Global Payroll — 17 min
Canada’s labor laws can vary dramatically from one province to the next. Owning a local entity in one province does not necessarily grant a business the right to hire in another. Whether you’re hiring remote workers in Canada or expanding your team to a new province, this guide can help you understand the basics of Canadian labor laws.
Canada’s provinces enforce different amounts of paid leave, different tax rates, different minimum wages, and other contributions from employees and employers. Rather than cover every small difference, let’s take a high-level look at Canada’s labor laws to set expectations for what it’s like to employ Canadian workers.
The concept of at-will employment does not exist in Canada. Rules vary by province, but in general, Canadian employers have more obligations to employees than US employers do.
The minimum wage in Canada varies by province. Saskatchewan has the lowest minimum wage at CAD $11.45, while Nunavut has the highest minimum wage at CAD $16. These wages are true as of October 2020, but most provinces in Canada have rules that require minimum wages to adjust annually to account for economic factors like inflation.
To view a complete list of minimum wages in Canada by province, view this helpful chart.
As with minimum wages, overtime rates in Canada vary depending on the laws of the province where the employee works. Most provinces require employers to pay an overtime rate of 150% of the employee’s regular wages after a certain number of hours.
In Alberta, for example, employers are required to pay 150% of normal wages for any time worked after 44 hours in a week or after eight hours in a day. In British Columbia, employees receive 150% pay for the first four hours worked after eight hours in a day, then 200% pay for every hour worked after that point.
If you would like to employ someone in Canada and have questions about overtime, Remote can provide more detailed information based on your employee’s position, profession, and location.
In many cases, yes, salaried employees are eligible for overtime pay in Canada. Certain highly skilled professions do not include mandatory overtime pay. Doctors and lawyers, for example, are not guaranteed overtime pay by law. Manager-level employees and above are also not entitled to overtime pay if they are salaried exempt workers.
Canada’s laws protecting employees from discrimination are more robust than similar laws in the US. When interviewing, Canadian employers may not ask employees to reveal any information that could lead to discrimination.
This not only includes age, religion, sexual orientation, gender expression, race, and other commonly protected applicant characteristics, but also criminal history. Unless the question is specifically related to the duties of the job, Canadian employers may not question applicants about their criminal histories. Canada has strict policies about criminal records for entrance to the country, however, so employees attempting to emigrate to Canada may have difficulty if they have committed crimes in another country in the past.
Under Canadian law, workers of all genders are entitled to protection from sexual harassment. Employers are obligated to provide safe and inclusive environments free from harassment for all employees.
Employers must draft and publicize workplace policies that clarify expectations for behavior and notify employees of their rights if they feel they have been harassed or discriminated against. Employers may not disclose the identity of a complainant or the details of the allegation except in contexts where doing so is necessary under the law. Employers notified of harassment or violence within their workplaces are obligated to act.
Canada’s new and stricter laws on harassment and violence in the workplace supersede older and less strict laws as of January 1st, 2021.
Laws on whether employers in Canada can ask about employees’ work experience in Canada do not always favor employers. Some interpretations of Canadian law could view “Canadian work experience” questions as discriminatory. Companies should err on the side of caution and ask questions about the field of work instead of the location where the work occurred.
All Canadian provinces allow employers to place employees on probationary periods at the beginning of the employment relationship. During a probationary period, an employer may terminate an employee without notice or severance pay if the relationship is not working out.
The standard probationary period lasts three months. Some provinces, however, allow for longer probationary periods. New Brunswick allows employers to keep employees on probation for up to six months, while Manitoba limits probationary periods to 30 days.
Although fixed-term agreements do exist in Canada, Remote generally advises against hiring employees for fixed terms. Open-term or indefinite agreements are far more common in Canada, and employers who attempt to use fixed-term agreements could expose themselves to unnecessary issues of liability.
Emerging privacy legislation around the world, including legislation in Canada, gives consumers and employees more control over their own data. However, employers in Canada are required by federal law to maintain all records pertaining to individual employees for at least 36 months after the creation of the records. Remote encourages and practices a 48-month retention period to guarantee compliance in every province.
Employers in Canada may not ask prospective employees to take a drug test as a condition of employment in most cases. Random drug tests are also forbidden unless an employer can prove that other efforts to curtail on-the-job drug use have failed in the past. Companies may require employees to take drug tests after incidents that create safety concerns or after employees return from rehabilitation treatment.
Marijuana is legal in Canada at the federal level for recreational use. Employees in Canada generally may use marijuana on their own time, but companies are entitled to forbid the use of marijuana on company grounds or during work hours. Employees suspected to be working under the influence may be terminated for doing so. In most workplaces, employers treat marijuana use the same way they treat alcohol use.
Different provinces enforce different standards for employee termination requirements. Outside probationary periods, employers can only terminate employees for legally recognized, valid reasons. Canadian laws generally encourage employers to train and accommodate underperforming employees as an alternative to termination.
In all provinces, employers must provide either a minimum amount of notice or the same time period’s amount of pay to employees being terminated. Notice periods vary based on a variety of factors including age, length of employment, and the market for the employee’s skills.
With so many provinces enforcing so many variations in labor law, Canada can be a particularly challenging country for businesses to understand. However, Canada is also home to top talent in a variety of fields, and employing remote workers in Canada has never been easier.
Remote makes labor laws in Canada simple regardless of where in Canada your employees live and work. Our global employment solutions keep businesses compliant with all federal and provincial Canadian labor laws while providing a superior experience for Canadian employees. Contact us today to learn more about Remote’s global employment solutions in Canada.
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