Hiring Employees in Canada

1. Key Points in Employment Contracts

• Service Contract INDEPENDENT CONTRACTOR AGREEMENT (for freelancers, consultants, project contractors, etc.)
  • The contract must be written in English. In Quebec, the contract must be in French. It must be in writing and signed by both parties.
  • The contract must include:
    • Information about each party, including the full name, address, and contact information of the service provider (individual or company) and the employer (company).
    • The purpose of the contract.
    • The specific services and scope to be provided by the service provider.
    • The service period (start date, completion date, or the validity period of the contract).
    • Remuneration and payment terms.
    • Service standards and deliverables.
    • Responsibilities and obligations of both parties.
    • Termination clause.
    • Confidentiality clause.
    • Intellectual property clause.
    • Breach of contract clause.
    • Declaration of independent contractor status (clearly stating that the relationship between the service provider and the employer is that of an independent contractor, not an employment relationship, and the service provider will not enjoy employee benefits or privileges).
    • Governing law and dispute resolution method (indicating that the contract is governed by the laws of a specific province in Canada and stipulating the dispute resolution method, such as negotiation, arbitration, or court).
  • It is applicable to work arrangements without an employment relationship, such as freelancers, consultants, and project contractors. They pay taxes on their own and do not enjoy employee benefits.
• Employment Contract EMPLOYMENT CONTRACT (a) Permanent Full – Time; (b) Fixed – Term; (c) Part – Time; (d) Casual/Seasonal
  • The contract must be written in English. In Quebec, the contract must be in French. It must be in writing and signed by both parties.
  • The contract must include:
    • The position offered.
    • The contract term.
    • The work location.
    • The basic salary and payment date.
    • Working hours and working days.
    • Other benefits (if any).
    • Annual leave.
    • Termination clause.
    • Sick leave.
    • Probation period.
    • Notice period.
    • Duties and responsibilities.
  • It is applicable to the relationship between employers and employees. Employees are managed by the employer and enjoy employee rights such as salary, leave, work – related injury compensation, and social insurance.

2. Overview of Local Statutory Welfare Systems

• Salary Payment
  • Pay cycle:
    • In Ontario, there is no strict requirement. Usually, salaries are paid weekly, bi – weekly, semi – monthly, or monthly.
  • Payday:
    • In Ontario, the employer must set a fixed payday for employees and implement it consistently. The employer must pay the current salary on the specified payday.
• Monthly Minimum Wage
  • As of April 1, 2025, the federal minimum wage is set at $17.75 CAD per hour, applicable to employees in federally regulated industries such as banking, telecommunications, aviation, postal services, railways, and transportation.
  • The minimum wage in Canada varies by province/territory.
    • In Ontario, it will be raised to $17.60 CAD per hour on October 1, 2025.
  • For current wage information, please refer to the following:
    Provinces
    Newfoundland and Labrador
    Prince Edward Island
    Nova Scotia
    New Brunswick
    Quebec
    Ontario
    Manitoba
    Saskatchewan
    Alberta
    British Columbia
    Territories
    Nunavut
    Northwest Territories
    Yukon
• Probation Period
  • The probation period regulations in Canada vary by province/territory, with a maximum of 6 months.
  • In Ontario, it is 3 months.
• Employer Costs
  • Employer contribution items in Canada usually include:
    • CPP1 Canada Pension Plan (excluding Quebec) (applicable to annual salaries below $71,300 CAD) – 5.95%.
    • CPP2 Canada Pension Plan (excluding Quebec) (applicable to the salary range between $71,300 and $81,200 CAD; no CPP is paid for the amount above $81,200) – 4%.
    • EI Employment Insurance – 2.296%.
    • Workers’ compensation insurance (rates vary by province/territory).
    • Group welfare insurance (dental, supplementary medical insurance, life insurance, etc.).
    • Additional employer contributions (such as Group RRSP matching contributions).
  • Among them, CPP and EI are statutory contributions. Workers’ compensation insurance is mandatory for employers in most provinces to pay for employees (some industries may be exempted), and the others are voluntary contributions by employers.
  • In Ontario, the Workers’ Safety and Insurance Board (WSIB) rate is 0.18%. The statutory employer cost is approximately 8% (excluding voluntary employer costs).

3. Salary Payment and Statutory Holiday Responsibilities

• Overtime Pay and Maximum Working Hours
  • Each province in Canada has a standard working – hour limit. After exceeding the limit, employers usually have to pay overtime pay (the overtime rate is mostly 1.5 times the normal hourly wage). Most provinces have stipulated the maximum daily and weekly working hours, but the thresholds for calculating overtime pay are not entirely the same. Managers, high – paid professionals, and certain industry positions (such as information technology and transportation) may be exempted from overtime pay. The specific exemption scope is determined by the employment standards laws of each province.
  • In Ontario, working hours exceeding 44 hours a week are counted as overtime (in Ontario, working more than 8 hours a day is not automatically counted as overtime unless otherwise stipulated in the contract/collective agreement). The overtime part is ≥1.5× the employee’s normal hourly wage.
• Personal Income Tax
  • Individuals need to pay federal and provincial taxes, and the specific tax rates depend on their location. The federal personal income tax rate ranges from 15% to 33%. Income tax is calculated on a progressive basis. (For provincial and territorial tax rates, please refer to the Canada Revenue Agency and the Quebec Revenue Agency.)
• Statutory Holidays
  • Statutory annual leave (vacation entitlement) in Canada is regulated by the Employment Standards Act/Code of each province or territory.
  • For employees with 1 – 5 years of service:
    • In Ontario, it is 2 weeks. Vacation pay is 4%.
  • For employees with more than 5 years of service:
    • In Ontario, it is 3 weeks. Vacation pay is 6%.
• Treatment or Conversion Logic of Unused Annual Leave at the End of the Year
  • Use of annual leave
    • Mandatory leave: In Ontario, the Employment Standards Act, 2000 (ESA) requires employers to ensure that employees take their entitled paid annual leave within 10 months after the end of the entitlement year.
    • Non – forfeiture: Even if employees do not apply for leave, employers cannot invalidate their annual leave. Employers are responsible for arranging leave or paying the corresponding vacation pay.
  • Payment of annual leave
    • If an employer requires an employee to work during the period when they are entitled to leave or fails to let the employee take leave within the specified period, the employer must pay the employee the vacation pay corresponding to the leave days.
    • When the contract expires or the employment relationship terminates, all unused annual leave must be converted into cash and paid in a lump sum and cannot be forfeited.
    • In case of failure to take leave due to sick leave, maternity leave, or other statutory leave, the employer must still arrange leave within the legally permitted extension period or convert and pay the vacation pay.
• Statutory Public Holidays
  • In Canada, public holidays depend on the province where the employee is located. There are both national public holidays and province – specific public holidays. National public holidays include:
    • New Year’s Day
    • Good Friday
    • Victoria Day
    • Canada Day
    • Labour Day
    • National Day for Truth and Reconciliation
    • Thanksgiving Day
    • Remembrance Day
    • Christmas Day
    • Boxing Day
• Other Leaves
  • Maternity Leave
    • In Canada (excluding Quebec), maternity income subsidies are provided by the federal EI (Employment Insurance) for a maximum of 15 weeks, with a replacement rate of 55% and a maximum of $695 per week. This is a government benefit, not paid by the employer.
    • Maternity benefits can start up to 12 weeks before the expected due date and must end no later than 17 weeks after the expected due date or the actual date of delivery (whichever is later).
    • Maternity benefits can be connected with parental benefits (maternity leave first, then parental leave).
    • In Quebec, EI does not apply. Instead, it is provided by the RQAP (Quebec Parental Insurance Plan). The “maternity benefits” are 18 weeks × 70% under the basic plan and 15 weeks × 75% under the selected plan.
  • Paternity Leave
    • Under the EI system (excluding Quebec), there is no separate paternity benefit.
    • Quebec’s RQAP has a special “paternity benefit”: 5 weeks × 70% under the basic plan and 3 weeks × 75% under the selected plan.
  • Parental Leave
    • There are two types of EI parental benefits (the type cannot be changed once the benefits start):
      • Standard: Up to 40 weeks can be shared by parents, and up to 35 weeks for single parents; the replacement rate is 55%, with a maximum of $695 per week.
      • Extended: Up to 69 weeks can be shared, and up to 61 weeks for single parents; the replacement rate is 33%, with a maximum of $417 per week.
  • Sick Leave
    • The sick – leave duration may vary by province.
• Calculation Logic of Partial – attendance Salary (including Absence or Unpaid Leave)
  • Hourly – paid employees are calculated based on working hours. Employees on an annual or monthly salary basis can be calculated by hours, working days, or calendar days. There is no unified legal requirement for which method to use.
• Local Minimum Wage Required for Split Payroll of Expatriate Employees (Work Permit)
  • Under the Temporary Foreign Worker Program (TFWP), employers must pay a salary that is not lower than the “prevailing median wage” for the position/location published on Job Bank.
  • The salary must also meet the minimum – wage standard of the province/territory.

4. Dismissal Rules and Compensation Arrangements

• Withdrawal of Local Social Welfare (such as Provident Fund)
  • CPP: According to the China – Canada Social Security Agreement, for temporary assignees, double – contribution can be avoided through the agreement. That is, employees can continue to participate in the Chinese pension system and be exempted from CPP in Canada; they need to apply to the tax authority and obtain a Certificate of Coverage. The “assignment” under the China – Canada agreement generally has a maximum duration of 72 months.
  • EI still needs to be paid.
  • Workers’ compensation insurance is registered by province.
• Dismissal (Legal Requirements and Best Practices)
  • Notice Period
    • Federally: After continuous employment for 3 months, employers must give written notice or pay in lieu of notice. The notice period increases with the length of service from 2 to 8 weeks (e.g., 2 weeks for 3 months of service; 3 weeks for 3 years of service;…; 8 weeks for 8 years or more of service). It varies according to provincial laws. In most provinces, at least one – week notice is required for each year of service.
    • In Ontario, the notice period increases with the length of service from 1 to 8 weeks (<3 months with no minimum notice; 1 week for 3 months – 1 year; 2 weeks for 1 – 2 years;…; 8 weeks for 8 years or more).
  • Voluntary Resignation
    • Employees are allowed to resign at any time.
    • Compliance requirements
      • Employees must provide a signed resignation letter.
      • Due to the local payroll cut – off time, the resignation date may need to be adjusted.
  • Dismissal during Probation
    • Employers are allowed to terminate the employment relationship with employees at any time during the probation period. (In Ontario, written notice or pay in lieu of notice must be given after 3 months of service, increasing with the length of service).
    • Reason: There is no legal requirement.
    • Compliance requirements
      • Dismissal must not constitute discrimination.
      • Employees must not be subject to additional legal protection (e.g., disability, pregnancy, or union membership).
  • Mutual Agreement Dismissal
    • Employers and employees are allowed to mutually agree to terminate the employment relationship for any reason.
    • Common reasons
      • The employee may be involved in disputes or litigation.
      • Employees cannot be dismissed without just cause, otherwise, unjust dismissal may cause disputes.
      • The employee has negotiated the termination of the labor contract with the client.
  • Dismissal for Just Cause
    • Employers are allowed to immediately dismiss an employee for willful misconduct without prior notice.
    • Reasons
      • Attendance issues, including absenteeism and lateness.
      • Theft of company money or property.
      • Misconduct in violation of the employment agreement, policies, or laws.
      • Falsification of records.
      • Workplace harassment and violence.
      • Dishonesty, including fraud, theft, breach of trust, and deception.
      • Disobedience and insolence.
      • *Performance issues are usually not accepted.
    • Compliance requirements
      • A strong investigation must be conducted into the alleged reason for dismissal, and clear and irrefutable evidence must be provided.
      • It must be proven that the alleged reason clearly violates company conduct, labor laws, or labor agreements.
• Conversion of Annual Leave for Departing Employees
  • When an employee leaves (either by resignation or dismissal), the employer must pay the accrued vacation pay in a lump sum. A common calculation is based on a percentage of the previous year’s or the entitlement year’s salary, starting at 4% and increasing to 6% after a certain length of service (in many provinces).
• Official Websites of Labor Laws
  • Federal: https://laws-lois.justice.gc.ca/eng/acts/l – 2/
  • Ontario: https://www.ontario.ca/laws/statute/00e41

5. Incentive Measures and Policy Analysis of Local Governments for Establishing Companies and Hiring Local Employees

• Incentive Policies
  • Local Employment Protection Policy
    • Statutory employment standards (federal/provincial governance): Canada does not have a unified national Labor Law. Federally regulated industries are subject to Part III of the Canada Labour Code (working hours, wages, annual leave, statutory holidays, various leaves, etc.); other industries are governed by the employment standards laws of each province/territory.
    • Taking Ontario as an example, the official Ontario guide “Your guide to the ESA” covers minimum wage, working hours and overtime, termination notice, public holidays, maternity/parental leave, etc. HR practices should be based on this guide and the e – Laws provisions.
    • Statutory withholding and payment: Employers must withhold and pay CPP pension and EI employment insurance at the annual rate.
    • Workers’ compensation insurance (provincial): Most provinces require enterprises hiring employees locally to register and pay workers’ compensation insurance.
    • Anti – discrimination and reasonable accommodation: The federal Canadian Human Rights Act and provincial human rights laws prohibit employment discrimination; employers are required to provide “reasonable accommodation” for religion, disabilities, etc.
    • Local priority (in the context of foreign employment): When hiring foreign employees through TFWP (LMIA), employers need to prove that there are no suitable Canadian citizens/permanent residents (the principle of LMIA). The government can also set a proportion cap for the low – wage stream (in the same workplace, the proportion of temporary foreign workers in low – wage positions usually cannot exceed 10%; LMIA applications exceeding the cap will not be accepted. Some industries/positions may apply a 20% cap) and implement a “no – processing policy for high – unemployment areas” (since September 26, 2024, for low – wage stream LMIA applications where the wage is lower than the “wage threshold” of the province/territory and the work location is in a metropolitan area with an unemployment rate of ≥6%, the applications will not be processed) to protect local employment.
    • Training and skills development: The Canada – Ontario Job Grant provides funding for employers to purchase on – the – job training; at the federal level, there are also the Student Work Placement Program (SWPP) and Canada Summer Jobs (youth summer job subsidies) to support employers’ employment.
• Quota Ratio for Hiring Foreign Employees
  • Canada does not set a general ratio. Whether foreign employees can be hired depends on the channel and the type of position.
  • TFWP (LMIA) low – wage stream “proportion cap”: Since September 26, 2024, the upper limit for employers to hire foreign employees in low – wage positions at the same workplace is 10%. The government may also “not accept” low – wage LMIA applications in metropolitan areas with an unemployment rate of ≥6% (except for some industries such as agriculture, food processing, fishing, construction, and healthcare).
  • TFWP high – wage stream: There is no quota limit, but the wage threshold and compliance requirements are higher. Since November 8, 2024, the starting salary for the high – wage stream needs to be more than 20% higher than the median hourly wage of the province/territory.
  • IMP (International Mobility Program): LMIA is exempted, such as intra – company transfers. There is no quota limit, but it is necessary to meet the immigration regulations and employer compliance requirements (e.g., keep records for 6 years, provide positions/salaries/conditions that are substantially the same as promised).
• Funding Policies
  1. SR&ED R&D tax incentives: Enterprises conducting eligible scientific research/experimental development in Canada can enjoy pre – tax deductions and investment tax credits (ITC); the CRA provides eligibility and application guidelines.

6. Human Resources Analysis and Employment Suggestions

• Number of Employed People
  • In July 2025, the national number of employed people was approximately 21.02 million, a decrease of 40,800 from the previous month; the employment rate was 60.7%.
• Unemployment Rate
  • In July 2025, the national unemployment rate was 6.9%.
• Average Salary Trend
  • In July 2025, the average hourly wage increased by 3.3% year – on – year to $36.16, which was basically the same as the 3.2% increase in June, indicating a moderate salary growth rate.
  • By July 2025, the number of people employed in the service industry nationwide was approximately 16.85 million, accounting for about 80% of the total employment (total employment of 21.02 million). Salary changes are mainly driven by the service industry.
  • The average weekly salaries in industries such as utilities, finance and insurance, and professional/scientific/technical services are among the top in the service industry; retail and accommodation and catering are relatively lower.
• Employment Suggestions
  • 1. Recruitment channels (official + mainstream platforms):
    • Job Bank (federal official) offers free job postings and automatic candidate matching; it is also the core channel for compliant advertising in some foreign – employment scenarios (LMIA).
    • Provincial public platforms: such as WorkBC in B.C.; Québec emploi in Quebec (government – official French recruitment platform).
    • Also cooperate with LinkedIn / Indeed to cover passive candidates and niche groups.
  • 2. Salary and statutory employer costs:
    • CPP pension and EI employment insurance are national statutory requirements. Employers contribute according to the current year’s rate, and both have annual caps.
    • Workers’ compensation insurance is mandatory at the provincial level. Most businesses need to register and pay, such as WSIB in Ontario.
  • 3. Job posting and salary transparency:
    • In British Columbia, since November 1, 2023, all public job postings must indicate the salary or salary range.
    • In Ontario, new “salary transparency” regulations for job posting salary information will come into effect on January 1, 2026.
  • 4. Language and localization (especially in Quebec):
    • French priority in Quebec: Recruitment advertisements, employment documents, and communication with employees must be provided in French. If a foreign language (such as English) is required, it must be proven that the position actually requires it and that “reasonable means” have been taken to avoid mandatory foreign – language use.
    • When recruiting in Quebec, ensure that the visibility/coverage of French job postings is “comparable” to that of other languages.
  • 5. Working hours and overtime baseline:
    • In Ontario, working more than 44 hours a week triggers 1.5 times the overtime pay; the thresholds in other provinces are different. Check the local employment standards before issuing an offer.
  • 6. Foreign talent (LMIA/work permit):
    • When using the TFWP (LMIA) channel, priority should be given to recruiting Canadians/permanent residents and meeting recruitment obligations such as job advertising. For urgent technology recruitment, the Global Talent Stream can be evaluated.
  • 7. Employment compliance (policy documents):
    • Employers in Ontario with 25 + employees must have a written “Disconnecting from Work” policy, which should be updated annually and distributed to employees on time.

7. Cultural Adaptation in Different Regions

• Language
  • English and French are the two official languages in Canada (at the federal level). The official language of Quebec is French. The 2021 census showed that 98% of the population can speak English or French; the social coverage of these two official languages is extremely high.
  • According to the 2021 census, in addition to English and French, the most commonly used non – official languages in Canada include Spanish, Mandarin, and Punjabi.
• Religious Customs
  • Religion
    • Canada has no state religion. The charter guarantees “religious freedom” and prohibits religious discrimination within the framework of equal rights and human rights laws.
    • According to the 2021 census, Christianity accounts for about 53.3%, non – religious people account for about 34.6%, Muslims account for about 4.9%, Hindus account for about 2.3%, and Sikhs account for about 2.1%. Religious diversity continues to increase.
  • Customs
    • Language and politeness: There are two official languages in the country, English and French. In Quebec, French is the only official and “common” language. Business and service communication with the public usually needs to be in French. When visiting or in business situations in Quebec, it is more appropriate to start with a French greeting.
    • Greetings and addressing: In work and business settings, people usually greet each other with a handshake or a friendly nod and generally address each other by their first names; maintain politeness and personal space and respect whether the other person is willing to shake hands.
    • Punctuality: Punctuality is highly valued in business and meetings. It is recommended to arrive at least a few minutes early.
    • Diversity and anti – discrimination: Religion, disabilities, etc. are protected by human rights laws; employers and service providers have an obligation to provide “reasonable accommodation” for religious practices, disabilities, etc.
    • Tipping culture: In service industries such as restaurants, tips are usually required, generally 15% – 20% of the pre – tax bill amount; tips are also commonly given for haircuts, manicures, taxis, etc.
    • Smoking, e – cigarettes, and cannabis: Smoking/e – cigarettes in public places are mostly restricted; although non – medical cannabis is legal at the federal level, the consumption locations, sales, and possession rules are further regulated by each province/territory (e.g., in Ontario, smoking/e – cigarettes are prohibited in enclosed public places and workplaces, and there are specific rules for cannabis use).
• Business Culture
  • Punctuality and professional communication are highly valued in the Canadian workplace; being on time for meetings, communicating clearly, and keeping promises are generally expected.
  • Emphasizing a diverse, equal, and inclusive (DEI) workplace environment is a policy orientation at the government level.
  • When doing business in Quebec, special attention should be paid to the French – priority rule: Public signs and commercial advertisements usually need to be in French.

Note: This employment guide is for reference only, aiming to provide a basic overview of employment information in the country. Since laws and policies may change at any time, it is recommended that you consult before taking any employment – related actions to ensure compliance with the latest regulations and policies.