Payroll and Benefits Guide Canada – Ontario

Employer

Employer Payroll Contributions

Employee

Employee Payroll Contributions

Employee

Employee Income Tax

General

Payroll Cycle

An employer has 1 month to remit an employee’s first pay. After this, wages must be paid at regular intervals of no more than 16 days, or 1 month in case of managerial personnel. If pay day falls on a statutory holiday, the wages must be paid on the preceding working day.

13th Salary

There are no provisions in the law regarding 13th salaries.

General

Working Week

Monday-Friday

Paid Time Off

In Ontario, employees are entitled to two consecutive weeks of annual leave after the first year of employment and three consecutive weeks of leave after five years of employment.

Employees are entitled to vacation pay of 4.00% of the regular salary rate of pay for the first five years of employment and 6.00% of the regular salary rate of pay after five years of employment.

Public Holidays

There are 9 public holidays in Ontario. Employees that work on a statutory/public holiday are paid 150% of the regular hourly salary rate of pay plus public holiday pay, or regular rate of salary for all the hours worked plus a substitute day off with public holiday pay. When public holidays fall on a weekend it is customary to give off in lieu either the previous working day or next working day.

Sick Days

The Canada Labour Code was updated with effect from December 1, 2022, to provide 10 days of paid sick leave to employees in the federally regulated private sector, (which is limited to specific industries)  There is a thirty day qualifying period for covered employees; therefore, on December 31, employees who have been continuously employed for at least 30 days will have access to their first three days of paid sick leave. As of February 1, 2023, employees will acquire a fourth day, and will continue to accumulate one day a month up to a maximum of 10 days per year.

Effective December 18, 2022, Canada’s Employment Insurance sickness benefits were extended from 15 weeks to 26 weeks. As such, qualified individuals who establish a new claim on or after December 18, 2022 will receive up to 26 weeks of Employment Insurance sickness benefits, paid at 55% of their average weekly insurance earnings, for up to a maximum of $650 per week in 2023.

Maternity Leave

Employees are entitled to up to 17 weeks of leave if the employee has completed at least one year of employment before the due date. Maternity leave may not begin before the 17th week preceding the expected delivery date and shall end not later than 18 weeks after. If the delivery occurs after the expected date, the employee is entitled to at least two additional weeks of maternity leave.

Special maternity leave may begin four weeks before the expected delivery date when there is a risk of termination of her pregnancy or a danger for the health of the mother or unborn child caused by the pregnancy. Two weeks’ notice and a medical certificate is required.

Employment insurance provides maternity and parental benefits to:

• People who are away from work because they’re pregnant or have recently given birth
• Parents who are away from work to care for their newborn or newly adopted child
• Workers are entitled to 55% of their earnings for 15 weeks up to a maximum of CAD650 a week

Maternity benefits are only available to the person who is away from work because they’re pregnant or have recently given birth. They can’t be shared between parents.

The person receiving maternity benefits may also be entitled to parental benefits.

Maternity benefits can be followed by parental benefits. You may apply for both at once.

For further information visit the Government of Canada website.

Paternity Leave

Paternal leave falls under parental leave.

Parental Leave

Parents are entitled to up to 63 weeks of leave to care for a newborn or adopted child. The parental leave cannot begin before the week of birth or when the child is legally adopted.
The leave should begin no later than 78 weeks after the birth or adoption.

Employment insurance provides maternity and parental benefits to:

• People who are away from work because they’re pregnant or have recently given birth
• Parents who are away from work to care for their newborn or newly adopted child

The assistance details are as follows:

For further information visit the Government of Canada website.

Other Leave

In Ontario, employees are entitled to:

• 2 days of mandatory leave for the bereavement of a family member
• Approximately 8 weeks of leave for compassionate care leave
• Up to 3 days of unpaid leave for family responsibility leave
• Up to 28 weeks per year of unpaid leave for Family Medical leave.
• Up to 37 weeks of leave in the case of a critical illness
• Up to 104 weeks in the event of the death of an employee’s child, or in the case that the child has disappeared.
• All employers must provide their full-time, regularly employed employees, job-protected, unpaid leave for their duty as jurors or as a witness in a case, responding to a subpoena, or acting as a plaintiff or defendant in the courts. Employees must provide a copy of the jury summons to the employer as evidence of the requirement.
  • Reservist Leave regulations require employers to provide up to 20 days of unpaid leave each calendar year for annual training for reservists once they have completed at least 26 consecutive weeks of service with the same employer. An employee may take reservist leave for the following reasons:
    • Deployment to Canadian forces operation outside Canada
    • Deployment to Canadian forces operation inside Canada that is assisting with an emergency or the aftermath of an emergency
    • Annual training, including related travel time, for up to 20 days in a calendar year
    • Other operations set out as such in the Employment Standards Regulation by the minister

Termination Process

The termination process is standard in Ontario, Canada. It is based on termination reasons within the General Labor Law, unless an employer can provide sufficient cause for dismissal without notice (i.e., due to misconduct).

Notice Period

In general, notice periods in Ontario are stipulated within the employment contract or collective agreement and is linked to the reason for termination and the employee’s length of service:

• Up to 2 years of employment: 1 weeks’ notice
• 2-4 years of employment: 2 weeks’ notice
• 4-6 years of employment: 4 weeks’ notice
• 6-8 years of employment: 5 weeks’ notice
• 8-10 years of employment: 6 weeks’ notice
• 10+ years of employment: 8 weeks’ notice

Severance Pay

To be eligible for severance pay, an employee must have completed at least five years of employment, or the company has a payroll of over 2.5 million CAD per year or have terminated over 50 employees in the past six months due to all or part of the company closing to receive severance payments. The severance pay calculation is based on one week’s regular salary rate per year of employment.

Probation Period

Probation period in Ontario for a permanent employee is generally a minimum of 3 months.

General

Cell Phone, internet allowance, and car allowance.

Supplementary health care/dental plan – typically covers costs of items or care that is not covered by Canada’s universal healthcare system such as prescription drugs or vision ware.

Private pension contribution of the employer (2-6 % of base salary).

VISA

The Government of Canada operates the Temporary Foreign Worker Program to enable foreign citizens to apply to work in Canada for a set period. The program covers all job roles and knowledge levels, and it can be used when a qualified Canadian citizen or permanent resident is not available or suitable for the role. There are federal (Government of Canada) immigration programs and provincial programs (Government of Ontario) in place in Ontario.

General

Canadian Federal GST is charged at 5%. Ontario PST is 8%, resulting in a combined GST and PST rate of 13.00%.