The strength of Canada’s economy, together with a highly skilled workforce, low corporate tax rates, and large trade networks, positions the country as an ideal market for global companies to invest in and grow.
Federal regulations, on the other hand, in contrast to the United States, where the Department of Labor has taken the lead in enacting new employment legislation, regulate only particular areas of industry, with all others being subject to provincial legislation.
This is fortunate for the company, which further simplifies compliance when expanding into Canada. Read this guide to learn all about Canadian labor laws and how to reduce the risks of compliance along the way.
Common Deductions on Canadian Paystubs Explained
Employment Contracts in Canada
Like its southern neighbor, Canadian employment law does not require written work contracts. However, this is in contrast to the U.S., where at-will employment is prohibited.
Different forms of employment contracts are permitted in Canada. Some of these are fixed-term, indefinite, seasonal, part-time, and internships. We are now going to discuss the two most common employment contracts in the country: fixed-term and indefinite contracts.
Fixed Term Contracts
Fixed-term contracts in Canada have a definite duration, with the contract specifying the date the working relationship will end. They can be for any period of up to three years, and employers can extend them multiple times.
Canadian employers often use fixed-term contracts to hire talent for project-based work or to fill an employment gap, such as when an employee takes maternity leave.
This contract should not be mistaken for fixed-term contractor agreements. Although contractor agreements often state a termination date, they do not include the whole host of employment rights that Canadian fixed-term employment contracts do.
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Indefinite Contracts
Indefinite contracts: Also known as permanent contracts, indefinite contracts are for an indefinite period, with no specified end date to the working relationship. Canadian employment law classifies work contracts as indefinite if there is no clearly stated end date.
Because they usually last longer than fixed-term contracts, indefinite contracts often come with more additional rights for the employee, such as notice of termination or leave for compassionate care.
Remember: In Canada, the contract terminology is not the only factor to determine the contract type that the employment relationship falls under. The overall employment character ultimately determines if the contract is for a fixed term or indefinite.
Consider an employee who has had a series of fixed-term contracts with the same employer for several years. The courts will disregard the contract of employment as being of an indefinite term and impose all the obligations on the employee-employer relationship, such as termination notice and other benefits, of long-service employees.
Employment Rights in Canada
The Canada Labour Code sets out the labor protections for federal industries, which are limited in scope to air transportation, radio broadcasting, and telecommunications.
For all other sectors, provinces are at liberty to establish individual minimum standards. This means that some of the regulations that apply to businesses across Canada vary from industry to industry.
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Working Hours and Overtime
Under common practice, a typical workweek in Canada runs from Monday to Friday for 40 hours, and a typical workday is 8 hours in a 24-hour period.
Overtime is any hours worked by an employee over and above the standard minimum. Such hours are compensated at 1.5 times the employee’s regular wage. Overtime regulations vary by province and industry.
For example, a standard workweek in Ontario is 44 hours, while in British Columbia, it’s 40. Employers in British Columbia calculate overtime pay according to various structures, either daily or weekly, depending on individual circ*mstances.
Many foreign companies engage a third-party legal expert, like an employer of record (EOR), when expanding to the country to avoid fines and ensure compliance with Canadian work-hour and overtime regulations.
Minimum Wages
The federal minimum wage in Canada is CA$16.65 per hour. However, this wage only applies to employees working for businesses in federally regulated industries.
Employees in all other sectors are supposed to be governed by the provincial minimum wage, which is generally much lower than the minimum wage set by the federal government. For example, in Manitoba, the provincial minimum wage is CA$13.50 per hour, while in Saskatchewan, it is CA$14.00 per hour.
Statutory Benefits
Under Canada’s statutory social security program, all employers must provide the following minimum statutory employee benefits:
- Canada Pension Plan: This is a retirement plan that all employees have in Canada, with the exception of Quebec, where similar coverage is provided to employees by the Quebec Pension Plan (QPP).
- Federal Employment Insurance: This fund provides a source of income to employees who are unable to work due to illness, pregnancy, or to care for an ill or injured family member.
- Provincial Health Insurance: The federal government of Canada is responsible for funding the basic medical care of all workers nationwide. However, the degree of coverage varies from province to province.
- Provincial Worker’s Compensation: Workers’ compensation in Canada offers medical treatment and salary protection to employees who suffer injuries or ailments in the workplace. Policy terms vary by province, and benefits depend on the industry in which the employee works.
In addition to the above statutory minimums, many employers in Canada provide their employees with supplementary benefits, such as additional health insurance and group-registered retirement savings, as a way of attracting and retaining top talent.
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Conclusion
Understanding Canadian pay stub laws is very important for an employer to keep up with both federal and provincial regulations. Employers need to provide paystubs with accurate details for employees, showing gross earnings, net pay, deductions, and hours worked. These laws, requirements, and stipulations change from province to province, and it is important to be up-to-date on these regional differences.
Compliance not only protects employers from legal repercussions but also fosters transparency and trust with employees. By adhering to these laws, an employer contributes to fair labor practices, which supports a positive workplace environment.
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FAQ's
What information must be included on a Canadian paystub?
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Canadian paystubs must include details such as gross and net wages, hours worked, deductions, and employer contributions.
Are electronic paystubs acceptable under Canadian law?
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Yes, electronic paystubs are acceptable as long as they are easily accessible, printable, and contain all required information.
How long must employers keep paystub records in Canada?
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Employers must retain paystub records for at least three years, though some provinces may require longer retention periods.
What are the penalties for non-compliance with paystub laws in Canada?
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Penalties vary by province but can include fines, legal action, and back pay for employees if employers fail to comply with paystub requirements.
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