The Most Popular Employee Benefits in Canada

Companies in Canada are legally mandated to follow its labor laws, and this includes providing the mandatory benefits for employees. Generally, this means contributing to the nation’s healthcare system and pension fund. While these employee benefits are required by Canadian labor law, there are other employee benefits that are offered by employers as standard industry practice.

These other employee benefits can include supplemental retirement and medical benefits. With these additional perks, companies can have a competitive advantage in their respective industries, as well as attract and retain high-performing employees.

So, how do employee benefits work in Canada? What are the mandatory employee benefits in Canada? What benefits does Canada have for low-income earners? What are the best employee benefits in Canada? In this article, Benefits and Pensions Monitor discusses these and other topics that are relevant to Canada’s employee benefits. This should help you understand what benefits to offer your employees, and what you must offer by law.

Legally Required Employee Benefits in Canada

Which benefits are mandated by the Canadian government or its labour laws? Here’s a list of what is legally required of employers or companies in Canada:

The Canada Workers Benefit (CWB)

One of the main legally required employee benefits is the Canadian Workers Benefit or CWB. This is a two-part, refundable tax credit created by the Canada Revenue Agency (CRA). It is a benefit offered to low-income working families and individuals.

Introduced in 2019 this special tax credit for Canadian workers was a replacement to the Working Income Tax Benefit or WITB. Typically, Canadian workers received the CWB when they file their tax return. The CWB comes in two parts: the basic amount and a disability supplement. Workers may claim the disability benefit only after completing and sending the disability tax credit form T2201 to the CRA.

example government of canada employee benefits cheque

How does the CWB work?

As mentioned earlier, the CWB is in two parts; the basic amount and the disability supplement. Here are their main features and how they function:

The basic amount

The benefit is only available to one person per low-income family or single-person household. The size of a worker’s CWB amount may depend on their entire household’s income, marital status, and the age of their children, if any.

Should a worker’s income exceed the individual or family threshold, the CWB credit is reduced by 12% until they earn a higher income and are no longer considered eligible.

The disability supplement

If a CWB-eligible worker has a spouse or common-law partner, they may both be eligible for the disability supplement. But for this to apply, both individuals must also be eligible for the disability tax credit. It's possible for workers in a low-income household to get an extra $713 when combining the two CWB components.

Workers can claim the CWB as a single payment via direct deposit once a year. If they choose, workers can also split half of the benefit into four annual payments, with the remaining amount received as a single payment after they file their taxes.

Who is eligible for the CWB?

For a worker to be eligible for the CWB basic amount, they must meet the following criteria:

• Earn working income
• Have a net income of less than $33,015 a year
• At least be a resident of Canada throughout the year
• Must be at least 19 years old on December 31st of the eligible tax year, or live with your spouse/common-law partner or your child

It's important to note that to be eligible for the CWB, the worker or their eligible spouse/common-law partner:

• Must not be enrolled as a full-time student at a designated educational institution

for more than 13 weeks of the year, unless you have an eligible dependent

• Must not have been jailed for at least 90 days of the year
• Must not be someone who does not pay tax in Canada due to their position as an officer or servant of another country, such as a consular worker

The Canadian Pension Plan (CPP)

The CPP is a mandatory pension plan that’s given to most workers in Canada. However, in Québec, there is no CPP, but instead the Québec Pension Plan or QPP. The most prominent feature of the CPP is that it gives retirees a monthly pension on which they can subsist for the rest of their lives.

The amount that retirees receive largely depends on factors like how much they earned and contributed to the plan during their working years. Another factor is whether the retiree opts to start receiving their CPP payments when they reach the age of 60 or at the age of 70 at the latest.

The federal government sets a yearly maximum pensionable earnings (YMPE) amount, which is the maximum salary amount for CPP contributions. For 2024, the maximum salary that a worker can have to be eligible to contribute to the CPP is $68,500.

Here’s a video showcasing the CPP when it was introduced. Note that the video may not be as updated, and the amounts mentioned may not reflect the CPP as it is today.

The Québec Pension Plan (QPP)

If a worker lives or works in Québec, they may be entitled to the QPP. The Québec Pension Plan (QPP) is a taxable public insurance plan that gives employees and their families financial protection for retirement, death, or disability.

Contributions to the QPP are divided equally between the employee and employer. The amount of pension an employee receives is calculated based on earnings recorded under their name since 1966 (when the Québec Pension Plan started) and the age when the contributor’s pension began. A contributor to the QPP can get their retirement pension as early as age 60.

Old Age Security (OAS)

This is another type of employee benefit that is mandated by law but is not directly funded by Canadian workers. Rather, Old Age Security is paid from general tax revenues. Retired workers can get income from OAS as early as age 65 or defer it to when they reach the age of 70.

To qualify for the maximum amount, however, workers must have been Canadian citizens for 40 years after their 18th birthday. Whereas, collecting a minimum OAS payment requires that workers must have been Canadian citizens for at least ten years after their 18th birthday.

Employment Insurance (EI)

Employment insurance benefits provide income replacement to employees, if they are unable to work due to any of the following:

• Sickness
• Maternity
• Parental leave
• Compassionate care leave

For most people, the benefit level is 55% of an employee’s average insurable weekly earnings, up to a maximum amount. But as of January 1, 2024, the maximum yearly insurable earnings amount was set at $63,200. This means that an employee can receive a maximum amount of $668 per week.

The maximum benefit period can vary, lasting 14 to 45 weeks.

The duration of employment insurance payments depends on regional unemployment rates, and accumulated hours of employment in the preceding year or since an employee’s last claim, whichever is shorter.

Provincial Healthcare Insurance

This is guaranteed healthcare that all Canadian residents can access. Canadian Medicare provides these health benefits, and all eligible employees get to receive basic medical care and standard hospital care. Provincial healthcare insurance is funded via government tax revenue from all of Canada’s 13 provinces. Healthcare coverage varies by province or territory.

Survivor Insurance

Survivor insurance in Canada is like a life insurance policy. This type of insurance provides the legal spouse or common-law partner of a deceased employee with monthly payments.

The funds are taken from the deceased employee’s CPP or QPP, and all employees aged between 18 and 70 are eligible for this benefit. The monthly amount the surviving spouse or common-law partner receives depends on their age at the time of the contributor’s death and their retirement pension.

Legislated Leaves

Globally, Canada has one of the highest counts of government-regulated and legislated leaves.

While these are paid through government-sponsored Employment Insurance benefits, these leaves are job-protected, meaning the employer is responsible for maintaining the employee’s position until it is reasonable for the employee to return to work.

The maximum allowable leaves vary by province and are governed by Federal or Provincial mandates.

Provincial workers’ compensation plans

This benefit is for all Canadian employees. The Workers’ Compensation plans provide insurance for medical treatment and salary protection for employees who incur workplace injuries or illnesses.

Compensation varies from province to province, while the benefits depend on the industry where the employee works.

Statutory Holidays

Also known as paid public holidays or general holidays, statutory holidays are days in the year where most businesses are required to close but must still pay eligible employees as if it was a regular workday.

There are additional rules and payment requirements for employees who work on a statutory holiday.
Generally, there are 5 days in the year which are a paid holiday in every jurisdiction, which includes:

• New Year’s Day
• Good Friday
• Canada Day
• Labour Day
• Christmas Day

Employers should take note of the paid general holidays as mandated by the Canada Labour Code:

• New Year’s Day
• Good Friday
• Victoria Day
• Canada Day
• Labour Day
• National Day for Truth and Reconciliation (September 30)
• Thanksgiving Day
• Remembrance Day
• Christmas Day
• Boxing Day

Federally regulated businesses are required to observe these holidays, and employers of such businesses must pay all full-time, part-time, and casual employees for these holidays as if they were ordinary days.

How do employers in Canada calculate employees’ holiday pay?

Employers have different options to pay their workers if they ask them to work on a holiday. This is often the case if the business is a “continuous operation” where employees must still work. The holiday pay options include:

• 1.5 times the regular rate of workers who are made to work on a general holiday, plus general holiday pay
• pay for the actual hours worked on the general holiday at workers’ regular rate. This may be coupled with a holiday with pay at some other time, either by adding it to workers’ annual vacation or on another day that is convenient to both worker and employer
• holiday pay for the first day on which you do not work after the general holiday, if permitted by your collective agreement

Supplementary Employee Benefits

Apart from the mandatory employee benefits, some Canadian employers may offer supplementary benefits. Supplementary benefits can serve as part of a compensation and benefits package meant to attract and keep top talent.

Healthcare benefits

Supplementary healthcare coverage apart from the mandatory employee benefits is important for employees in Canada. In fact, it was found that 91% of Canadian employers offer an extended health care benefit to supplement the government health insurance plan for employees.

• 77% of employers pay 100% of the premium
• 51% of employers offer extended health care to hourly workers
• 73% pay 100% of the premium

Extended health care can include prescription drug coverage, hospital stays, paramedical practitioners, and out-of-country coverage at varying levels, depending on employer size, demographics, and industry.

Flexible benefits

These plans are highly desired for their flexibility, ability to address generational differences in the workforce, and attractiveness to employees. However, flexible benefit plans are commonly only offered by larger companies.

A few carriers have come to market recently with small to mid-size, off-the-shelf flexible benefit plans that are getting traction in the marketplace. Smaller companies can accommodate flexibility by incorporating voluntary benefit offerings, employer-funded spending accounts, and wellness platforms.

Optional benefits

Larger companies in Canada will usually provide employees with a range of voluntary or optional benefits at discounted prices through the employer. There is an emerging trend for employers to offer innovative voluntary programs, such as virtual wellness and pet insurance.

Retirement programs

Employees can sometimes look to employers to provide group programs through payroll deductions with employer matching schemes as a core component of a total rewards program. In some respects, this is somewhat like the 401k plan in the US.

In addition to saving for retirement, employees look for low-cost savings vehicles for short- and medium-term goals. While this is an attractive employee benefit, there have been some problems in it for female workers.

What are the most popular benefits among Canadian employees?

According to this report, the benefits that Canadian employees value most have a lot to do with their retirement savings and health care. Mental health wellness seems to be a rising concern among employees, since many Canadian workers are feeling overworked. Some facts unearthed by the report include:

• 60% of employees say their employer’s retirement benefits as the reason why they stay with their current company, compared to 41% in 2010. 
• 48% of workers surveyed say their employer’s health care is important for their happiness
• 47% say retirement plans are crucial in their decision to join the company, significantly up from 32% and 25%, respectively in 2010

And according to Willis Towers Watson (WTW). Of the employees surveyed, 39% also cited flexible work arrangements as an important benefit.

These days, even the Canadian government realizes that statutory employee benefits are barely enough to keep employees happy, or even simply keep employees. Employers can and should use this information to come up with cost-efficient benefits packages they can sustainably implement.

Does your company offer the sort of employee benefits that can get and retain high-performing workers? Share your thoughts in the comments, and don’t forget to sign up for our free newsletter.