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Employment laws in Canada

Updated on:
16 Jan, 2024
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EOR in 
Canada
Monthly
Annually
(Save upto 15%)
$
229
/month
(billed monthly)
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Employ contractors and employees in 160+ countries
EOR in 
Canada
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$
229
/month
(billed annually)
$
249
/month
(billed monthly)

Table of Content

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Canada boasts a vibrant tech industry with talented individuals ready to contribute to global digital evolution. As a hub of tech innovation, the country's employment laws significantly ensure a fair and productive work environment. The federal government sets specific minimum requirements to cover a broad spectrum of aspects, from employment contracts to termination rules, fostering a conducive and beneficial work climate for both employers and employees (private employees and federal employees). Understanding these regulations, like the employment standards legislation, is fundamental to nurturing a thriving and compliant business in Canada.

Main Sources of Employment Laws

Employment laws provide a comprehensive framework to guide the interaction between employers and employees, helping to shape a conducive work environment. This framework is derived from various sources, ensuring a well-rounded, balanced, and fair representation of both parties' rights and responsibilities.

Legislation

The first and foremost source of labor laws in Canada is legislation. Both federal government and provincial governments pass statutes that govern employment relationships. Federal laws like the Canada Labour Code apply to federally regulated works, undertakings, or businesses. These include banking, interprovincial and international transportation, telecommunications, and federal Crown corporations. This sphere is commonly referred to as federal jurisdiction.

Common Law

In addition to legislation, common law also plays a significant role in shaping employment laws. These are laws developed through decisions made by judges in court cases. Over time, these case law precedents provide a basis for decisions in similar circumstances, influencing the employment agreement or relationship.

Common law is especially relevant in contract interpretation, fiduciary duties, and wrongful dismissal. These form the core of Canadian labor laws.

Each province in Canada may have specific employment standards. Hence it is essential to understand the laws applicable to each province where your employees work. Comprehending programs like the Canada pension plan and employment insurance is also crucial. Understanding provincial laws and Canadian laws regarding employment equity is particularly important.

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Employment contracts in Canada

Employment contracts are the basis of any employment relationship between the employer and the employee in Canada. Whether the employment agreement is drafted in written or verbal, it must be stated clearly so both parties understand the roles and responsibilities.

While oral contracts are legally recognized, having written agreements is best practice. A well-drafted written contract minimizes ambiguities and helps prevent potential disputes. It provides a tangible record of what was agreed upon, reducing reliance on memory or interpretation.

The key components of employment contracts in Canada typically include the following:

  1. Position and Duties: This clarifies the role an employee will be undertaking, along with a detailed explanation of the duties and tasks they are expected to perform. It may also outline performance expectations and the employer's right to alter duties as required.
  2. Compensation: It details the amount, frequency, and method of payment, including any potential bonuses, commissions, or raises. It may also specify whether the employee is eligible for overtime pay. This part of the employment agreement is crucial in ensuring the federal contractors' program is adhered to and payroll tax obligations are met.
  3. Working Hours: This portion of the contract specifies the regular working hours for the employee and stipulates expectations for overtime work.
  4. Probationary Period: If applicable, the contract will note a probationary period during which the employment relationship may be ended with less notice.
  5. Benefits: A written employment contract in Canada usually includes employee benefits details such as health insurance, pension, and other perks. It is important to have these details spelled out in the document to avoid disagreements.
  6. Termination clauses: Just like every employment contract, essential details such as the termination requirements, severance pay details, and notice period duration should be clearly outlined in the employment contract.
  7. Non-Disclosure and Confidentiality: These provisions protect sensitive business information and trade secrets, maintaining the company's competitive edge.

Classification of Employees in Canada

This classification determines the rights and protections that each worker is entitled to. Misclassifying an employee can lead to substantial legal issues under employment law and financial consequences, making it vital for federally regulated employers to understand these categories thoroughly.

There are several ways employees are typically classified in the Canadian workforce, all governed by federal law:

Full-Time Employees

Full-time employees in Canada are obligated by the Canada Labor Code to stick to the standard 30 to 40 hours of work weekly. In addition, employers in Canada are mandated to provide stipulated benefits such as health insurance, pension plans, etc.

Part-Time Employees

Although Part-time employees have no definite definition according to Canada's Labor Code, they are not entitled to the same benefits due Full-time employees. However, they work shorter hours compared to full-time employees in Canada.

Temporary or Fixed-Term Employees

These are essential workers in Canada's labor force. They are usually employed for a fixed period and not given the same treatment as full-time employees. Temporary or fixed employees are typically foreign nationals, students, or people in Canada with just work permits. However, despite not being permanent employees, Canadian employment laws cover them and make stipulations for their protection.

Casual Employees

Casual employees are those who are called into work as and when needed, often with irregular work schedules. These individuals are typically found in industries with fluctuating workloads and are afforded many of the same basic protections under Canadian employment law as other employees. Federal contractors must ensure correct classification to avoid significant penalties from the federal government.

Minimum employment terms and conditions

The Canada Labour Code outlines the basic terms and conditions of employment that businesses must follow to ensure that workers are treated fairly and with respect. This is critical in preventing unfair labor practices.

The fundamental aspects covered under these minimum terms include:

Minimum Wage

The minimum wage in Canada is the lowest amount an employee or worker can be legally paid. The minimum wage amount is usually measured per hour.

While the Canadian federal minimum wage is fixed at $16.65 per hour, Canada has various minimum wage rates according to each province in the country. For instance, the minimum wage in Alberta is $15 while Quebec's minimum wage is fixed at $14.25. The same wage differences apply to the different provinces in Canada.

Hours of Work

The standard work week in Canada is 40 hours, typically spread over five days. Any work beyond these standard hours is usually considered overtime, requiring additional compensation.

Overtime Pay

The overtime compensation in Canada is usually at least 1.5 times the regular hourly wage.

Vacation Entitlements

Employees in Canada with a five-day week work schedule are entitled to at least 20 days of paid vacation annually. Employees that work six times a week, they are entitled to 24 days of vacation annually.

Leave rights in Canada

Leave rights are a significant component of labor laws in Canada, offering various types of leave to protect employees' welfare during their employment period. They provide employees with the ability to balance work and personal life better, and for employers, adhering to these leave policies aids in maintaining a healthy and productive workplace.

  • Annual Leave: The annual or vacation leave varies according to each provincial region in Canada. However, federal legislation allows for at least two weeks of paid annual leave for employees that have worked in an organization for a year, three weeks for employees with more than five years in an organization, and four weeks after 10 years of employment.
  • Sick Leave: When employees in Canada fall sick, they are entitled to three days of leave. For most regions in Canada, this leave is unpaid.
  • Maternity and Parental Leave: Maternity and Parental leave: Pregnant employees are entitled to a minimum of 15 weeks of paid maternity leave in the event of child delivery. This leave can be extended up to 17 weeks.
    Parents are entitled to parental leave in the event of childbirth or adoption. The length of this parental leave is dependent on the province of residence.
  • Bereavement Leave: Employers usually provide a minimum of three days of bereavement following the death of a family member. In provinces like Alberta, when an employee loses a pregnancy, they are entitled to bereavement leave. However, employees in Canada are only entitled to bereavement leave after working in an organization for more than three months.

Termination of employment in Canada

The Canada Labor Code governs the terms of the termination of employment in Canada. It also dictates the notice period time frame, severance pay, and unjust dismissal processes.

Notice Periods

A minimum of two weeks' written notice must be provided to employees in Canada before an employer can terminate the employment contract of an employee. Without the written notice, the employer is obligated to make a two weeks wage bill at the same rate the employee has been earning.

However, this requirement does not exist for employees who have not completed their probationary period or three months with the organization. Also, it does not apply to employees who initiate their employment termination.

Severance Pay

An employee qualifies for severance pay after they have completed a minimum of 12 months working for an organization. It is typically two days' pay of the employee's regular salary for each full year of employment.

Employers in Canada are not required to provide severance pay in cases of lay-offs, when an employment contract ends, is dismissed for a just cause, and when the employee quits or initiates the termination.

Unjust Dismissal

Employees are protected from unfair termination under Canadian law. Within 90 days of the dismissal, an employee who feels they were fired unfairly may file a complaint under the Canada Labour Code. After receiving the complaint, an inspector will look into it to see if the firing was unfair. If so, remedies could entail the employee being given a second chance, getting paid for any lost wages, or taking other steps to make things right.

Data protection and employee privacy

Data protection in Canada is governed by laws such as the Personal Information Protection and Electronic Documents Act (PIPEDA). It outlines how organizations should handle personal information, ensuring employee privacy.

In conclusion, understanding employment laws in Canada is vital for both employers and tech talents, enabling them to build a remote or distributed team that complies with the region's legal landscape. It prevents potential legal pitfalls and ensures a smooth and productive working relationship. Compliance is not just a necessity but a part of the corporate identity that shapes the trust and reputation of a business.

Ensure compliance with Canadian employment laws with Skuad

Knowledge of employment laws not only aids in creating a fair and productive workplace but also contributes significantly to avoiding potential missteps and related penalties.

As a comprehensive Employer of Record platform, Skuad enables organizations to hire and onboard contractors and employees compliantly across more than 160 countries, including Canada. With Skuad, legal risks and fines become a worry of the past, as the platform ensures your organization's complete adherence to country-specific laws and regulations.

Book a demo with Skuad to know more.

FAQs

Can I work 60 hours a week in Canada?

The standard hours of work in Canada in a week cannot exceed 48 hours. Anything beyond this amount of hours is subject to overtime pay.

Is working 12 hours in one day illegal in Canada?

Unless there are exceptions, employees may work a maximum of 12 hours a day in Canada.

Employ contractors and employees in 160+ countries
Get started
limited-offer-banner
EOR in 
Canada
Monthly
Annually
(Save upto 15%)
$
229
/month
(billed annually)
Start Hiring Now
Employ contractors and employees in 160+ countries
limited-offer-banner
EOR in 
Canada
$
229
/month
(billed annually)
$
249
/month
(billed monthly)

Table of Content

Building a remote team?

Employ exceptional talent, anywhere, anytime!

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Employment laws in Canada

Employment laws in Canada

Building a remote team?

Employ exceptional talent, anywhere, anytime!

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Canada boasts a vibrant tech industry with talented individuals ready to contribute to global digital evolution. As a hub of tech innovation, the country's employment laws significantly ensure a fair and productive work environment. The federal government sets specific minimum requirements to cover a broad spectrum of aspects, from employment contracts to termination rules, fostering a conducive and beneficial work climate for both employers and employees (private employees and federal employees). Understanding these regulations, like the employment standards legislation, is fundamental to nurturing a thriving and compliant business in Canada.

Main Sources of Employment Laws

Employment laws provide a comprehensive framework to guide the interaction between employers and employees, helping to shape a conducive work environment. This framework is derived from various sources, ensuring a well-rounded, balanced, and fair representation of both parties' rights and responsibilities.

Legislation

The first and foremost source of labor laws in Canada is legislation. Both federal government and provincial governments pass statutes that govern employment relationships. Federal laws like the Canada Labour Code apply to federally regulated works, undertakings, or businesses. These include banking, interprovincial and international transportation, telecommunications, and federal Crown corporations. This sphere is commonly referred to as federal jurisdiction.

Common Law

In addition to legislation, common law also plays a significant role in shaping employment laws. These are laws developed through decisions made by judges in court cases. Over time, these case law precedents provide a basis for decisions in similar circumstances, influencing the employment agreement or relationship.

Common law is especially relevant in contract interpretation, fiduciary duties, and wrongful dismissal. These form the core of Canadian labor laws.

Each province in Canada may have specific employment standards. Hence it is essential to understand the laws applicable to each province where your employees work. Comprehending programs like the Canada pension plan and employment insurance is also crucial. Understanding provincial laws and Canadian laws regarding employment equity is particularly important.

One platform to grow your global team

Hire and pay talent globally, the
hassle-free way

Talk to an expert

Employment contracts in Canada

Employment contracts are the basis of any employment relationship between the employer and the employee in Canada. Whether the employment agreement is drafted in written or verbal, it must be stated clearly so both parties understand the roles and responsibilities.

While oral contracts are legally recognized, having written agreements is best practice. A well-drafted written contract minimizes ambiguities and helps prevent potential disputes. It provides a tangible record of what was agreed upon, reducing reliance on memory or interpretation.

The key components of employment contracts in Canada typically include the following:

  1. Position and Duties: This clarifies the role an employee will be undertaking, along with a detailed explanation of the duties and tasks they are expected to perform. It may also outline performance expectations and the employer's right to alter duties as required.
  2. Compensation: It details the amount, frequency, and method of payment, including any potential bonuses, commissions, or raises. It may also specify whether the employee is eligible for overtime pay. This part of the employment agreement is crucial in ensuring the federal contractors' program is adhered to and payroll tax obligations are met.
  3. Working Hours: This portion of the contract specifies the regular working hours for the employee and stipulates expectations for overtime work.
  4. Probationary Period: If applicable, the contract will note a probationary period during which the employment relationship may be ended with less notice.
  5. Benefits: A written employment contract in Canada usually includes employee benefits details such as health insurance, pension, and other perks. It is important to have these details spelled out in the document to avoid disagreements.
  6. Termination clauses: Just like every employment contract, essential details such as the termination requirements, severance pay details, and notice period duration should be clearly outlined in the employment contract.
  7. Non-Disclosure and Confidentiality: These provisions protect sensitive business information and trade secrets, maintaining the company's competitive edge.

Classification of Employees in Canada

This classification determines the rights and protections that each worker is entitled to. Misclassifying an employee can lead to substantial legal issues under employment law and financial consequences, making it vital for federally regulated employers to understand these categories thoroughly.

There are several ways employees are typically classified in the Canadian workforce, all governed by federal law:

Full-Time Employees

Full-time employees in Canada are obligated by the Canada Labor Code to stick to the standard 30 to 40 hours of work weekly. In addition, employers in Canada are mandated to provide stipulated benefits such as health insurance, pension plans, etc.

Part-Time Employees

Although Part-time employees have no definite definition according to Canada's Labor Code, they are not entitled to the same benefits due Full-time employees. However, they work shorter hours compared to full-time employees in Canada.

Temporary or Fixed-Term Employees

These are essential workers in Canada's labor force. They are usually employed for a fixed period and not given the same treatment as full-time employees. Temporary or fixed employees are typically foreign nationals, students, or people in Canada with just work permits. However, despite not being permanent employees, Canadian employment laws cover them and make stipulations for their protection.

Casual Employees

Casual employees are those who are called into work as and when needed, often with irregular work schedules. These individuals are typically found in industries with fluctuating workloads and are afforded many of the same basic protections under Canadian employment law as other employees. Federal contractors must ensure correct classification to avoid significant penalties from the federal government.

Minimum employment terms and conditions

The Canada Labour Code outlines the basic terms and conditions of employment that businesses must follow to ensure that workers are treated fairly and with respect. This is critical in preventing unfair labor practices.

The fundamental aspects covered under these minimum terms include:

Minimum Wage

The minimum wage in Canada is the lowest amount an employee or worker can be legally paid. The minimum wage amount is usually measured per hour.

While the Canadian federal minimum wage is fixed at $16.65 per hour, Canada has various minimum wage rates according to each province in the country. For instance, the minimum wage in Alberta is $15 while Quebec's minimum wage is fixed at $14.25. The same wage differences apply to the different provinces in Canada.

Hours of Work

The standard work week in Canada is 40 hours, typically spread over five days. Any work beyond these standard hours is usually considered overtime, requiring additional compensation.

Overtime Pay

The overtime compensation in Canada is usually at least 1.5 times the regular hourly wage.

Vacation Entitlements

Employees in Canada with a five-day week work schedule are entitled to at least 20 days of paid vacation annually. Employees that work six times a week, they are entitled to 24 days of vacation annually.

Leave rights in Canada

Leave rights are a significant component of labor laws in Canada, offering various types of leave to protect employees' welfare during their employment period. They provide employees with the ability to balance work and personal life better, and for employers, adhering to these leave policies aids in maintaining a healthy and productive workplace.

  • Annual Leave: The annual or vacation leave varies according to each provincial region in Canada. However, federal legislation allows for at least two weeks of paid annual leave for employees that have worked in an organization for a year, three weeks for employees with more than five years in an organization, and four weeks after 10 years of employment.
  • Sick Leave: When employees in Canada fall sick, they are entitled to three days of leave. For most regions in Canada, this leave is unpaid.
  • Maternity and Parental Leave: Maternity and Parental leave: Pregnant employees are entitled to a minimum of 15 weeks of paid maternity leave in the event of child delivery. This leave can be extended up to 17 weeks.
    Parents are entitled to parental leave in the event of childbirth or adoption. The length of this parental leave is dependent on the province of residence.
  • Bereavement Leave: Employers usually provide a minimum of three days of bereavement following the death of a family member. In provinces like Alberta, when an employee loses a pregnancy, they are entitled to bereavement leave. However, employees in Canada are only entitled to bereavement leave after working in an organization for more than three months.

Termination of employment in Canada

The Canada Labor Code governs the terms of the termination of employment in Canada. It also dictates the notice period time frame, severance pay, and unjust dismissal processes.

Notice Periods

A minimum of two weeks' written notice must be provided to employees in Canada before an employer can terminate the employment contract of an employee. Without the written notice, the employer is obligated to make a two weeks wage bill at the same rate the employee has been earning.

However, this requirement does not exist for employees who have not completed their probationary period or three months with the organization. Also, it does not apply to employees who initiate their employment termination.

Severance Pay

An employee qualifies for severance pay after they have completed a minimum of 12 months working for an organization. It is typically two days' pay of the employee's regular salary for each full year of employment.

Employers in Canada are not required to provide severance pay in cases of lay-offs, when an employment contract ends, is dismissed for a just cause, and when the employee quits or initiates the termination.

Unjust Dismissal

Employees are protected from unfair termination under Canadian law. Within 90 days of the dismissal, an employee who feels they were fired unfairly may file a complaint under the Canada Labour Code. After receiving the complaint, an inspector will look into it to see if the firing was unfair. If so, remedies could entail the employee being given a second chance, getting paid for any lost wages, or taking other steps to make things right.

Data protection and employee privacy

Data protection in Canada is governed by laws such as the Personal Information Protection and Electronic Documents Act (PIPEDA). It outlines how organizations should handle personal information, ensuring employee privacy.

In conclusion, understanding employment laws in Canada is vital for both employers and tech talents, enabling them to build a remote or distributed team that complies with the region's legal landscape. It prevents potential legal pitfalls and ensures a smooth and productive working relationship. Compliance is not just a necessity but a part of the corporate identity that shapes the trust and reputation of a business.

Ensure compliance with Canadian employment laws with Skuad

Knowledge of employment laws not only aids in creating a fair and productive workplace but also contributes significantly to avoiding potential missteps and related penalties.

As a comprehensive Employer of Record platform, Skuad enables organizations to hire and onboard contractors and employees compliantly across more than 160 countries, including Canada. With Skuad, legal risks and fines become a worry of the past, as the platform ensures your organization's complete adherence to country-specific laws and regulations.

Book a demo with Skuad to know more.

FAQs

Can I work 60 hours a week in Canada?

The standard hours of work in Canada in a week cannot exceed 48 hours. Anything beyond this amount of hours is subject to overtime pay.

Is working 12 hours in one day illegal in Canada?

Unless there are exceptions, employees may work a maximum of 12 hours a day in Canada.

Building a remote team?

Employ exceptional talent, anywhere, anytime!

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Skuad is the best solution to hire and expand globally.

Skuad makes building globally distributed teams, quick and hassle-free.

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