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
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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 $68,500, plus 4% CPP2 on the $68,500–$73,200 band; Employment Insurance (EI) employer share of 2.32% (1.4× employee rate) to $63,200; 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 $68,500 (YMPE 2024) |
| CPP2 (second tier, introduced 2024) | 4.0% | On earnings between $68,500 and $73,200 (YAMPE 2024) |
| 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
Sources
Statutory rates and rules verified against the following authorities. We update this page when rates change.