Canada Country Guide 2022

Canada

Canadian law does not require that a contract of employment must be in writing to be valid. However, many employers choose, as a best practice, to enter into a written agreement to clearly define the terms and conditions of employment.

We recommend putting a strong employment contract in place, in the local language, which spells out the terms of the employee’s compensation, benefits, and termination requirements. An offer letter and employment contract in Canada should always state the salary and any compensation amounts in Canadian dollars rather than a foreign currency.

  • Capital: Ottawa
  • Currency: Canadian dollar (CAD)
  • Minimum hourly wage: ~ CAD 15 per hour

Public Holidays

  • New Year’s Day, Jan 1, 2022
  • New Year’s Day (in lieu), Jan 03, 2022
  • Family Day, Feb 21, 2022
  • Islander Day, Feb 21, 2022
  • Nova Scotia Heritage Day, Feb 21, 2022
  • Louis Riel Day, Feb 21, 2022
  • St. Patrick’s Day, Mar 14, 2022
  • Good Friday, Apr 15, 2022
  • Easter Monday, Apr 18, 2022
  • St. George’s Day, Apr 25, 2022
  • Mother’s Day, May 08, 2022
  • Victoria Day, May 23, 2022
  • National Patriots’ Day, May 23, 2022
  • Father’s Day, Jun 19, 2022
  • National Indigenous Peoples Day, Jun 21, 2022
  • The National Holiday of Quebec, Jun 24, 2022
  • June Day, Jun 27, 2022
  • Canada Day, Jul 01, 2022
  • Nunavut Day, Jul 09, 2022
  • Orangeman’s Day, Jul 11, 2022
  • Civic Day, Aug 01, 2022
  • Civic Holiday, Aug 01, 2022
  • Heritage Day, Aug 01, 2022
  • Discovery Day, Aug 15, 2022
  • Labour Day, Sep 05, 2022
  • National Day for Truth and Reconciliation, Sep 30, 2022
  • Thanksgiving, Oct 10, 2022
  • Remembrance Day, Nov 11, 2022
  • Christmas Day, Dec 25, 2022
  • Boxing Day, Dec 26, 2022
  • Christmas Day (in lieu), Dec 26, 2022

Canada – Working Hours

Employment standards legislation in each jurisdiction sets restrictions on working hours. Most jurisdictions limit the number of hours that can be worked in a week. In Ontario, for instance, an employer cannot allow an employee to work more than 48 hours a week without obtaining prior approval from the Director of Employment Standards.

Any hours worked in excess of the standard hours of work are considered overtime hours. When working overtime employees are entitled to:

  • pay of at least 1.5 times the regular hourly wage, or
  • time off with pay, equivalent to 1.5 hours of time off for every hour worked (for example, 5 hours of overtime worked = 7.5 hours of time off with pay)

Employers cannot refuse to pay overtime rates and cannot force workers to work excessive hours, nor can they fire workers or have them deported if they refuse or complain about overtime work.

Vacation Leave in Canada

Most employees have the right to an annual paid vacation. In Alberta, Manitoba, British Columbia, Ontario, and Québec, employees must receive two weeks of paid vacation after completing one year with an employer.

There are some differences across the country with respect to entitlements and eligibility. Most employers offer two to four weeks paid vacation, depending on the type of company and the seniority of the employees.

“Use or lose it” vacation is not allowed in Canada. By prior arrangement, an employee may agree with the employer to carry over vacation into the next year.

Sick Time Off

Most employees in Canada have the right to take up to three days of unpaid job-protected leave each calendar year due to a personal illness, injury or medical emergency.

Parental Leave

Every female employee in Canada who has completed six consecutive months of continuous employment and provides her employer with a certificate from a qualified medical practitioner certifying that she is pregnant, is entitled to maternity leave of up to 15 weeks at 55% of average weekly earnings up to a maximum payment of CAD 638 weekly. There’s no extended maternity leave option.

Both new parents have the right to take parental leave of up to 40 at 55% of average weekly earnings up to a maximum payment of CAD 638 weekly for standard leave, with one parent taking no more than 35 weeks,  or up to 69 weeks at 33% of average weekly earnings up to a maximum payment of CAD 383 weekly for extended leave, but 1 parent cannot receive more than 61 weeks of extended benefits.

Termination & Severance Pay

Notice of termination

Federally regulated employees do not have to give their employer notice if they choose to quit. However, if the employer chooses to terminate a position, they must either:

provide the employee with at least 2 weeks’ written notice

in lieu of such notice, pay the employee 2 weeks’ regular wages

Severance Pay

An employee has the right to collect severance pay if they have completed at least 12 consecutive months of continuous employment before their layoff or dismissal resulted in a termination of employment.

They are entitled to 2 days’ regular wages for each full year that they worked for the employer before their termination of employment. The minimum benefit is 5 days’ wages.

Taxation

Individuals resident in Canada are subject to Canadian income tax on worldwide income.

Individuals resident in Canada for only part of a year are taxable in Canada on worldwide income only for the period during which they were resident.

2022 federal tax rates are as follows:

OverNot OverTax on first column (CAD)Tax on excess (%)
050,197015,0
50,197100,3927,53020,5
100,392155,62517,82026,0
155,625221,70832,18029,0
221,70851,34433,0

In addition to federal income tax, an individual who resides in, or has earned income in, any province or territory is subject to provincial or territorial income tax. Except in Quebec, provincial and territorial taxes are calculated on the federal return and collected by the federal government. Rates vary among the jurisdictions.

Link: Provincial and territorial income tax

Social Security Contributions

The Canadian social security is composed of the Canada Pension Plan (CPP) and Employment Insurance (EI) contributions.

However, the Province of Quebec has three components of social security tax:

  • Quebec Pension Plan (QPP)
  • Employment Insurance (EI)
  • Quebec Parental Insurance Plan (QPIP)

Pension

For 2022, Canadian-resident employees are required to pay Canada Pension Plan contributions of up to CAD 3,499.80 and Employment Insurance premiums of up to CAD 952.74. However, Quebec employees instead contribute a maximum of CAD 3,776.10 in Quebec Pension Plan contributions, CAD 723.60 in Employment Insurance premiums, and CAD 434.72 to a Quebec Parental Insurance Plan.

Self-employed persons contribute double the employee’s Canada pension plan contribution (i.e. for 2022, up to CAD 6,999.60, or if in Quebec, CAD 7,552.20) and are permitted to deduct half of the base (non-enhanced) contribution and 100% of the enhanced contribution. The non-deductible portion qualifies for a tax credit. Self-employed persons are not liable for employment insurance premiums, but may opt to pay them. Self-employed persons in Quebec must contribute up to CAD 772.64 to the Quebec Parental Insurance plan.


How We Can Help

Establishing a branch office or subsidiary in Canada to engage a small team would be incredibly time-consuming, expensive and complex. Canadian labour law has strong worker protections, requiring great attention to detail and an understanding of local best practices. Access Financial makes it painless and easy to hire your team in Canada.

If you would like to discuss how Access Financial can make it fast and easy for you to engage your team in Canada, please contact us.

Disclaimer

WE HAVE PREPARED THIS AS A GUIDE ONLY; IT DOES NOT FORM PART OF AN OFFER. PLEASE REQUEST ILLUSTRATIONS BASED ON YOUR SPECIFIC CASE FROM ONE OF OUR SOLUTION MANAGERS.