Employment trends and job market analysis in Canada 

Canada has a robust economic base, low taxes, abundant natural resources, and a stable political climate. These factors create an environment for international businesses to flourish. When it comes to ease of payment for small to medium-sized businesses, Canada has one of the lowest tax burdens among the G7 countries.
Canada's economy is also one of the most resilient in the world, with a GDP of $2.1 trillion as of 2022. 
Hiring in Canada has become increasingly popular among foreign companies as the country offers a diverse and highly skilled labour force. This is due to its large number of higher education institutions and government initiatives, including upskilling support for sustainable technologies and programs for indigenous skills and employment training.

The Canadian job market is diverse and dynamic, with a mix of industries driving employment opportunities. Industries like technology, healthcare, finance, and professional services have shown steady growth, offering a range of positions from technical roles to administrative positions. Skilled trades, such as construction and manufacturing, also continue to be in demand due to ongoing infrastructure projects.

The country's commitment to innovation and clean energy is fostering growth in sectors like renewable energy and sustainable technology. Additionally, remote work options have become more prevalent, allowing companies to tap into local talent from different regions.

Overall, Canada's job market offers a mix of traditional and emerging opportunities across industries, with a focus on skills, adaptability, and innovation.

Our guide below provides a comprehensive overview of how to hire contractors and employees in Canada.

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Capital                                                     Ottawa

Languages spoken                                 English, French

Population size                                        38.7 million

Payroll frequency                                    Biweekly

Currency                                                 Canadian Dollar (CAD)

VAT                                                          5%

 

Taxes, payroll and social security in Canada

Taxes in Canada

Employment laws in Canada require employers to calculate, withhold, remit, and report all employee and employer deductions. This includes tax and social security based on their employees’ salary and is split into

 

Federal and Provincial taxes.

The federal tax rates for 2022 are:

• 15% on the first CAD$50,197 of taxable income

• 5% on the next CAD$50,195 of taxable income (on the portion of taxable income over 50,197 up to CAD$100,392)

• 26% on the next CAD$55,233 of taxable income (on the portion of taxable income over CAD$100,392 up to $155,625)

• 29% on the next CAD$66,083 of taxable income (on the portion of taxable income over CAD$155,625 up to CAD$221,708), plus

• 33% of taxable income over CAD$221,708

Provincial and territorial tax rates for 2022

With the exception of Quebec, all provincial and territorial tax rates are calculated similarly to federal tax using Form 428.

According to the Canada Revenue Agency, the following are the provincial tax rates for 2022 (in addition to federal tax).

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Provinces and territories                             Rates (CAD$)

British Columbia                      5.06% on the first $42,184 of taxable income

                                                7.7% on the next $42,184 up to $84,369 

                                                10.5% on the next $84,369 up to $96,866

                                                12.29% on the next $96,866 up to $117,623 

                                                14.7% on the next $117,623 up to $159,486

                                                16.8% on the next $159,486 up to $222,420

Alberta

                                                10% on the first $131,220

                                                12% on the next $131,221-$157,464

                                                13% on the next $157,465-$209,952

                                                14% on the next $209,953-$314,928

                                                15% on the amount over $314,928 

Saskatchewan 

                                                10.5% on the first $45,677 of taxable income

                                                12.5% on $45,677 up to $130,506

                                                14.5% on the amount over $130,506

Manitoba

                                                10.8% on the first $33,723 of taxable income

                                                12.75% on the next $33,723 to $72,885

                                                17.4% on the amount over $72,885

Ontario

                                                 5.05% on the first $45,142 of taxable income

                                                 9.15% on the next $45,142 up to $90,287

                                               11.16% on the next $90,287 up to $150,000

                                               12.16% on the next $150,001 up to $220,000

                                               13.6% on the amount over $220,000

Quebec

                                               15% on the first $45,105 of taxable income

                                                20% on the next $45,105 up to $90,200

                                                24% on the next $90,200 up to $109,755

                                                25.75% on the amount over $109,755

New Brunswick

                                                 9.68% on the first $43,835 of taxable income

                                               14.82% on the next $43,835 up to $87,671

                                               16.52% on the next $87,671 up to $142,534

                                               17.84% on the next  $142,534 up to $162,383

                                               20.3% on the amount over $162,383

Nova Scotia

                                                8.79% on the first $29,590 of taxable income

                                              14.95% on the next $29,591-$59,180

                                              16.67% on the next $59,181-$93,000

                                              17.5% on the next $93,001-$150,000

                                              21% on the amount over $150,000

Prince Edward Island

                                                9.8% on the first $31,984 of taxable income

                                              13.8% on the next $31,985-$63,969

                                              16.7% on the amount over $63,969

Newfoundland and Labrador

                                                8.7% on the first $38,081 of taxable income

                                              14.5% on the next $38,081 up to $76,161

                                              15.8% on the next $76,161 up to $135,973

                                              17.3% on the next $135,973 up to $190,363

                                              18.3% on the amount over $190,363

Nunavut

                                                  4% on the first $46,740 of taxable income

                                                  7% on the next $46,740 up to $98,480

                                                  9% on the next $98,480 up to $151,978

                                                11.5% on the amount over $151,978

Yukon

                                                   6.4% on the first $49,020 of taxable income

                                                   9% on the next $49,020 up to $98,040

                                                10.9% on the next $98,040 up to $151,978

                                                12.8% on the next $151,978 up to $500,000

                                                15% on the amount over $500,000

Northwest Territories 

                                                  5.9% on the first $44,396 of taxable income

                                                  8.6% on the next $44,396 up to $88,796

                                                12.2% on the next $88,796 up to $144,362

                                                14.05% on the amount over $144,362

 

Social security

Canada’s Social Security tax includes both the Canada Pension Plan (CPP) and Employment Insurance (EI). The province of Quebec, however, has its own social security tax system that differs from the rest of Canada.

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Canada pension plan (CPP)

The CPP is a monthly taxable benefit that provides employees and their families with partial replacement of their income upon retirement, disability, or death.

Employers contribute to earnings that are between the basic exemption amount and the Year's Maximum Pensionable Earnings (YMPE). In 2022, contributions to those earnings are 5.7%.

Contributions to CPP are compulsory for all working Canadians aged 18-70. In 2022, contributions to those earnings are 5.7% by employees.

If an employee earns more than the Year's Maximum Pensionable Earnings, their contributions and those by Western to CPP on their behalf will cease once the limit is reached each year.

The following January, CPP contributions will begin again. This means there will be an increase in the employee’s pay when CPP deductions cease during a year, and they may see a noticeable decrease in pay at the beginning of the following year when deductions begin again.

Non-residents working in Canada are required to make contributions. To be eligible to begin receiving CPP, the employee must be at least 60 years of age and have made at least one contribution to CPP. The amount of CPP they receive depends on their personal contribution history.

Canadians aged 65-70 AND in receipt of CPP benefits may elect to cease contributions by filing Form CPT30.

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Employment insurance (EI)

Employment Insurance (EI) provides workers with temporary income support during periods of unemployment or when they are required to take time off due to events such as pregnancy, caring for a newborn or newly adopted child, a critically ill or injured person, or a family member who is seriously ill with a significant risk of death.

Employers outside of Quebec contribute 2.21% of whilst those within Quebec contribute 1.58% of EI premiums.

Labour laws to be aware of when hiring employees in Canada

Expanding a business to Canada involves understanding and adhering to various labour laws and regulations. Here are some key labour laws that employers should be aware of when expanding their business to Canada:

Employment standards

Each province in Canada has its own employment standards legislation that outlines minimum requirements for employment relationships. These standards cover areas such as hours of work, overtime pay, vacation entitlement, public holidays and termination notice.

Minimum wage

Minimum wage rates vary by province and can change annually. Employers must ensure they pay their employees at least the minimum wage set by the applicable provincial legislation. You'll find out more about the minimum wage in Canada later on in this guide. 

Workplace health and safety

Employers must provide a safe and healthy work environment for their employees. This includes implementing safety policies, providing necessary training, and following regulations to prevent accidents and injuries.

Employment contracts

It's advisable to have written employment contracts that outline the terms of employment, including job duties, compensation, working hours, benefits, and termination clauses. It's important to note that these factors will vary for contract vs. permanent roles. 

Employment Insurance (EI)

As mentioned above, employers and employees contribute to the Employment Insurance program, which provides benefits to eligible employees who experience job loss or certain other life events.

Canada Pension Plan (CPP) and Employment Insurance (EI) Contributions: Employers must deduct CPP and EI contributions from employees' wages and contribute their own portion as well.

It's important to note that labour laws can vary by province, so it's recommended to consult with legal experts or government resources specific to the province in which you plan to expand your business. 

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Minimum wage in Canada

Canada’s federal minimum wage is $15.55 per hour and applies to Canadians working in federally regulated sectors (banks, federal Crown corporations, postal services, etc.). The average salary in Canada is $59,300.

The provincial minimum wage will apply if you work in an industry that the federal government does not regulate.

The table below illustrates Canada’s provincial minimum wage as of June 1, 2022.

Province                  Minimum hourly wage (CAD$)              Date of effect

British Columbia                       $15.65                                  June 1, 2022

Alberta                                      $15.00                                 October 1, 2018

Saskatchewan                          $11.81                                 October 1, 2021

Manitoba                                  $11.95                                  October 1, 2021

Ontario                                     $15.00                                  January 1, 2022

Quebec                                    $14.25                                  May 1, 2022

New Brunswick                        $12.75                                  April 1, 2022

Nova Scotia                              $13.35                                 April 1, 2022

Prince Edward Island               $13.35                                 April 1, 2022

Newfoundland and Labrador   $13.20                                 April 1, 2022

Nunavut                                    $16.00                                 April 1, 2022

Yukon                                        $15.70                                 April 1, 2022

Northwest Territories                 $15.20                                 April 1, 2022

Working hours in Canada

The standard work week in Canada consists of eight hours a day and 40 hours per week. Employees are entitled to one full day of rest a week with additional breaks and a rest period on working days.

Any additional hours put in beyond the standard 40 hours of work per week is considered overtime.

These hours are eligible for overtime compensation of at least 1.5 times the regular hourly wage. Alternatively, the employee can claim time off with pay that is equivalent to 1.5 hours of time off for every overtime hour worked.

 

Background checks in Canada

An employer may legally conduct a background check if they have a good reason for doing so. However, they must provide the applicant with clear notice that a criminal record check is part of the application process. They must also get the applicant’s permission before conducting the check.
Background checks involve personal information, so various laws are in effect to ensure candidates' privacy. Each province and territory has its own privacy laws.
Canadian companies that operate within a federally regulated industry, such as banks, airlines, or telecommunication companies, must comply with the Personal Information Protection and Electronic Documents Act (PIPEDA).
Personal Information Protection and Electronic Documents Act (PIPEDA) governs organizations engaged in commercial activity and applies when personal data crosses provincial boundaries or internationally. Personal data includes any factual or subjective information that is recorded. This includes names, ages, IDs, education levels, incomes, social statuses, disciplinary action histories, employment files, financial records, and health histories.

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Types of leave available in Canada

Annual leave

Annual leave in Canada is determined by provincial law, but employees typically receive a minimum of nine days depending on the province they’re based in and the length of their tenure.

Maternity leave

Pregnant employees are entitled to up to 17 weeks of unpaid time off. In some cases, this period can be extended. Employers are not obligated to pay employees during this time however the employee can make specific claims via their Employment Insurance, and employers have the option to top up these payments.

In the case of a stillbirth or miscarriage, an employee is allowed to take up to 12 weeks of unpaid maternity leave.

Parental leave

The Canadian government allows new parents to take unpaid time off when a baby or child is born or comes into their care. Birth mothers who have taken maternity leave are entitled to up to 35 weeks of leave, while those who did not take maternity leave can take up to 37 weeks of parental leave.

Birth mothers are entitled to take both parental and maternity leave as both are considered different categories of leave entitlements. As the right to parental leave is independent of the right to pregnancy leave, a birth father can, for example, be on parental leave while the birth mother Is on either maternity or parental leave.

While on leave, both parents can apply for parental benefits and continue to earn credit for length of employment, service, or seniority. In most cases, an employee must be given their old job back upon returning from pregnancy or parental leave.

Sick leave

There are no statutory allowances for sick days taken in Canada. However, the Canada Labour Code provides leave for illness or injury as well as work-related illness or injury.

Employees that have completed three months of continuous employment with the same employee are entitled to sick leave protection not exceeding 17 weeks. In general, the code is designed to protect employees against dismissal, lay-off, suspension, demotion, or discipline because of absence due to illness or injury.

On the 20th of May 2021, Canada’s Employment Standards Amendment Act legislated that employees of British Columbia can now receive up to three days of paid leave for any COVID-19-related illness.

For employers that don’t currently have a sick-leave program, the British Columbia government will reimburse them up to CAD$200 per day per worker on sick leave. This program is administered by WorkSafeBC through an online application for employers registered for WorkSafeBC coverage.

Supplementary notes on sick leave in Canada:

• Employees are responsible for providing a medical certificate if requested by the employer within 15 days of their return to work.

• An employee can opt to interrupt their parental leave, compassionate care leave, leave related to critical illness and leave related to death or disappearance to take sick leave. Under these circumstances, the other leave resumes immediately after sick leave ends. Some employees may be entitled to cash benefits under the Employment Insurance Act (EI).

Apart from the above, Canada also provides its employees with additional leave such as:

• Bereavement leave: Three days mandatory

• Compassionate care leave:  Provincial regulation of approximately eight weeks

• Personal emergency leave: Up to 10 days per year

• Domestic violence and sexual assault leave: Up to five days

• Critical illness leave: Up to 37 weeks

• Child death leave and crime-related Child disappearance leave: Up to 104 weeks

• Family medical leave: Up to 28 weeks

 

Public holidays in Canada

Also known as Statutory holidays, public holidays in Canada are observed on a federal and provincial level. There are currently five nationwide statutory holidays followed by an additional six holidays for federal employees. Each of Canada’s 13 provinces and territories also celebrates a multitude of different holidays.

Nationwide statutory holidays

• New Year’s Day

• Good Friday

• Canada Day

• Labour Day

• Christmas Day

Federal statutory holidays

• Easter Monday

• Victoria Day

• Civic Holiday

• National Day of Mourning

• National Day for Truth & Reconciliation

• Thanksgiving

• Remembrance Day

• Boxing Day

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Termination of employment in Canada

A two-week notice period is the norm in Canada, and the employer is required to provide the employee with written notice of their intention to terminate the employment. In lieu of that, the employer must pay the employee two weeks' wages at the regular rate.

The above applies to any employee being terminated except for the following reasons:

• The employee has not completed three consecutive months of continuous employment

• The employee is the one who decides to terminate their employment contract

• The employee is dismissed for a just cause

• The employee is being laid-off

• The employee’s contract with the company ends on a date that is specified in the contract.

Severance pay

In most cases, the standard probationary period in Canada is three months. All employees who have completed a minimum of 12 months of continuous employment with an employer are entitled to severance pay. This is calculated as two days' pay at the employee’s regular rate of wages for each full year of employment, with a minimum of five days’ pay. 

The employer is obligated to provide the employee with severance pay under all circumstances except when:

• A layoff does not result in termination of employment

• An employee’s contract ends on a date that is specified in their contract

• The employee is being dismissed for a just cause

• The employee chooses to terminate the employment

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Do you need to hire employees in Canada?

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Talk to us

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Contact

Mrs. Emanuela Ferina

Head of Global Payroll

emanuela.ferina@studio-bcs.com

Phone 0039 0 363 360254

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