TL;DR, Hiring in Canada
- Fully-loaded employer cost: ~9–12% on top of gross (province-dependent)
- CPP/QPP, EI, and provincial workers' comp are the three statutory employer contributions
- Severance is province-specific; Ontario and federal jurisdiction are the highest
- Quebec has its own pension (QPP), parental insurance (QPIP), and health tax (FSS), costlier than other provinces
Last reviewed:
Statutory employer costs in Canada
In Canada, employer contributions vary by province but typically total 9–12% on top of gross salary: CPP (Canada Pension Plan) employer match of 5.95% on pensionable earnings to the 2026 YMPE of $74,600, plus 4% CPP2 on the $74,600–$85,000 band; Employment Insurance (EI) employer share of 2.282% (1.4× employee rate) to the 2026 MIE of $68,900; and provincial WSIB/WCB rates of 0.5–3%. Quebec adds QPIP and the FSS health tax.
| Contribution | Employer rate | Notes |
|---|---|---|
| Canada Pension Plan (CPP), Tier 1 | 5.95% | On earnings between $3,500 and $74,600 (YMPE 2026) |
| CPP2 (second tier, introduced 2024) | 4.0% | On earnings between $74,600 and $85,000 (YAMPE 2026) |
| Employment Insurance (EI), employer | 2.32% | 1.4× employee rate (1.66%), capped at $63,200 earnings (2024) |
| Provincial WCB/WSIB | 0.5–3.0% | Office workers in Ontario ~0.5%, construction much higher |
| EHT (Ontario Employer Health Tax) | 0.98–1.95% | Only on Ontario payroll >$1M annually; below threshold = 0% |
| Quebec QPP / QPIP / FSS (Quebec only) | +3–5% | Quebec replaces CPP with QPP (6.4%); adds QPIP (0.692%) + FSS health services (1.65–4.26%) |
Mandatory employee benefits
Beyond statutory contributions, Canada law requires the following benefits the employer must fund.
- Vacation pay
- 2 weeks (4%) minimum federally; 3 weeks (6%) after 5–6 years (province-specific). Saskatchewan starts at 3 weeks.
- Statutory holidays
- 9–10 paid public holidays per year (varies by province; Quebec adds St-Jean-Baptiste).
- Parental leave
- Federal EI covers 35–61 weeks of parental benefits; Quebec runs its own QPIP scheme (more generous, faster top-ups).
- Sick leave
- Federal jurisdiction: 10 days paid (2022 onwards). Most provinces: 3–5 days unpaid; BC and PEI offer 5 paid.
Termination, notice and severance
Probation
3 months in most provinces; 6 months federally. During probation, termination without notice is allowed for cause.
Notice period
Employment Standards Act minimums: 1 week after 3 months, scaling to 8 weeks after 8+ years. Common law notice (for non-union employees) is much higher: Bardal factors typically yield 1 month per year of service for executives.
Severance
Ontario: in addition to ESA notice, employers with $2.5M+ payroll owe 1 week per year of service (capped at 26 weeks) as severance pay under ESA s.64. Common-law claims by terminated executives often exceed ESA minimums substantially.
Common compliance pitfalls
- Common-law notice vs ESA minimums, ESA is a floor, not a ceiling. A non-unionized 5-year-tenured executive may be entitled to 5–8 months of notice/pay under Bardal common-law factors, not the 5 weeks ESA specifies.
- Quebec is its own employment-law jurisdiction. CPP doesn't apply (QPP does), EI is different (QPIP), the language of work must be French (Loi 96, 2022), and labor standards (CNESST) override federal norms.
- CPP2 (the second-tier CPP introduced 2024) is often missed by foreign payroll providers. Adds ~$190 employer + employee combined for high earners.
- Independent contractor classification: Canada Revenue Agency uses a multi-factor test (control, ownership of tools, chance of profit/loss, integration). Misclassification triggers back-CPP, back-EI, and CRA penalties.
Frequently asked questions
EOR platform fees for Canada range from $199–$699 per employee per month across compared providers. On top, employer-side contributions add ~9–12% to gross salary in most provinces; Quebec adds another ~3–5% due to QPP, QPIP, and the FSS health services tax.
Quebec runs parallel programs to the federal CPP, EI, and provincial taxes: Quebec Pension Plan (6.4% vs CPP 5.95%), Quebec Parental Insurance Plan (0.692% employer), and the Fonds des services de santé (FSS, 1.65–4.26% of payroll). Net employer burden in Quebec is typically 13–16% vs 9–11% in Ontario.
ESA (Employment Standards Act) sets the statutory floor, typically 1 week per year of service. Common-law notice, available to non-unionized employees who sue for wrongful dismissal, is calculated using the Bardal factors (age, tenure, position, re-employment prospects) and typically yields 3–4× the ESA minimum. Most terminations settle in between.
Provincial health plans (OHIP, RAMQ, MSP) cover doctor visits and hospital stays. Supplemental insurance for dental, vision, prescriptions, and paramedical services is standard at $80–$200/month per employee. Most EORs offer this as an add-on; expected by candidates above entry level.
Yes, and it's the standard play to avoid registering a Canadian business number, opening a CRA payroll account, and dealing with provincial registrations. EOR is faster (5–10 days) and avoids permanent establishment risk for engineering and back-office roles.
Sources
Statutory rates and rules verified against the following authorities. We update this page when rates change.