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Capital City
Ottawa
Currency
Canadian Dollar
(
C$
)
Timezone
GMT -3:30/-4/-5/-6/-7/-8
Payroll Frequency
Bi-monthly
Tax Year
1 January - 31 December
Employer Tax
7.78% - 8.24%
Languages
English
French
Capital City
Ottawa
Currency
Canadian Dollar
(
C$
)
Timezone
GMT -3:30/-4/-5/-6/-7/-8
Payroll Frequency
Bi-monthly
Tax Year
1 January - 31 December
Employer Tax
7.78% - 8.24%
Languages
English
French
Minimum Wage: The statutory minimum wage in Canada is $17.75 CAD per hour, setting the baseline for federally regulated employees, though many provinces have different minimum wage rates.
Working Hours: Standard working hours typically limit employees to a maximum of 8 hours per day and 40 - 48 hours per week, with specific rules varying by province or territory.
Payroll Taxes: In Canada, employers are required to make payroll contributions that fund social security, health care, and other statutory employee benefits.
Average Salary: The average salary in Canada is approximately CAD 67,467 before taxes.
Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.
However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.
Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.
From compliant contracts to competitive benefits, Playroll’s EOR services keep you aligned with local labor laws and regulations, safeguarding your business, so you can focus on growth.
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Businesses can only operate smoothly in Canada if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Canada below, to avoid any compliance issues.
Each region has its own set of legislation, and the interplay between federal and provincial laws adds complexity to understanding and meeting the specific requirements. The employer should also provide a contract of employment that is signed by both parties detailing:
We can help you get a new employee started in Canada quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.
For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.
Probationary periods are common in Canada, approximately three months. While there is no statutory limit for probation, each province has established maximum allowable timelines, varying from one month to six months. In certain provinces, mandatory probationary periods may be imposed, offering employers a level of protection even when the specific probationary duration is not explicitly outlined in the employment agreement.
In 2025, Canada’s average annual salary for full‑time workers is approximately CAD 67,467 before taxes. Salaries vary notably by experience level - entry‑level roles often range from about CAD 40,000 to 50,000, mid‑career roles typically stretch into the CAD 60,000–80,000 range, and senior or managerial positions commonly earn CAD 90,000 and up. Regional differences are clear too: for instance, averages in Ontario sit above the national mean (around CAD 69,140), while more remote or lower‑cost provinces may trend lower. Industry also matters: sectors like healthcare, technology, construction, and manufacturing generally offer stronger pay. On the economic front, Canada faces persistent challenges: employment dropped sharply in July 2025 with over 40,000 jobs lost, pushing the unemployment rate to a multi‑year high of about 6.9% and youth unemployment soaring to roughly 14.6%. These strains, compounded by inflationary pressures and trade uncertainties, may temper real wage growth.
Standard working hours typically limit employees to a maximum of 8 hours per day and 40 - 48 hours per week, with specific rules varying by province or territory.
Certain industries, such as healthcare and transportation, have unique exceptions due to the nature of their work, and managerial or exempt employees may not be subject to standard limits. Employers are responsible for respecting mandated rest periods, meal breaks, and statutory holidays to avoid penalties. In most territories, as of 2025, medical notes for sick leave are not mandatory unless an absence exceeds 5 consecutive days, and employees are entitled to up to 27 weeks of job-protected leave for serious illness or injury.
Overtime in Canada is typically paid at 1.5 times the employee’s regular rate. Some provinces may mandate higher rates, such as double time on statutory holidays or certain weekend days.
In Canada, the minimum wage is determined by each province or territory, with rates varying depending on the region's economic conditions and cost of living. The federal minimum wage is $17.75 CAD per hour, setting the baseline for federally regulated employees, though many provinces have different minimum wage rates.
It's crucial for employers to stay up-to-date with these rates to ensure compliance, especially as the rates are reviewed and adjusted regularly. This can affect payroll calculations and worker compensation standards across different regions.
Hiring in Canada means navigating local labor laws, mandatory employee benefits, payroll taxes, and strict employment regulations. These requirements aren’t always intuitive, especially if your team lacks in-country legal or HR expertise. An Employer of Record steps in as the legal employer for your hires, managing all compliance-related responsibilities. This includes issuing locally compliant contracts, registering employees with relevant authorities, processing payroll, and handling social security contributions and taxes in line with national laws.
By handing over these complexities to an EOR, your business avoids costly compliance errors and the time required to master local employment standards. You can focus on growing your team and operations while trusting that the legal and administrative foundation is solid. Whether you're making one strategic hire or building out an entire team, the EOR keeps you compliant, removes guesswork, and reduces the risk of legal or financial penalties, without requiring you to open a legal entity or maintain a local HR team.
1 January - 31 December is the 12-month accounting period that businesses in Canada use for financial and tax reporting purposes.
The payroll cycle in Canada is usually bi-monthly, with employees being paid before 15th and by the end of month.
Canada does not have any legislation that mandates the provision of a 13th salary.
Employer payroll contributions are generally estimated at an additional 7.78% - 8.24% (varies by province) on top of the employee salary in Canada.
In Canada, the typical estimation for employee payroll contributions cost is around 7.28% - 8.542% (varies by province)%.
In Canada, employees are subject to federal taxation ranging from 14.5% to 33%, determined by their income bracket. Additionally, provincial taxes, which vary across the provinces, are imposed on top of these federal taxes.
The Canada Pension Plan retirement pension is a monthly taxable benefit that serves as an income replacement for retirees aged 60 and above. To qualify, individuals must have made at least one valid contribution to the CPP, which can stem from their work in Canada or be credited from a former spouse or common-law partner.
Both employees and employers in Canada and Quebec are required to contribute to the pension plan at a rate of 5.95% for CPP and 6.40% for QPP.
Employers in Canada must comply with various payroll taxes, including income tax withholding, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums, ensuring accurate calculations and timely remittances to avoid penalties. Understanding these obligations, along with submission methods and due dates, is crucial for maintaining compliance and employee trust.
Additionally, staying informed about regulatory updates and leveraging payroll management software can help businesses streamline payroll processes, consolidate payroll data, and ensure adherence to Canadian tax laws efficiently.
Running payroll in Canada is complex, especially when you're hiring without a local entity. Local laws determine everything from tax withholdings and reporting deadlines to benefit contributions and currency requirements. Missteps can lead to fines, payment delays, or unhappy employees. An Employer of Record takes this burden off your plate by handling the full payroll process. Acting as the legal employer, the EOR ensures you remain compliant with all payroll-related obligations, while still allowing you to manage your team’s day-to-day work and performance.
Key Ways an EOR Supports Payroll in Canada:
Make better business decisions by consolidating global payroll data, while seamlessly syncing your existing payroll operations.
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In Canada, work permits and visas are essential for employers hiring foreign workers. The process involves understanding the different work permit types, meeting eligibility criteria, submitting applications, and paying required fees.
Key visa types include the Temporary Work Permit, which allows foreign nationals to work for a limited time, the Open Work Permit, which allows workers to work for any employer, the LMIA-Based Work Permit, which requires a Labour Market Impact Assessment (LMIA) to prove the need for foreign workers, and the Post-Graduation Work Permit for international students who have completed their studies in Canada.
Employers must ensure compliance with Canadian labor laws and immigration regulations when sponsoring foreign workers.
The annual leave entitlement in Canada is at least 2 weeks (varies by province) for a full time worker after one year of employment. These can include public holidays on top of that or within those days, which would otherwise be unpaid.
Employees get paid for public holidays, and if a holiday falls on a weekend, it shifts to the next workday.
Annual leave regulations in Canada differ from province to province. According to employment standards legislation, employees are entitled to two weeks of paid time off after completing one year of service. After five years of employment, the minimum entitlement for annual leave increases to three weeks, and it further extends to four weeks after completing 10 years of service.
A minimum of 15 weeks of maternity leave is guaranteed, with certain provinces establishing a higher baseline. Employers are not obligated to directly cover the costs of this leave, as Canadian social programs extend payments to support new parents during this period.
There is no specific statutory provision for paternity leave in Canada apart from the 35 weeks provided for either parent as parental leave. However, in Quebec, there is a provision for five weeks of paternity leave.
In Canada, employees are entitled to protected time off for sick leave, with the specific annual entitlement varying across provinces. Policies concerning sick leave, encompassing its duration and whether employers are obligated to provide compensation for it, differ from province to province.
The maximum duration of parental leave for a single parent in Canada is 35 weeks, extending to 61 weeks when opting for extended parental leave. But certain provinces may establish a higher maximum limit.
Federal legislation ensures that employees are entitled to a minimum of five days of paid protected bereavement leave following the passing of an immediate family member.
Employers are mandated to provide a minimum of 10 days of protected leave for employees to utilize in instances of family violence, with five of these days being compensated. Employees facing allegations of perpetrating family violence are not eligible for this leave.
Administering employee benefits in Canada requires more than just offering a standard package. Local labor laws often mandate specific entitlements, from health insurance to paid leave, and the rules can change without warning. Canada also has unique standards for what an attractive, competitive benefits package looks like. For businesses without in-country expertise, meeting these obligations and expectations can quickly become risky and expensive. An Employer of Record acts as your compliance partner, ensuring all benefits are provided according to the latest legal requirements and without administrative strain on your internal team.
Beyond compliance, an EOR brings clarity and consistency to a process that’s often complex and fragmented. They handle enrollments, ensure accurate employer contributions, manage communications with local providers, and keep everything properly documented. This means employees get what they’re entitled to, and you avoid the headache of navigating benefits systems in a foreign market. Whether you're hiring one person or building a larger team, an EOR provides a clear, dependable structure that lets you offer competitive benefits without taking on unnecessary risk or workload.
Terminating employment contracts in Canada can be complicated. Unlike the concept of at-will termination commonly found in some jurisdictions, Canadian employers do not have the same flexibility, especially once the probationary period concludes. In Canada, terminations without notice or pay in lieu must be based on just cause to comply with legal requirements. The reasons for termination may include:
According to federal employment regulations, employers are required to provide graduated notice of termination based on length of service. For employees with 3 months to 3 years of service, 2 weeks' notice is required. For employees with 3+ years of service, the notice period increases by one week per year (3 weeks for 3 years, 4 weeks for 4 years, etc.), up to a maximum of 8 weeks for 8+ years of service. It's important to note that notice periods differ across provinces and territories. Notice period regulations do not pertain to employees under fixed-term contracts.
Upon completing a minimum of twelve months of employment with an employer, individuals are entitled to severance pay equivalent to two days' pay for each year of service completed
Disclaimer
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
ABOUT THE AUTHOR
Jesse Weisz
Jesse is an experienced R&D Analyst at Playroll, a leading Employer of Record (EOR) provider. With a strong background in data analysis and market research, Jesse specializes in identifying emerging trends and driving innovation in global HR solutions. She is an all-rounder, critical thinker and success-seeker (often inextricably linked to being a late-night tea drinker).
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As of January 1, 2025, Canada’s minimum wage rates vary by province:
CAD 67,467 is the average full‑time annual salary in Canada for 2025; pay varies by experience, industry, and location - with senior roles, high‑demand sectors, and provinces like Ontario offering above‑average earnings.
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