Employee Benefits in Canada

Bonuses and additional payments

In Canada, bonus structures are generally negotiated as part of the employment contract. 

• While there is no federal mandate for a minimum bonus, many employers offer performance-based incentives to reward excellence and productivity. 
• Vacation pay is statutorily required and is typically calculated at a minimum of 4% to 6% of an employee's gross earnings, ensuring that workers receive fair compensation for their time off.

Annual leave

Employees in Canada are entitled to paid vacation leave after completing one year of service. The statutory entitlement is two weeks per year for employees with less than five years of service, increasing to three weeks after five years, and four weeks after 10 years. This leave is fully paid and can be taken throughout the leave year, as agreed between employer and employee.  

Unused statutory leave must be taken within 10 to 12 months after it is earned, depending on the province. Payment in lieu of unused leave is only permitted upon termination of employment. 

Additional leave may be offered as part of an employment contract, though it is not required by law. Many employers offer enhanced leave policies to stay competitive and improve retention.

Sick leave

Personal and sick leave are governed by the Canada Labour Code. Federally regulated employees are entitled to up to 10 days of paid sick leave per year, accruing at a rate of one day per month after 30 days of continuous employment. Employers may offer more generous sick leave policies through employment contracts or collective agreements.

Parental leave

Employers must provide up to 63 weeks of unpaid parental leave to eligible employees following the birth or adoption of a child, with the option to share up to 71 weeks if both parents are employed by federally regulated employers. Employees who have completed at least six consecutive months of continuous employment are eligible for benefits, with written notice submitted at least four weeks before the intended start date of the leave.

Additional benefits

In addition to the above, Canadian employers are mandated to offer certain statutory benefits while often providing additional perks to attract and retain talent:

• Canada Pension Plan (CPP): Employers and employees both contribute to the CPP, which supports retirement savings and benefits.
• Employment Insurance (EI): Contributions to EI provide temporary financial assistance in cases of unemployment, illness, or maternity/parental leave.
• Health benefits: Although public healthcare is universally available to Canadian residents, many employers offer extended health, dental, and vision plans as supplemental benefits.
• Retirement savings and other benefits: Companies may also offer group retirement savings plans, life insurance, and other employee-focused benefits to enhance overall compensation packages.

As your employer of record in Canada, we can help you build a compliant and competitive benefits package while managing the required contributions and entitlements on your behalf.