Canada 18 min

Employment laws in Canada: how to hire and stay compliant

Written by Shay Ogunsanya
Shay Ogunsanya


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A robust economy, competitive labor costs, a talented workforce, and modern infrastructure — are some factors that make Canada a favorable destination for companies who are looking to hire remote employees abroad.

However, companies that want to hire in Canada must ensure that they meet their obligations under all applicable laws and regulations, including maximum working hours, overtime pay, vacation, offboarding, etc. Failing to comply with Canada's employment laws and tax practices can lead to financial or legal consequences. The best way to avoid noncompliance risks is to work with an employer of record who can help you navigate the complex world of Canadian employment law. But more on that, later.

In this guide, we take a look at the basics of employment law in Canada. We’ll also explain how partnering with an employer of record (EOR) like Remote can make it easy to hire compliantly in Canada.

Understanding key labor laws in Canada

It's crucial to comply with local labor laws while hiring remotely in Canada. Companies must ensure regulations around minimum wages and overtime pay are met, provide benefits like health insurance, and adhere to non-discrimination/equal employment opportunity regulations.

It is also important for foreign employers to understand the different types of Canadian workers (full-time versus part-time) as this affects how much they need to pay out in wages or other benefits. Finally, foreign companies must consider any immigration requirements imposed by federal or provincial governments when recruiting internationally.

Multiple pieces of legislation impact two different sets of employees in Canada: those federally regulated and those covered by provincial laws. The former encompasses occupations such as banking, postal services, and air travel at the federal level with laws that include, among others:

  • Canada Labour Code

  • Canadian Human Rights Act

  • Canada Occupational Health and Safety Regulations

Most Canadians (roughly 90%), however, fall under province-specific regulations. Ontario is the province with the largest population and often influences other regions by passing laws that impact all workplaces within its borders. The labor laws with provincial impact include:

  • Employment Standards Act

  • Ontario Human Rights Code

  • Labour Relations Act

  • Workplace Safety and Insurance Act

  • Workplace Safety and Insurance Board

  • Occupational Health and Safety Act

Do employment laws in Canada vary by province?

In Canada, both statutory and common law (in nine provinces) regulate employment. Quebec is the exception, as it has no common law system. Instead, its Civil Code of Québec — based on the French Napoleonic Code — and related jurisprudence govern labor laws there.

Statutory requirements may differ by region, but labor laws concerning employment standards, compensation for workers, occupational safety and health regulations, labor relations, and discrimination are all largely the same across Canada.

As you can see, it can be challenging to navigate Canadian employment laws across its provinces. 

To make it easier and faster for you to hire remote employees from Canada, partner with an employer of record like Remote. Our team of specialists has in-depth knowledge of applicable labor regulations, policies, and employment laws. We offer extensive guidance regarding relevant legislation as part of our services, so customers can rest assured that they fulfill obligations.

With Remote, you're able to streamline your hiring and onboarding process, manage the administrative work in managing employees, and receive comprehension legal advice — every step of the way. Our EOR services can make your life easier by keeping you up-to-date on the newest developments in Canadian labor law.

link to What are labor laws like in Canada?
7 min

What are labor laws like in Canada?

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.

What do you need to know before hiring a Canadian employee?

When hiring and employing remote employees located in Canada, companies need to own their own legal entity in the country or obtain assistance from a global employment partner like Remote to comply with local regulations.

Remote understands the laws and customs related to hiring staff in Canada. Our services make it easy, quick, and compliant to employ remote employees or contractors. Remote takes care of payroll and benefits packages as mandated by Canadian law, plus handles offboarding for departing team members along with other legal obligations concerning employees in Canada.

The Canada salary calculator: How to calculate the total cost of a Canadian employee

Remote's employee cost calculator is a useful tool to understand the cost of hiring employees in Canada or globally. Our free tool is designed to help you budget and plan for your global hires.

For a detailed breakdown of costs, including mandatory contributions and statutory benefits in line with Canadian labor laws, sign up with Remote.

Budget your next hire with our free Cost of Employment Calculator

Use the calculator to find the total cost to hire an employee in a new country including all government mandated contributions.

Statutory employment rights in Canada

What is the minimum wage in Canada?

In Canada, minimum wages vary province by province and are typically adjusted to combat inflation. The Retail Council of Canada keeps an up-to-date list of all provincial wage rates. Currently, the federal government is imposing hourly minimum wages indexed to inflation from CAD 14.00 to CAD 16.75 depending on the province. However, each province is still responsible for setting its own hourly minimum rate, as long as it does not fall below the nationally mandated minimum.

What are the standard working hours in Canada?

In Canada, the standard hours of work for employees (and student interns) are eight hours daily (over a 24-hour period) and 40 hours per week (from midnight Saturday to midnight on the following Saturday). A full day off must be given each week, usually Sunday. Breaks and rest periods also apply. In the case of a general holiday in one or more weeks, working time is cut by eight hours.

What is the overtime rate in Canada?

In Canada, any time spent on the job in excess of regular working hours is classified as overtime. In this case, employees have a right to:

  • receive not less than 1.5 times their usual wage rate for overtime hours worked; or 

  • take paid time off equivalent to 1.5 times the amount of extra work completed (e.g., five additional hours = 7.5 hrs with pay)

If opting for paid leave, it must be arranged through the employer in writing and must include details about when said days off will be taken. Paid leave should be taken:

  • If covered by collective bargaining terms, within three months from the end of the pay period during which overtime was worked OR longer duration stipulated by agreement.

  • If no applicable collective agreement exists, then within three months OR up to 12 months according to written understanding between employee/employer

Note that daily and weekly overtime amounts might vary, so total payment will be calculated based on the highest number.

Some employees are exempt from overtime. Each province has its own rules for who can and cannot receive overtime. In some provinces, it’s straightforward, with managers and supervisors being exempt, along with several sector exemptions. Other provinces have complex tests for who can be qualified as exempt. For example, in Manitoba, “employees who substantially control their hours of work and earn more than twice the average industrial wage may be exempt from the hours of work and overtime provisions.”

How do probation periods work in Canada?

In Canada, it is not uncommon for companies to impose probationary periods of three months. Three months is the most common duration for probationary period across provinces in Canada, including Ontario. However, this is not universal as the length of a permitted probationary period for new hires varies depending on the province, between 90 days and six months.

What discrimination protections does Canada provide?

In Canada, federal and provincial laws protect individuals from discrimination in the workplace. These regulations cover characteristics such as race, gender, age, religion, and more. Additionally, federal works and undertakings must comply with employment equity legislation which seeks to provide opportunities for:

  • women

  • indigenous people

  • those with disabilities

  • ethnic minorities

Can employees in Canada join unions?

Unions in Canada aim to reduce any workplace disruption by certifying trade unions as bargaining agents for worker groups, which are often non-managerial employees in a company. Exclusions from the bargaining unit are also provided in some jurisdictions for those with access to confidential information about labor matters. Each jurisdiction has its own rules regarding certification processes.

Once a union is certified by a labor relations board as an agent for an identified bargaining unit, it holds exclusive rights to negotiate with the employer on behalf of all employees within that group, regardless if they are members or not. In exchange, the union must represent each employee fairly.

Are there collective bargaining agreements in Canada?

Collective bargaining is enshrined in federal and provincial Canadian labor laws. Employees have the right to join trade unions, which can negotiate employment conditions with employers on their behalf. Currently, only around one-third of Canadian workers are union members. This number has been decreasing annually.

Can companies drug test employees in Canada?

The jurisprudence concerning the testing of alcohol and drugs in areas governed by the federal government is based on an effort to maintain a balance between two objectives:

  • protecting individual human rights as well as privacy

  • ensuring safety for both employees and those around them

Therefore, employers are only allowed to conduct random testing of staff working in safety-critical roles when there is a clear occurrence of abuse involving alcohol or drugs among those employed. This testing must also be justified, as the potential advantages should outweigh any infringement on employee privacy rights, while the employer still fulfills their duty to support personnel who have tested positive.

What is the relevant workers’ compensation legislation in Canada?

In Canada, there is no private insurance related to workers' compensation. Instead, legislation and systems overseen by government bodies or authorities manage it.

Legislated regimes such as workers' compensation programs offer a public, no-fault solution to provide benefits to those with job-related injuries or diseases. Through these systems, staff members receive aid from the program but cannot file any sort of legal action against their employer. Employers have to pay premiums for this coverage and prices depend mainly on the size of payroll, type of industry, and past claim record.

What are the unique considerations for employers hiring in Canada?

Aside from the above discussion, unique considerations for employers hiring in Canada include:

  • Establishing severance obligations at the outset of employment to avoid potential litigation.

  • Drafting non-compete and non-solicit clauses that are reasonable and enforceable.

  • Providing effective onboarding, even when working remotely, to ensure employees feel properly oriented.

  • Understanding employment standards legislation that can vary from province to province and requiring legal advice on compliance issues.

Companies must be aware of the potential legal implications of not following Canadian labor laws, as failure to do so could result in hefty fines and other penalties. Additionally, it can lead to unhappy employees, who may choose to leave the company or take legal action. Therefore, employers should ensure that they are providing a safe workplace environment and fair wages for their remote employees.

The best way to understand and ensure continued compliance with Canadian labor laws is to partner with an employer of record like Remote. We provide expertise on local regulatory requirements as well as support for recruitment, onboarding, and administration of remote employees, making it easier for companies to focus their efforts on growing their business while ensuring compliance across all jurisdictions.

link to How to use an Employer of Record in Canada
16 min

How to use an Employer of Record in Canada

Learn how to use an EOR in Canada and find out how an employer of record platform like Remote can make it easy to hire globally with full compliance.

Managing employee offboarding in Canada

Does at-will employment exist in Canada?

At-will employment does not exist in Canada. Canada's employment laws provide employees with certain rights and protections, including the right to reasonable notice of termination or severance pay if they are dismissed without cause.

How do companies terminate employees in Canada?

In the Canadian legal system, two arrangements are usually allowed for ending an employment relationship: with cause or without cause through the provision of reasonable notice of termination or pay in lieu of notice. Causes for dismissal can involve incompetence, insubordination, conflict of interest, theft, or dishonesty among other recognized kinds of misconduct. In cases where an employee is fired for cause, there is no obligation to provide a warning or any form of payment at termination.

Without a justifiable explanation behind it, terminating someone's employment — which could happen as a result of downsizing/reorganization — requires employers in all territories to abide by statutory stipulations prescribing minimum period(s) of notice or pay in lieu of notice. This depends on how long employees have been employed and tends to peak at an amount equal to eight weeks' pay.

Aside from the minimum requirements outlined by law, employers may be required to provide more notice or pay in lieu of notice if there is a prior-written agreement or to avoid litigation. In case of disagreement about the amount of notice, courts might end up deciding what would be considered a reasonable notice period. This could go up to 24 months, but in such cases, courts may also award extra damages where severance has taken place improperly/unfairly.

Are terminated employees in Canada entitled to severance pay?

In the federal sector and Ontario, staff let go without cause have certain entitlements, where severance payments may be due from their employer. These severance payments can never take the form of a notice period.

If an employee has served for one year or more continuously, then they should receive either two days’ wages at their normal pay rate for each year they have been employed, or five days’ wages, whichever is the greater amount.

In Ontario, there are also criteria dependent on employees' years of service solely when either:

  • the employer’s global payroll exceeds CAD 2.5 million, or

  • the employer fires 50 or more employees within a six-month period due to permanent suspension of all or a part of business activities

In these cases, severance is calculated by multiplying the regular weekly salary by the length of employment (prorated for incomplete years) up to a 26-week limit.

Differences between employees and contractors in Canada

What regulations separate employees and contractors in Canada?

The Canadian Employment Standards Act is relevant to those working in any capacity, be it full-time, part-time, temporary, or permanent. However, this does not extend to independent contractors, as they are classified as self-employed. 

The issue is that the Employment Standards Act has very broad definitions of the terms employee, employer, and work. As an example, it states that an employee is someone who receives or is entitled to wages for work done for another. An employer could be a person with control over the employee or responsible for their employment. Work means any labor or services rendered by an employee, whether at home or elsewhere.

The purpose of this law is to make sure employees are compensated according to basic standards and protocols, as well as to foster fair treatment between employers and employees.

The Canadian Employment Standards Act was created to protect employees. To determine if the individual is an employee or self-employed, one of the chief questions asked is “whose business are they working for?”

In addition to this, some common law tests have been introduced that can be useful when considering what type of relationship exists between employer and employee. These include assessing:

  • how much direction and oversight a person receives from the employer

  • whether they run their own organization with their own customers

  • whether there's potential for gain or loss on behalf of the employee

  • if work performed by them is integral to the business goals

  • if both parties have an ongoing connection.

Generally speaking, longer employment periods indicate greater ties between the individual and the employer. It suggests increased employer control over tools/materials used in addition to the individual being given more guidance, which implies that the individual is more likely to be classified as an employee.  

What are the relevant rules on contract workers in Canada?

Independent contractors may retain many of the same entitlements as employees, in theory. The laws in Canada consider the concept of a dependent contractor, who is someone who falls somewhere between an employee and an independent contractor, as evidenced by their economic dependence.

This status can be recognized under certain statutes and gives such individuals the right to receive suitable notice when terminated. In other words, workers with this designation can benefit from employment standards normally reserved for employees.

Can employers hire employees on fixed-term contracts in Canada?

There are temporary workers in Canada. Most provinces do not have a distinct set of regulations for permanent and temporary employees, apart from the requirement to give notice of termination, which is only necessary when a fixed-term contract expires before it was supposed to. 

As such, temporary employees normally benefit from the same rights as their permanent counterparts. Upon expiration of a fixed-term contract, there is no need for employers to send out notices or provide any form of compensation — unless a situation arises where such personnel must be let go before completion of their contractual period.

Employers should avoid fixed-term contracts unless absolutely necessary due to the risks involved. If an employee works past the end date of the fixed-term contract, the contract will generally convert into a contract of indefinite duration. Fixed-term contracts may be renewed; however, renewals should be executed carefully because back-to-back fixed-term contracts are often an indicator that the relationship is, in fact, permanent.

What are the misclassification laws and penalties in Canada?

Misclassification of Canadian employees and independent contractors can lead to liability for employers under WSIB (Workplace Safety and Insurance Board). Employers also need to be mindful of various implications concerning taxes, pensions, insurance, wrongful dismissal claims, and other liabilities.

Failure to deduct CPP (Canada Pension Plan) contributions, for instance, can result in employer penalties of up to 10 to 20%. Employers may also be liable to pay benefits if an individual is injured while working, or subject to reasonable notice periods in the case of wrongful dismissals. 

Read our expert guide to misclassification to learn more about how Remote’s employer of record services can classify your hires correctly and help you comply with Canadian labor laws. 

The fast, simple, compliant way to hire in Canada

As you can see, navigating labor laws in Canada and ensuring ongoing compliance when you hire employees in the country is not easy. But international hiring doesn’t have to be a hassle. 

You can make your life easier by partnering with an employer of record that simplifies the process of hiring and paying employees in Canada and the rest of the world. 

EORs are responsible for ensuring legal compliance with local labor laws, including filing taxes and other required paperwork on behalf of employers. This service helps companies streamline their HR processes while staying compliant with international labor regulations.

Remote is the best-in-class global employment partner. Our market leadership has been recognized with a G2 ranking as number one in multi-country payroll. We understand global labor laws, so you don't have to worry about compliance when hiring employees remotely. We can help you seamlessly attract and retain talent in-country, and never go awry of employment law in Canada.

If you want to get an idea of how much it’s going to cost to hire a full-time employee in Canada, check out our free employee cost calculator. For more information on how Remote can help you hire and pay remote employees in Canada in compliance with local labor laws, visit our Canada Country Explorer.

link to Guide on hiring in Canada
13 min

Guide on hiring in Canada

To hire employees in Canada, companies must first know the laws of the province in which the prospective hire lives and works. While Canada does enforce some federal labor laws, individual provinces have a lot of say on Canadian labor laws, payroll processes, benefits, taxes, and other factors.


Federal Labour Standards Canada Labour Code

Canadian Human Rights Act

Canada Occupational Health and Safety Regulations Employment Standards Act

Ontario Human Rights Code

Labour Relations Act

Workplace Safety and Insurance Act

Workplace Safety and Insurance Board

Occupational Health and Safety Act Retail Council of Canada

UCFW Canada

Canadian Labour Relations

Canadian Employment Standards Act

Employment and employee benefits in Canada: Overview

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