, 2022:

• Employment Insurance Sickness Benefits: The benefits were extended from 15 weeks to 26 weeks. Qualified individuals who established a new claim on or after December 18, 2022, are eligible to receive up to 26 weeks of Employment Insurance sickness benefits.
• Benefit Amount: These benefits are paid at 55% of the claimant’s average weekly insured earnings, with a maximum of $650 per week in 2023.

Maternity Leave

Eligibility: Employees are entitled to up to 17 weeks of maternity leave if they have completed at least one year of employment before the due date.

Timing:

Maternity leave cannot begin earlier than 17 weeks before the expected delivery date and must end no later than 18 weeks after the delivery.

If the delivery occurs after the expected date, the employee is entitled to at least two additional weeks of maternity leave.

Special Maternity Leave: This can begin four weeks before the expected delivery date if there is a risk of pregnancy termination or a danger to the health of the mother or unborn child. A two-week notice and a medical certificate are required.

Employment Insurance (EI) Maternity Benefits

Eligibility:

EI maternity benefits are available to individuals who are away from work because they’re pregnant or have recently given birth.

These benefits are only available to the person who is pregnant or has recently given birth and cannot be shared between parents.

Benefit Amount: Workers are entitled to 55% of their earnings for up to 15 weeks, with a maximum benefit of CAD 650 per week.

Parental Benefits:

The person receiving maternity benefits may also be eligible for parental benefits.

Maternity benefits can be followed by parental benefits, and workers can apply for both at once.

Paternity Leave

Paternal leave falls under parental leave.

Parental Leave

Parents in Canada are entitled to up to 63 weeks of parental leave to care for a newborn or adopted child. Here are the details:

• Duration: Up to 63 weeks of leave.
• Timing:
  • Parental leave cannot begin before the week of the child’s birth or the legal adoption.
  • The leave must start no later than 78 weeks after the birth or adoption.

Employment Insurance (EI) Parental Benefits:

The specific benefit rate and duration depend on the option chosen by the parents when applying for parental benefits.

Eligibility:

Available to parents who are away from work to care for their newborn or newly adopted child.

This benefit is available in addition to maternity benefits for the parent who gave birth.

Benefit Amount:

The benefits provided under EI allow parents to share the leave and can be taken simultaneously or consecutively.

Other Leave

Employees in Canada have various entitlements for leave, including bereavement, compassionate care, personal emergencies, and family medical situations. Here’s a breakdown:

Mandatory Leave Entitlements

1. Bereavement Leave:
   • Duration: 5 days.
   • Purpose: For the loss of a family member.
2. Compassionate Care Leave:
   • Duration: Up to 27 weeks.
   • Purpose: To provide care or support to a family member who has a serious medical condition with a significant risk of death within 26 weeks.
3. Personal Emergency Leave:
   • Duration: Up to 10 days per year.
   • Purpose: For personal illness, injury, medical emergency, or other urgent matters.
4. Family Medical Leave:
   • Duration: Up to 8 weeks within a 26-week period.
   • Purpose: To care for a family member with a serious medical condition.
5. Extended Leave in Tragic Circumstances:
   • Duration: Up to 104 weeks.
   • Purpose: In the event of the death of an employee’s child or if the child has disappeared under tragic circumstances.

Quebec-Specific Leave Entitlements

Purpose: For annual training, deployment to Canadian Forces operations either inside or outside Canada, assisting with an emergency, or other operations as set out in the Employment Standards Regulation.

Jury Duty Leave:

Entitlement: Full-time, regularly employed employees are entitled to job-protected, unpaid leave when serving as a juror, a witness, responding to a subpoena, or acting as a plaintiff or defendant in court.

Requirement: Employees must provide a copy of the jury summons to their employer.

Reservist Leave:

Duration: Up to 20 days of unpaid leave per calendar year.

Eligibility: After completing 26 consecutive weeks of service with the same employer.

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