Mandatory and Supplementary Employee Benefits in Canada

In Canada, there are mandatory employee benefits that employers are required to provide by law. However, each province may have its own regulations regarding certain employee benefits, making it essential for companies to seek advice to ensure compliance with federal and provincial laws. In addition, providing more than the minimum benefits is crucial for larger companies seeking to attract and retain highly skilled workers. To stay competitive, employers could offer supplementary employee benefits tailored to their specific industry or personalized to individual employees.  

Offering a complex set of employee benefits requires human resources (HR) teams with the expertise, time, and budget to manage them effectively. Unfortunately, this is only sometimes feasible for smaller businesses. However, smaller employers can offer other things as supplemental benefits. These benefits may not be as comprehensive as those larger companies provide, but they can still be invaluable in fostering employee loyalty and retention. 

At Nour Private Wealth (NPW), we understand how important it is to find the right employee benefits solution for our clients. That is why we have a team of insurance experts at Nour Insurance Services (NIS), a related and separate company from NPW, to guide entrepreneurs and business owners on the products that best suit their needs. In addition, with a team of wealth advisors servicing clients across seven provinces, we have insight into the provincial requirements for specific benefits. Let us discuss employee benefits in more detail. 

Do Employers Need to Provide Employee Benefits in Canada? 

Certain basic employee benefits are required by law, and employers can be penalized if they don’t provide the mandatory benefits. When you look at the costs, it might seem excessive sometimes, but there are advantages to offering mandatory and supplementary benefits. For example, quality workers are more likely to remain if benefits are attached to their employment, cutting the turnover rate. And when benefits promote healthy lifestyles and a healthy work environment, there is less absenteeism. There are also advantages to these business expenses as most employer-paid premiums are tax-deductible.   

What Are the Mandatory Employee Benefits Required By Law?

Mandatory employee benefits, or statutory benefits, are the benefits employers are legally required to provide and are primarily regulated by the Employment Standards Act. This act establishes the rights and responsibilities of employers and employees. In Canada, various types of leaves are considered mandatory benefits. The specific types of leave and entitlements can vary by province and are governed by either federal or provincial mandates. Typically, these leaves are paid through government-sponsored Employment Insurance benefits.

The leaves are job-protected, so employers must maintain an employee’s position until it is reasonable for the employee to return to work. Statutory leaves include: 

  • Annual/Vacation leave
  • Compensatory leave
  • Sick leave
  • Critical illness leave
  • Compassionate care leave
  • Maternity/Paternity leave
  • Parental leave.

The final three statutory benefits are the Canadian Pension Plan (CPP), employment insurance, and eye exams. The CPP is a mandatory savings plan for all employed Canadians, and employer and employee contributes to the plan. Employment insurance is in place to assist employees who are unable to work due to illness, are caring for another person, or who lost their job. Finally, eye exams are usually included as part of an extended health care benefit, even though there is no compulsory employer-funded health insurance due to the country’s publicly funded health care system.

Employee Perks and Supplemental Employee Benefits

The main non-mandatory employee benefits are individual and employer-funded retirement/pension programs and supplementary healthcare coverage. Most Canadian employers offer extended healthcare that covers prescription drugs, hospital expenses, paramedical practitioners, and more. Group pension programs are very popular and provide long-term savings at a high rate of return. As part of our Group Pension Services offering, NPW provides various flexible retirement-savings solutions for business owners.  

What optional employee benefits are offered? Statistics show that in 2020, 63.4% of the country’s female population formed part of the country’s workforce, and a growing number of employers are offering fertility benefits. Additional benefits for employees vary significantly, including profit sharing, stock options, tuition reimbursement programs, and free workplace canteens. Some employers even pay employees for volunteer work. In addition, perks could include mental health training and fitness platforms.        

If you want to discuss the mandatory employee benefits in Canada relevant to your business, contact us at Nour Private Wealth.

Disclaimer: Insurance products and services are offered through Nour Insurance Services Inc., a related and separate company from Nour Private Wealth Inc. Only products and services offered through Nour Private Wealth Inc. are covered by the Canadian Investor Protection Fund.

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