Canada Employee Benefits: The Complete Guide

When it comes to talent acquisition and retention in Canada, enticing employee benefits could mean the difference between an accepted job offer and a declined one. Beyond recruitment and retention, ensuring your employee benefits plan abides by provincial statutory requirements is an important way to protect your business from legal liability.

Companies expanding their operational footprint to Canada must tailor their global benefits strategy to resonate with Canada's unique blend of laws, union negotiations, and cultural customs. But unraveling Canadian employee benefits can be challenging, especially if you’re a foreign business.

So, how exactly do you develop an employee benefits package that's compliant and appealing to Canadian professionals? Dive in as we unpack the essentials and nuances of employee benefits in Canada.

What Does a Canada Employee Benefits Plan Look Like?

The importance of employee benefits should not go unnoticed. Employee benefits packages are strategic tools businesses can employ to stand out. They encompass non-wage forms of both tangible and intangible compensation that companies extend to their staff. When executed right, a robust employee benefit plan can help your business¹:

• Attract top-tier talent
• Minimize employee turnover
• Enhance job satisfaction, keeping teams engaged and driven
• Prioritize the physical and mental health of employees
• Foster employee work-life balance for all
• Elevate the company's public image and reputation

Each organization crafts its benefits plan tailored to its unique needs. A company’s specific plan may be influenced by various factors like budget, size, goals, and industry. Consequently, no two employee benefit packages are the same. However, the vast majority will encompass a blend of legally required statutory benefits, as well as a diverse mix of supplemental benefits.

What Are the Statutory Benefits in Canada?

No matter your company’s specific size or industry, Canadian employment law dictates that all employers provide or contribute to the following mandatory benefits:

1. Provincial healthcare insurance – Funded by the government's tax revenue from Canada’s 13 provinces, the public healthcare system ensures all Canadian residents can access basic medical care and standard hospital services.

2. Pension – The Canada Pension Plan (CPP) & Quebec Pension Plan (QPP) compel employers and employees to provide monthly contributions to their regional plan. These offer taxable benefits, replacing a portion of an employee's income upon retirement.²

3. Employment Insurance (EI) – A lifeline for those between jobs or those taking specific leaves, employment insurance provides temporary financial support. Only workers who've contributed premiums in the previous year and satisfy certain conditions can enjoy these benefits, which cover scenarios like illness, pregnancy, or childcare.

4. Leave – In Canada, employees are safeguarded when taking leave; not only are employers often required to cover a part of the wages, but they’re also mandated to retain the job position until the employee's return. Some of the types of leave include:

• Medical or sick leave
• Maternity, paternity and parental leave
• Personal leave
• Family violence leave
• Critical illness leave
• Compassionate care leave
• Leave for legal proceedings
• Leave for the disappearance of a child

5. Minimum wage – Canada recently instituted a federal minimum wage of $16.65, effective April 1, 2023. If the minimum wage of the province or territory where the employee usually works is higher than the federal minimum wage, the employer is to pay the higher minimum wage.³

6. Holidays – Canadian employees are entitled to paid days off for the following 10 general holidays⁴:

• New Year’s Day
• Good Friday
• Victoria Day
• Canada Day
• Labour Day
• National Day for Truth and Reconciliation
• Thanksgiving Day
• Remembrance Day
• Christmas Day
• Boxing Day
• Civic Day
• Easter Sunday

7. Vacation Days – In Canada, after completing one year with the same Canadian employer, employees earn 2 weeks of annual vacation. This increases to 3 weeks after five years, and 4 weeks after a decade of continuous employment.

For most midsize-to-large companies, you must offer an employee benefit plan that includes these mandatory benefits. If an employer is found to be non-compliant, they may face several legal consequences, including:

• Fines and fees
• A ban from hiring temporary workers
• Reputational harm
• Legal proceedings
• Operational pause

What Are the Recommended Supplemental Benefits?

Supplementary employee benefits are additional perks and incentives employers offer—the cherry on top that goes beyond the mandatory statutory benefits. These offerings present a unique opportunity for employers to stand out in a crowded marketplace.

By curating a thoughtful selection, businesses can create a compelling package that speaks directly to potential employees' needs and desires, ensuring they attract and retain the best in the field. Examples of additional benefits might include:

• Bonus and stock options
• Supplementary healthcare coverage
• Retirement savings programs
• Physical, spiritual, and mental health programs
• Life, disability and accident insurance
• Travel perks
• Employee training, education, and development programs
• Flexible work schedules and remote work 
• Additional PTO
• Childcare benefits
• Healthcare spending account
• Dental Insurance
• Employee assistance programs