Canada
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See how hiring works in Canada
Learn about local payroll, taxes, and employment laws in Canada
Minimum Wage Standards
The federal minimum wage is CAD $17.75 per hour, effective April 2025. This rate applies to federally regulated workers.
Provincial minimum wages vary significantly. Alberta: $15.00/hr, Ontario: $17.60/hr, British Columbia: $17.85/hr, and Nunavut has the highest at $19.75/hr. Each province and territory sets its own minimum wage for provincially regulated employees.
Income Tax Structure
Canada uses a federal progressive income tax system with rates ranging from 14% to 33%. Each province and territory also levies its own income tax, resulting in combined federal and provincial rates of up to approximately 53.5%.
| Taxable Income (CAD) | Federal Tax Rate |
|---|---|
| Up to $57,375 | 14% |
| $57,375 - $114,750 | 20.5% |
| $114,750 - $158,468 | 26% |
| $158,468 - $253,414 | 29% |
| Over $253,414 | 33% |
Employer Contributions
Employers in Canada are required to make several mandatory payroll contributions on behalf of their employees.
Mandatory Employer Contributions:
- Canada Pension Plan (CPP): 5.95% of pensionable earnings (maximum $4,034.10/year)
- CPP2: 4% on earnings between $71,300 and $81,200
- Employment Insurance (EI): 1.4 times the employee rate (maximum $1,508.47/year)
Employee Contributions:
- Canada Pension Plan (CPP): 5.95% of pensionable earnings
- Employment Insurance (EI): 1.64% of insurable earnings (maximum $1,077.48/year)
Important Note: These figures are estimates for informational purposes. Actual costs vary based on employment terms, province of employment, and specific circumstances. Contact our team for accurate calculations tailored to your situation.
Overtime & Working Hours
Overtime is generally paid at 1.5 times the regular hourly wage after 8 hours per day or 40 hours per week. Overtime rules vary by province and territory.
Standard working hours: 8 hours per day, 40 hours per week. The standard workweek runs Monday through Friday.
Maternity Leave
Eligible employees are entitled to 17 weeks of maternity leave. Employment Insurance (EI) provides maternity benefits at 55% of the employee's average insurable earnings, up to a maximum of $695 per week, for 15 weeks.
Maternity benefits are available to the birth mother and cover the period surrounding childbirth.
Parental Leave
Canada offers two options for parental leave benefits through EI:
- Standard option: Up to 40 weeks at 55% of earnings (maximum 35 weeks per parent)
- Extended option: Up to 69 weeks at 33% of earnings (maximum 61 weeks per parent)
Quebec has its own parental insurance plan (QPIP), which includes 5 weeks of paternity leave paid at 70% of earnings.
Sick Leave
Sick leave entitlements vary by province and territory. Federally regulated employees are entitled to 10 days of paid sick leave per year.
Provincial entitlements differ. Some provinces provide paid sick days while others only guarantee unpaid sick leave. Employers may also offer additional sick leave through employment contracts or company policies.
Bereavement Leave
Federally regulated employees are entitled to bereavement leave as follows:
- 5 days of bereavement leave (3 days paid) for the death of an immediate family member
Provincial entitlements vary. Employers may offer additional bereavement leave through company policy.
Termination Framework
There is no at-will employment in Canada. Employers must have just cause for termination or provide adequate notice and severance pay. Employees may challenge wrongful dismissals through the courts or applicable labour boards.
Valid grounds for termination with cause include:
- Serious misconduct or insubordination
- Habitual neglect of duty
- Fraud or dishonesty
- Willful disobedience of lawful orders
Legal Requirement: Without just cause, the employer must provide reasonable notice of termination or pay in lieu of notice, along with any applicable severance pay. Common law may entitle employees to significantly more than statutory minimums.
Notice Period Requirements
Notice periods depend on the jurisdiction and length of service:
Federal (Canada Labour Code):
- After 3 months of service: 2 weeks notice
- After 8 or more years of service: up to 8 weeks notice
Ontario (Employment Standards Act):
- 1 week of notice per year of service, up to a maximum of 8 weeks
Common law notice entitlements are typically much more generous, ranging from 2 to 6 weeks per year of service, up to a maximum of approximately 24 months.
Severance Compensation
Severance pay entitlements vary by jurisdiction:
Federal:
- After 12 consecutive months of continuous employment: the greater of 2 days' wages per year worked or 5 days' wages
Ontario:
- After 5 years of service: 1 week's pay per year of service, up to a maximum of 26 weeks
Upon termination, employees must also be compensated for any accrued but unused vacation time.
Risk Management: Common law severance entitlements can be significantly higher than statutory minimums. To minimize unforeseen financial exposure, employers should include well-drafted termination clauses in employment contracts. Our employer of record service includes a Severance Reserve for all employment agreements.
Paid Annual Leave
Federal vacation entitlements increase with years of service:
- After 1 year of service: 2 weeks (vacation pay at 4% of earnings)
- After 5 years of service: 3 weeks (vacation pay at 6% of earnings)
- After 10 years of service: 4 weeks (vacation pay at 8% of earnings)
Provincial vacation entitlements vary. Some provinces, such as Saskatchewan, provide 3 weeks after 1 year of service.
Public Holidays
Canada observes approximately 9 federal statutory holidays per year. Five holidays are recognized nationwide, with additional holidays varying by province and territory.
Nationwide statutory holidays:
- New Year's Day (January 1)
- Good Friday (date varies)
- Canada Day (July 1)
- Labour Day (first Monday of September)
- Christmas Day (December 25)
Additional federal holidays:
- Victoria Day (Monday before May 25)
- Thanksgiving (second Monday of October)
- Remembrance Day (November 11)
- National Day for Truth and Reconciliation (September 30)
Onboarding Timeline
The onboarding process is typically completed within 2-5 business days following client execution of the Statement of Work.
Compensation Structure
Salaries in Canada are typically paid on a bi-weekly basis (every two weeks). Some employers use a semi-monthly pay schedule (twice per month).
Employers are responsible for withholding and remitting income tax, CPP contributions, and EI premiums from each pay period.
Employment Contract Specifications
Written employment contracts are strongly recommended in Canada but are not always legally required. Verbal agreements can create enforceable employment relationships, though written contracts provide clarity and legal protection for both parties.
Essential contract elements include:
- Job title and description
- Compensation and benefits
- Start date
- Termination terms and notice provisions
- Non-compete and non-solicitation clauses
- Confidentiality obligations
Employment law varies significantly by province and territory. Contracts should comply with the applicable provincial employment standards legislation.
Probationary Period
Probation periods in Canada are typically 3 to 6 months. During the probation period, employers may terminate employment with shorter notice or no notice, depending on the jurisdiction and contract terms.
Federal employees may be terminated without notice during the first 3 months of employment. Provincial rules vary, and employment contracts should clearly specify probationary terms to be enforceable.
How it works
Your Global Hiring Process
We take care of employing your team, so you can focus on growing
You choose the talent
You select the candidate you want to hire, anywhere in the world.
We employ them for you
MB Remote becomes the legal employer and handles contracts, payroll, and local labor laws.
Your team starts working
Your employee works directly with you, just like an in-house team member.
We manage compliance
We ensure ongoing payroll, taxes, and legal compliance in the employee’s country.
Frequently Asked Questions
These are the most commonly asked questions about the Employer of Record
Can’t find what you’re looking for? Get in touch with an expert
Is it free to contact MB Remote?
Yes. Contacting us is completely free and without obligation. We’ll discuss your needs and explain how our EOR solution works before anything else.
How long does it take to hire an employee?
Hiring can usually be completed within a few days, depending on the country and local requirements.
What is an Employer of Record (EOR)?
An Employer of Record is a legal entity that employs workers on your behalf. MB Remote handles contracts, payroll, taxes, and local labor law compliance, while you manage the day-to-day work.
Who is the legal employer of the employee?
MB Remote is the legal employer, but the employee works exclusively for you as part of your team.
In which countries can you hire employees?
We support hiring in multiple countries. Contact us to check availability for a specific location.
How does payroll work?
We manage payroll, taxes, and social contributions in compliance with local regulations. You receive one simple monthly invoice.
Is my company still in control of the employee?
Yes. You manage tasks, schedules, and performance. We handle the legal and administrative side.