Canada has a diverse, highly educated talent pool that suits the needs of many employers. More than half the adult population in Canada has completed a post-secondary education, and these professionals have solid skills in areas like technology, science, and business.
Hiring Canadian workers can help you fill in gaps in your workforce and propel your business to new heights. However, one of the risks of expanding globally and hiring international candidates is that you must comply with new labor laws you may not be familiar with.
If you're considering hiring in Canada, getting familiar with the country's requirements for lawful employment is essential. Let's break down some of the labor laws in Canada that you should be aware of before proceeding.
Canada’s legal framework for employment law
Canada has provincial employment legislation and federal employment legislation. Provincial employment laws apply to around 90% of Canada's workforce, while federal employment laws only apply to a minority of Canadian employees. This is because provinces have jurisdiction over employment law within their provincial borders, and federal authority for employment matters is limited to the federally regulated industries, such as banking and air transportation. This guide shall only focus on provincial employment laws.
Standard work hours and overtime
The standard workweek in Canada is eight hours per day, 40 hours per week. However, minimum standards legislation in each Canadian jurisdiction imposes restrictions on employees' working hours. These limitations encompass daily or weekly maximums for the duration of work permitted, as well as mandatory minimum break periods during shifts.
Each Canadian jurisdiction also has unique overtime rules. These rules mandate that employers compensate employees at an increased rate for any work conducted beyond the standard hours per day or week. Most jurisdictions set the overtime rate at a minimum of 1.5 times the employee's regular hourly rate. Most salaried employees are eligible for overtime; however, minimum standards statutes exempt certain job categories from entitlement to overtime, such as managerial and supervisory employees.
Minimum wage
The minimum wage varies across provinces in Canada. As of April 1, 2024, the lowest provincial minimum wage is in Saskatchewan at $14.00 gross per hour, and the highest provincial minimum wage is in Nunavut at $19.00 gross per hour.
Vacation and leaves of absence
Each Canadian province has enacted legislation that governs vacation and leaves of absence.
In regard to vacation, each jurisdiction has its own vacation and vacation pay rules. In all jurisdictions, the employee's right to vacation accrues annually on a regular schedule and they acquire eligibility for this vacation after completing a year of service. The minimum amount of vacation an employee is entitled to take after each vacation year varies among jurisdictions from two weeks to four weeks.
Vacation pay is calculated as a percentage of the wages the employee receives during the vacation year, aiming to mirror their usual earnings during their time off work. Normally, vacation pay amounts to 2% of annual wages for each week of vacation.
Further, in every Canadian jurisdiction, minimum standards legislation designates certain days as public holidays. These are dates on which eligible employees are entitled to either a paid day off or premium pay if they work on that day. For example, there are nine public holidays in Ontario and ten public holidays in Saskatchewan.
In regard to leaves of absence, each Canadian jurisdiction has different types of leave available to employees, including but not limited to maternity leave, parental leave, compassionate care leave, and family leave. Most minimum standard leaves are unpaid and there is usually a required amount of service the employee must have with the employer to be eligible for the leave.
Termination of employment
Canada does not have at-will employment laws like the neighboring United States, and employee rights in Canada are generally stronger. If an employer wishes to terminate an employee's position at the company without “just cause,” they must provide the employee with either advance notice of termination or compensation in lieu of that notice.
The following needs to be taken into account when an employee is being terminated:
1. Statutory minimum termination notice: Employers must provide a minimum termination notice period, which differs depending on the jurisdiction and the duration of employment. In cases where multiple employees are terminated within a brief timeframe, legislation regarding mass or group termination notice periods might be applicable.
2. Common law reasonable notice: Under certain circumstances, an employer may be obliged to provide compensation for the common law notice period. This notice is determined by looking at multiple factors including but not limited to: the length of service, the age of the employee, the availability of similar employment, having regard to the experience, training, and qualifications of the employee. Typically common law notice periods are much longer than the minimum standards termination notice periods.
3. Statutory minimum severance pay: Minimum standards legislation in Ontario also requires that longer-serving employees receive additional statutory severance pay, on top of statutory termination notice. For example, in Ontario, an employee qualifies for severance pay if their employment is severed and they have worked for the employer for at least five years and their employer has a global payroll of at least $2.5 million or severed the employment of 50 or more employees in a six-month period because all or part of the business closed permanently.
Protection against workplace violence, harassment, and discrimination
Employees across Canada are protected against workplace violence, harassment, and discrimination under human rights legislation and occupational health and safety laws.
Each jurisdiction has its own human rights legislation that prohibits harassment and discrimination based on grounds that generally include race, ancestry, place of origin, color, ethnic origin, citizenship, creed, sex, sexual orientation, age, marital status, family status, and disability.
Moreover, in every Canadian jurisdiction, occupational health and safety legislation imposes general duties on employers to safeguard the health and safety of workers. Most jurisdictions provide specific duties in relation to either harassment and/or violence as occupational health and safety laws often require employers to develop policies or procedures to address any risk of violence and/or harassment in the workplace.
Benefits of hiring from Canada
With the rise of remote work, it's easier than ever for companies to find talent all over the world and cultivate an international workforce. Canada, in particular, is an appealing place for employers to look for workers thanks to benefits that include:
- Tapping into a skilled new talent pool
- Creating a more diverse and accepting workforce
- Increasing productivity and customer service by having employees in different time zones
- Gaining a foothold in the Canadian market
- Enjoying lower employment costs compared to countries like the U.S.
Options for hiring Canadian employees
You can choose from a few different paths when hiring Canadian workers as an international employer.
Opening a subsidiary or entity
The most traditional option is to open a subsidiary or entity in Canada. Establishing an entity shows you plan to be a part of the community and allows you to grow your brand awareness in the country. Unfortunately, taking this route requires a massive investment of time and resources. Expect to spend months and tens of thousands of dollars before you can hire Canadian workers this way.
Working with a professional employer organization (PEO)
Another option is to co-employ workers with a professional employer organization (PEO) in Canada. A PEO provides your business with HR services, including managing payroll, employee benefits, employment taxes, and compliance with local labor laws. The PEO representatives are experts in the local laws and regulations that will apply to your business when you hire a Canadian employee.
Working with a PEO reduces the stress of managing labor law compliance yourself. However, keep in mind that you’ll still need to establish an entity in Canada in order to co-employ Canadian workers there with a PEO partner. If you’d like to avoid the hassle and expense of opening an entity, you might instead choose to work with an employer of record (EOR) in Canada that can act as the legal employer on your behalf and also handle compliance, payroll, benefits, and more.
Hiring independent contractors
In some cases, bringing on foreign workers as full employees may not be the best option. Instead, your business might benefit from hiring independent contractors in Canada. Choosing this option allows you to benefit from the skills and expertise of Canadian workers without needing to go through all the administrative burdens of hiring full-time employees.
If you hire Canadian workers as contractors, make sure you aren’t misclassifying them under local labor laws. Employee misclassification can lead to fines and other penalties for the offending business.
Using a global employment platform
Another option for hiring Canadian workers as an international employer is to use a global employment platform. These platforms help employers hire, onboard, and manage employees from all over the world. Instead of having to find a new hiring solution in each country where you want to hire someone, you can use a single platform to tackle all your hiring needs. A global employment platform is a scalable, easy-to-use solution to the challenges of international hiring.
Start hiring in Canada
Expanding your search for talent beyond your borders can be hugely beneficial to your business. Staying compliant with all local labor laws and regulations can be challenging, though. You must also manage all aspects of your international hire's employment, including payroll, benefits, and applicable employer taxes. These tasks add up quickly and can put a strain on your team.
That’s where Oyster comes in. As a global employment platform, Oyster helps you manage compliance and HR tasks across over 180 countries. Learn more about how Oyster’s global employment solution can help with your hiring needs.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.
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