Contract of Hiring Employees in Ontario
Employment contracts are either fixed-term or open-ended. It is important to note that contracts can be written or agreed upon orally.
Immigration Requirements
Employees who will be working in Ontario on a temporary basis can receive a temporary working permit from the Canadian government. Employees who wish to permanently work in Ontario should submit an application with the Ontario Immigrant Nominee Program.
HR & Labor in Ontario
Working hours: To be considered a full-time employee, employees should work 40 hours a week and 8 hours a day. Employers must have a written agreement with employees if they choose a workday that is longer than 8 hours. After 5 consecutive hours of work, employees are entitled to a break. If an employee has worked overtime, they will be paid 1.5 of the set wage.
Minimum working age: Employees can start working as early as 14 years old but should not be employed during school hours if they are 14-17 years old.
Payroll in Ontario
Employees and employers will decide the paydays together. Salaries are disbursed either every two weeks (bi-weekly), the same two days every month (bi-monthly), or monthly.
Social Security in Ontario
Ontario Labor Law sustains that an employee is required to make contributions to the Canada Pension Plan (CPP) to Employment Insurance (EI) based on annual earnings.
All the contributions made by an employee are creditable against that individual’s federal and provincial income tax liability.
Employment Insurance provides temporary income support to unemployed workers while they look for employment or to upgrade their skills.
The employer is responsible for withholding and remitting the individual’s portion as well as remitting the employer portion.
Social Security Deductions in Ontario
Canada Pension Plan contributions are required to be deducted from an individual’s remuneration if the individual is employed in Ontario, between ages 18 and 70, and receiving pensionable earnings.
The CPP and APP work together to ensure that all contributions are protected, no matter where the employees are.
Annual Contribution Rates in Ontario
Employee:
- Pension plan: 5.4% of the employee’s annual gross salary.
- Employment Insurance: 1.66% of the employee’s annual gross salary.
- Total cost: From 7.06%
Employer:
- Pension plan: 5.4% of the employee’s annual gross salary.
- Employment Insurance (EI): From 1.167% to 1.273% of employee’s annual gross salary.
- Total cost: From 6,567% to 6,673%
Individual Income Tax & Benefits in Ontario
Individual Income Tax
Individuals file taxes on an annual basis. Individuals in Ontario are subject to Canadian income tax on worldwide annual income.
*Note:
- Canadian Dollar (CAD)
Personal Deductions
Deductible non-business expenses include alimony and maintenance payments, certain child care expenses.
Personal Allowances
Federal personal allowances in Ontario take the form of tax credits:
Basic personal amount: CAD 10,354
The amount for an eligible dependent: CAD 8,792
Pension income amount: CAD 1,432
Age Amount: CAD 5,055
*Note:
- Canadian Dollar (CAD)
VAT/ GST Rates
The standard VAT rate for supplies and goods of services is 13% HST.
Employee Termination Policies in Ontario
Ontario labor law sustains that an employer must give the employee a written notice of termination of employment.
The time periods for giving the employee the notice vary according to his length of uninterrupted service.
Length of uninterrupted service
- Less than 3 months / no noticed period required
- 3 months but less than 1 year/ 1 week notice period
- 1 year but less than 3 years/ 2 weeks noticed period
- 3 years but less than 4 years/ 3 weeks noticed period
- 4 years but less than 5 years/ 4 weeks noticed period
- 5 years but less than 6 years/ 5 weeks noticed period
- 6 years but less than 7 years/ 6 weeks noticed period
- 7 years but less than 8 years/ 7 weeks noticed period
- 8 years or more/ 8 weeks noticed period
Severance Pay in Ontario
The Employment Standards Act requires that your employer provide both notices of your termination and severance pay if you qualify.
You are entitled to severance pay if you have been with your employer at least five years, the company’s Ontario payroll is at least $2.5 million or 50 or more employees have been terminated within a six-month period.
The amount of severance is based on one week’s pay for each year worked (partial years are pro-rated) up to a maximum of 26 weeks.
You must be given one week’s notice of termination if you have been employed for between three months and one year; two weeks’ notice for between one and three years.
Thereafter you are entitled to one week’s notice for each year of service to a maximum of eight weeks. Should your employer fail to provide you with the appropriate notice, you must be paid your wages for that period.
Special rules apply if an employer is terminating more than 50 employees in a four-week period.
Probationary Period in Ontario
Ontario labor law does not appear to impose a limit on probationary periods. However, many employers choose a three-month probationary period, as this period often coincides with the eligibility for group benefits, particularly because Canadian law requires no minimum pay in lieu of notice required for employees with less than three months of service.
Rest & Holiday Leave in Ontario
Annual Leaves
Maternity leave
Ontario labor law sustains that employees are entitled to maternity leave without pay of a maximum duration of 17 continuous weeks.
Vacation Leave
The length of the vacation is established based on the employee’s period of uninterrupted service. As for the amount of the indemnity, it varies according to the wages earned during the reference year in effect in the enterprise.
Public Holidays
Ontario labor law sustains that employees are entitled to an indemnity or a compensatory leave for each of the following statutory holidays
New Year – January 1
Bank Holiday – January 2
Family Day – February 19 (Ontario only)
Good Friday – March 30
Victoria Day – May 21
Discovery Day – June 25 (Newfoundland and Labrador only)
Canada Day – July 1
Orangeman’s Day – July 9 (Newfoundland and Labrador only)
Thanksgiving Day – November 22
Christmas Day – December 25
Boxing Day – December 26
NNRoad covers everything from employment solutions, HR outsourcing, entity set up, payroll and tax services, and benefits administration in Ontario. Contact us to learn how you can expand into Ontario. For more information on hiring employees in Ontario, talk to one of NNRoad’s consultants today.
