HR Toolkit


Compensation & Benefits

Legal Compliance

When compensating employees an organization must adhere to the existing legislation in the areas of Labour Standards, pay equity, Human Rights, Employment Insurance, pension or retirement benefits, labour relations and Occupational Health and Safety. Regularly reviewing the HR Toolkit, key government websites, and connecting with an HR and/or legal professional can help you ensure that your organization’s compensation practices are in compliance with current legislation in your jurisdiction.

Issues may include, but are not limited to, wages, leave options, bonuses, advancement opportunities, termination pay and more. Auditing your compliance with legislation annually is time consuming yet critical to the sustainability of your organization.

When compensating employees the following are areas that you need to ensure comply with relevant legislation:

  • Statutory Obligations
    • Minimum Wage
  • Statutory Benefits
    • Employment Insurance
    • Canada/Quebec Pension Plans

Statutory Obligations

A statutory obligation is a requirement that employers are required to provide their employees as determined by the law of the province or territory where the employer operates.

Employment Standards Legislation sets out the minimum terms and conditions of employment for those who operate federally and for each province or territory. Both employers and employees must follow these minimum obligations unless they offer terms or conditions more generous that the ones mandated by legislation.

Therefore, employment standards legislation sets out minimum standards relating to employment terms and conditions. The legislation also includes exceptions for certain types of employees, such as managers and professionals. Some key areas covered by legislation are:

  • Minimum Wage
  • Hours of Work
  • Public Holiday Entitlement
  • Overtime
  • Vacations Leave
  • Maternity and Paternity Leaves
  • Adoption and PArental Leaves
  • Emergency/Sick Leave/Compassionate Leave
  • Bereavement Leave
  • Leave Entitlement
  • Grievance procedures
  • Termintation of Employment

Minimum Wage

The minimum wage is designed to impose a broad and enforceable standard on employers that would guarantee a minimum level of income for unskilled, non-unionized workers. Minimum wage standards are also designed to stop these workers from trying to undercut each other by agreeing to work for less than someone else. Some exceptions exist for those who are student employees, self-employed, independent contracts and commissioned sales people. Each province or territory has its own minimum wage guidelines and exceptions.

Learn more about the minimum wage in your province or territory »

Statutory Benefits

Statutory is defined as something “fixed, authorized, or established by statute”, therefore the benefit packages that Canadian employers offer, are designed to enhance the well-being of their employees, and will contain both statutory and discretionary benefits. Statutory benefits are some of the benefits also referred to as “employer paid” benefits.

Employment Insurance

Employment Insurance is a statutory benefit that provides temporary financial assistance for unemployed Canadians while they look for work or upgrade their skills. People who are sick, pregnant or caring for a newborn or adopted child, as well as those who must care for a family member who is seriously ill with a significant risk of death, may also be assisted by Employment Insurance.

Employment Insurance (EI) premiums are calculated on, and deducted from, an employee's maximum insurable earnings (MIE), which are insurable salary, wages, cash allowances and other remuneration paid to an employee. The Canada Revenue Agency is responsible for determining what is considered insurable employment and which earnings are insurable.

Most employees in Canada are considered to be in “insurable employment” and covered by EI. As of January 1, 1997, every hour of work is insurable up to a yearly maximum earnings limit, replacing the previously required weekly minimum earnings or hours worked.

All employees in insurable employment must have EI premiums deducted from their earnings. Premiums are set annually as a rate per $100 of Insurable Earnings up to the level of Maximum Insurable Earnings. Their employers are also required to make payments at 1.4 times the employee rate, unless Human Resources and Skills Development Canada has granted the employer a reduced rate.

Procedures for premium deductions and remittances are outlined in “Canada Revenue Agency Instructions to Employers”

Types of Employment Insurance benefits

There are several types of benefits available to Canadians, depending on their situation.

Regular Benefits
These benefits are available to individuals who lose their jobs through no fault of their own (for example, due to shortage of work, seasonal layoffs, or mass layoffs) and who are available for and able to work, but can’t find a job.

Related website: Service Canada - Employment Insurance Information for Employers

Maternity and Parental Benefits
These benefits provide support to individuals who are pregnant, have recently given birth, are adopting a child, or are caring for a newborn.

Links and Resources

Sickness Benefits
These benefits are for individuals who are unable to work because of sickness, injury, or quarantine.

Related website: Service Canada - Employment Insurance Sickness Benefits

Compassionate Care Benefits
These benefits are available to people who have to be away from work temporarily to provide care or support to a family member who is gravely ill with a significant risk of death.

Important

When dealing with maternity, parental, sickness, and compassionate care leaves, there are two aspects to be considered. One is the period of leave specified by employment/labour standards legislation. Although the standards vary from jurisdiction to jurisdiction, employment/labour standards laws entitle eligible employees to specified leaves for a specified period of time. They also require employers to ensure that the employee's same, or a similar, job with at least the same wages, benefits and seniority will be available when the leave is over. The second aspect of the leaves to consider is the payment the employee may be eligible to receive from Employment Insurance (EI) or the Quebec Parental Insurance Plan (QPIP). Under the EI legislation, eligible individuals are entitled to government-paid benefits for maternity, parental, sickness, and compassionate care leaves. The QPIP provides benefits for maternity, paternity, parental, and adoption leaves for employees residing in the province of Quebec, regardless of the province of employment.

Related website: Service Canada - Career Transition Assistance

Canada/Quebec Pension Plans

Organizations are required to submit CPP/QPP payments to the government for all eligible employees on their maximum insurable earnings, based on a rate table revised annually. A percentage is deducted from the employee’s pay and a portion is remitted by the employer.

Related Websites:

Canada Pension Plan
Service Canada
Quebec Pension Plan
Régie des rentes Québec

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