Employers in Canada are required to contribute to the Canada Pension Plan (CPP), Employment Insurance (EI), and pay Workers’ Compensation premiums, with rates varying by province. Statutory minimums also include paid vacation (usually two weeks after one year of service per the Canada Labour Code or relevant provincial legislation) and public holiday pay. Additional benefits, such as health and dental insurance, are not mandatory federally but are frequently offered to remain competitive.

Employer payroll taxes include contributions to CPP (5.95% of pensionable earnings up to the annual maximum) and EI (1.66% federally, with different rates for Quebec, also up to a maximum), in addition to any applicable provincial payroll or health taxes. Employers are responsible for withholding and remitting federal and provincial income tax, CPP, and EI from employees’ pay per Canada Revenue Agency (CRA) guidelines. Employers must also file T4 slips and summaries annually, along with regular remittance schedules.

Beyond statutory contributions, employers should budget for costs such as group health and dental insurance, short- and long-term disability coverage, and extended sick leave, which are customary even if not mandated. Severance pay obligations under the Canada Labour Code or provincial Employment Standards Acts can be significant, especially in cases of mass termination or long service. Administrative overhead for payroll processing and compliance, as well as potential recruitment and training expenses, should also be considered.

Minimum wage rates are set provincially and reviewed annually (e.g., $16.55/hour in Ontario as of 2024), and overtime is generally paid at 1.5 times the regular rate after 44 hours per week (or as legislated provincially). Termination notice and severance pay are strictly regulated, with requirements increasing by years of service and governed by the Canada Labour Code or relevant provincial Employment Standards Acts. Collective bargaining agreements and unionized environments may impose additional benefits, wage premiums, or work rules that elevate costs.

Probationary periods of three to six months are common but must comply with provincial standards for notice and termination. Most employees are hired under indefinite-term contracts; fixed-term contracts are less common and must be carefully structured to avoid unintended permanent employment status. Group benefits such as extended health, life insurance, and RRSP matching are widely offered to attract and retain talent, even though they are not strictly required by law.