Canada Employment Law & Compliance Guide for Employers
Key employment laws in Canada: what employers need to know
Most Canadian employees are covered by provincial law, such as Ontario’s Employment Standards Act, 2000 (ESA); workers in federally regulated sectors like banking, telecoms and interprovincial transport fall under the Canada Labour Code. Two points surprise foreign employers: statutory notice is only a floor, because courts can award months of common-law ‘reasonable notice’ unless a written contract validly limits it, and Quebec has its own pension plan and French-language rules. This page summarises the core employer rules for 2026, using Ontario as the main example, with official sources.
Canada employment rules at a glance
| Topic | What the rule is | Official source |
|---|---|---|
| Minimum wage | Set by each province and territory. Ontario: CAD 17.95 per hour from 1 October 2026 (was CAD 17.60), indexed every October. Federally regulated employers pay the federal minimum wage under the Canada Labour Code, indexed every 1 April. | Ontario – Your guide to the ESA: Minimum wage |
| Standard working hours | Ontario: maximum 8 hours a day and 48 hours a week unless the employee agrees in writing to more, with 11 hours off each day. Federal: standard 8 hours a day and 40 a week, maximum 48. | Ontario – Your guide to the ESA: Hours of work |
| Overtime pay | Ontario: 1.5 times the regular rate after 44 hours a week; averaging over several weeks needs a written agreement. Federal: 1.5 times after 8 hours a day or 40 a week. Some managers and IT professionals are exempt in Ontario. | Ontario – Your guide to the ESA: Overtime pay |
| Paid annual leave | Ontario: 2 weeks after each 12-month year, 3 weeks after 5 years, with vacation pay of 4% or 6% of wages. Federal: 2 weeks after 1 year, 3 weeks after 5 years, 4 weeks after 10 years. | Ontario – Your guide to the ESA: Vacation |
| Public holidays | Ontario: 9 public holidays: New Year's Day, Family Day, Good Friday, Victoria Day, Canada Day, Labour Day, Thanksgiving, Christmas and Boxing Day. Federal: 10 general holidays, including the National Day for Truth and Reconciliation (30 September). | Ontario – Your guide to the ESA: Public holidays |
| Sick leave | Ontario: 3 unpaid, job-protected sick days a year after 2 weeks' service; since 28 October 2024 employers cannot require a doctor's note for them. Federal: up to 10 days of paid medical leave a year. EI sickness benefits cover longer absences. | Ontario – Your guide to the ESA: Sick leave |
| Maternity and parental leave | Ontario: up to 17 weeks' pregnancy leave plus 61–63 weeks' parental leave, unpaid but job-protected. Income comes from Employment Insurance: 15 weeks of maternity benefits at 55% of earnings, then parental benefits. Quebec runs its own plan (QPIP). | Ontario – Your guide to the ESA: Pregnancy and parental leave |
| Probation period | No statutory probation period. Ontario ESA notice is not owed in the first 3 months of employment, and the Canada Labour Code works the same way. Common-law notice can still apply unless a written contract validly sets a probation term. | Ontario – Your guide to the ESA: Termination of employment |
| Notice period | Ontario: written notice or pay in lieu from 1 week (under 1 year) to 8 weeks (8+ years); 8–16 weeks for mass terminations of 50+ employees. Federal: 2 to 8 weeks by service. Courts may award longer common-law notice. | Ontario – Your guide to the ESA: Termination of employment |
| Severance pay | Ontario: 1 week's pay per year of service, up to 26 weeks, for employees with 5+ years if the employer's global payroll is CAD 2.5 million or more, or 50+ jobs end in 6 months on a closure. This is on top of notice. | Ontario – Your guide to the ESA: Severance pay |
| Employer social contributions | 2026: CPP 5.95% on CAD 3,500–74,600 (max CAD 4,230.45), CPP2 4% on CAD 74,600–85,000 (max CAD 416), EI 2.28% up to CAD 68,900 (max CAD 1,572.30). Ontario adds Employer Health Tax (up to 1.95%) and WSIB premiums. | Canada Revenue Agency – CPP contribution rates, maximums and exemptions |
| Employee social contributions | 2026: CPP 5.95% (max CAD 4,230.45), CPP2 4% (max CAD 416) and EI 1.63% up to CAD 68,900 (max CAD 1,123.07). Quebec employees pay into the Quebec Pension Plan and QPIP instead, with a lower EI rate. | Canada Revenue Agency – EI premium rates and maximums |
| Income tax on salaries | Employers withhold federal and provincial tax each payday and remit it to the CRA. 2026 federal rates: 14% to 33% (33% above CAD 258,482). Ontario adds 5.05% to 13.16%. Quebec income tax is withheld separately for Revenu Québec. | Canada Revenue Agency – Tax rates and income brackets, current year |
| Mandatory bonuses and 13th-month pay | None required by law. There is no 13th-month pay. Vacation pay (4% or 6% in Ontario) and public holiday pay are statutory entitlements, not bonuses. Contractual bonuses must be paid as agreed. | Ontario – Your guide to the Employment Standards Act |
| Work permits for foreign nationals | Most foreign workers need a work permit from IRCC. Usually the employer first obtains a Labour Market Impact Assessment (LMIA) from ESDC (CAD 1,000 per position). LMIA-exempt routes include intra-company transfers and CUSMA professionals; the employer pays a CAD 230 compliance fee. | IRCC – Hire a temporary foreign worker |
| Employment contract requirements | No written contract is required, but one is needed to limit common-law notice. Ontario employers must give the ESA poster and, with 25+ employees, written pay and hours details before day one (since 1 July 2025). Quebec contracts must be offered in French. | Ontario – Your guide to the ESA: Mandatory information for employees |
Employer obligations in Canada, topic by topic
Filter by primary service relevance
Does an employment contract have to be in writing in Canada, and what should it include?
What are the working-hour and overtime rules in Canada?
What is the minimum wage in Canada in 2026, and how must wages be paid?
How much vacation, holiday and sick leave must employees get in Canada?
What payroll contributions and taxes does a Canadian employer pay in 2026?
How much notice and severance must an employer give when dismissing an employee in Canada?
How can an employer hire a foreign national in Canada?
When can you treat a worker in Canada as an independent contractor?
Key employment laws in Canada and official sources
- Employment Standards Act, 2000 (Ontario), S.O. 2000, c. 41 — Sets Ontario minimum wage, hours, overtime, vacation, holidays, leaves, notice and severance.
- Canada Labour Code, R.S.C. 1985, c. L-2 — Sets employment standards for federally regulated sectors such as banking, telecoms and interprovincial transport.
- Canada Pension Plan, R.S.C. 1985, c. C-8 — Requires employers to deduct and match CPP and CPP2 contributions on employees’ earnings.
- Employment Insurance Act, S.C. 1996, c. 23 — Sets EI premiums and benefits, including maternity, parental and sickness benefits.
- Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) — Requires employers to withhold and remit income tax from salaries and report on T4 slips.
- Immigration and Refugee Protection Act, S.C. 2001, c. 27 — Governs work permits, LMIA-exempt categories and employer compliance for foreign workers.
- Human Rights Code (Ontario), R.S.O. 1990, c. H.19 — Bans discrimination in hiring and employment and requires accommodation to the point of undue hardship.
- Employer Health Tax Act (Ontario), R.S.O. 1990, c. E.11 — Imposes Ontario’s payroll-based Employer Health Tax of up to 1.95%.
FAQs: hiring employees in Canada
Can a foreign company hire employees in Canada without a local entity?
Yes. A foreign company can register with the CRA as a non-resident employer and run Canadian payroll without incorporating, but it must still meet provincial employment standards, remit source deductions and consider whether it is carrying on business in Canada for tax purposes. Many companies use an Employer of Record instead, which employs the worker under a local contract and runs payroll, contributions and compliance.
How much does an employee cost in Canada on top of gross salary?
In Ontario, statutory employer costs are usually about 8–10% of salary up to the caps. For 2026 that means CPP at 5.95% (to CAD 74,600), CPP2 at 4% (to CAD 85,000), EI at about 2.28% (to CAD 68,900), Employer Health Tax of up to 1.95% and WSIB premiums. Vacation pay of 4% is part of wages. Extended health and dental plans are common but voluntary.
What is the minimum wage in Canada in 2026?
It depends on the province. Ontario’s general minimum wage is CAD 17.95 an hour from 1 October 2026, up from CAD 17.60, with a student rate of CAD 16.90. Federally regulated employers, such as banks and airlines, pay the federal minimum wage under the Canada Labour Code, indexed every 1 April. Other provinces set their own rates and change dates.
How much notice and severance does an employer owe when dismissing an employee in Canada?
In Ontario the ESA requires 1 to 8 weeks’ notice or pay in lieu after 3 months’ service, plus severance of 1 week per year (up to 26 weeks) for employees with 5+ years where payroll is CAD 2.5 million or more. Without a valid termination clause, courts can award common-law reasonable notice of several months or more. Just cause dismissal needs serious misconduct.
Can a company hire a foreign national in Canada, and what permit is needed?
Yes, with a work permit from IRCC. Usually the employer first obtains a Labour Market Impact Assessment (LMIA) from ESDC, costing CAD 1,000 per position, to show no Canadian is available. LMIA-exempt routes include intra-company transfers and CUSMA professionals, for which the employer pays a CAD 230 compliance fee. Low-wage LMIAs face caps and regional restrictions introduced since 2024.
Is it risky to engage contractors instead of employees in Canada?
Yes, if the contractor works like an employee. The CRA looks at control, tools, profit and loss, and integration, and Ontario and federal law prohibit misclassification. Consequences include unpaid CPP and EI with penalties and interest, unpaid vacation and holiday pay, and claims for notice. Even contractors who are not employees can be ‘dependent contractors’ owed reasonable notice by the courts.
Related NNRoad resources for Canada: Employer of Record in Canada · Payroll in Canada · Hiring foreign employees in Canada · Contractors and on-demand talent in Canada · Canada employer cost calculator
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Regulation Updates in Canada
Jul 2025: Canada Updates PGWP Eligibility, Targeting Health, Trades, and Tech Graduates
IRCC updates eligibility rules for international graduates, prioritizing fields linked to long-term labor needs in health care, education, and skilled trades.
Update first published on NNRoad in Jul 2025. The current rules are summarised in the sections above.
Jul 2025: B.C. Government Initiates Public Consultation on Labour Relations Code Recommendations
The province releases its 2024 Labour Relations Code Review Panel report and calls for public input ahead of major reforms to union certification, bargaining, and dispute resolution laws.
Update first published on NNRoad in Jul 2025. The current rules are summarised in the sections above.
Discover the latest employment and compliance updates in Canada — helping you stay ahead in a changing regulatory landscape.
Work permit: Applying from outside Canada
What it is: A federal policy update clarifies the eligibility for priority processing of work permit applications and the required steps applicants must follow, including entering employer-provided NOC/LMIA information.
What it changes: The guidance now specifies how priority processing is determined and the steps applicants must take, including the use of employer-entered NOC/LMIA information, creating new operational considerations for employers and EORs handling work permits.
Who is affected:
- Workers or employers explicitly mentioned or clearly implied by the policy summary.
What employers should do:
- Ensure relevant NOC/LMIA information is entered by the employer when handling work permit applications.
- Coordinate with EORs to align with the updated priority processing guidance.
Notes: Effective month: 2026-05.
Pension Benefits Standards Act
What it is: The Pension Benefits Standards Act amendments (Bill 33) require employers offering workplace pension plans to implement automatic escalation of pension contributions and related plan-document and process changes.
What it changes: This change creates new payroll and plan-administration obligations for employers to apply automatic escalation and adjust plan documents and processes accordingly.
Who is affected:
- Employers offering workplace pension plans
What employers should do:
- Prepare for automatic escalation of pension contributions
- Update plan documents and related processes to reflect the escalation and any associated administrative changes
Notes: Effective month: 2026-10.
Canada Summer Jobs 2026
What it is: Canada Summer Jobs 2026 opens the hiring period and defines employer eligibility and program rules for wage subsidies to eligible employers.
What it changes: The policy sets that wage subsidies are available to eligible employers (private-sector employers with 50 or fewer full-time employees) and defines CSJ-funded jobs as full-time, establishing operational requirements related to working time and payroll for subsidized hires.
Who is affected:
- Private-sector employers with 50 or fewer full-time employees
- Organizations applying for Canada Summer Jobs subsidies through the program
What employers should do:
- Prepare to assess eligibility under the 50 or fewer full-time employees criterion
- Plan and document that CSJ-funded positions are full-time and align payroll and working-time practices with the program rules
Notes: Effective month: 2026-04.
Labour Market Impact Assessment valid for a maximum of 6 months
What it is: The Labour Market Impact Assessment is valid for a maximum of 6 months.
What it changes: Positive LMIA approvals are valid for up to six months, requiring temporary foreign workers to apply for work permits within the LMIA validity period or the employer must reapply for a new LMIA.
Who is affected:
- Employers who use LMIA-backed hiring
- Temporary foreign workers under an LMIA
What employers should do:
- Ensure work permit applications by temporary foreign workers are submitted within the LMIA validity period
- If not within the validity period, reapply for a new LMIA
Notes: Effective month: 2026-04.
Canada extends certain work permit measures for Ukrainians
What it is: The policy update extends certain work permit measures so Ukrainians who arrived under the Canada-Ukraine Authorization for Emergency Travel (CUAET) may apply to extend their work permits for up to three years, effective April 2026.
What it changes: Anyone who arrived under CUAET can now apply to extend their work permits for up to three years. Employers have obligations to verify and process these extended work permits.
Who is affected:
- Workers who arrived under the CUAET program
- Employers who hire or employ Ukrainians under CUAET
- Any party responsible for verifying work permit status and processing extensions
What employers should do:
- Verify eligibility and process requests for extended work permits from Ukrainians who arrived under CUAET
- Prepare to support extensions for eligible employees by providing required documentation and processing steps
Notes: Effective month: 2026-04.
Canadian Apprenticeship Strategy - Investments in Training Equipment
What it is: Expansion of flexibilities under the Canadian Apprenticeship Strategy – Investments in Training Equipment to broaden eligible costs.
What it changes: The policy now allows broader eligible costs, including shipping and installation, and enables federal contributions of up to 70% in remote or infrastructure-limited areas to support union-led and other apprenticeship training.
Who is affected:
- Employers involved in apprenticeship training
- Organizations delivering apprenticeship training in remote or infrastructure-limited areas
What employers should do:
- Review whether shipping and installation costs can be treated as eligible under the Investments in Training Equipment program
- Consider the possibility of federal contributions up to 70% when operating in remote or infrastructure-limited areas
Notes: Effective month: 2026-02.