Because Canadians have access to public health care for basic services, employers' benefit programs often include benefits which are not covered under the public system. Employers are not required to provide employee benefit plans, but many of them do. Generally, employers will offer extended health care coverage which includes drug, dental, paramedical and eye care plans. Spousal plans in Canada must cover both common-law and same-sex spouses. The costs of the extended health coverage may be at the employer's expense or a shared expense with the employee.
The federal government, through Human Resources and Skills Development Canada, administers a program called Employment Insurance (EI), which provides payments for a period of time to workers who lose their jobs. The purpose of the program is to cushion the blow of unemployment for a worker while also encouraging the worker to search for new employment. The program is paid for through premiums collected from employees and employers through a payroll deduction made by the employer and submitted to the government.
Almost all full-time employees as well as part-time and casual employees are covered under the Employment Insurance program, provided they meet specified minimum requirements. An employee will not be entitled to benefits if he or she resigned without good reason or was fired for cause.
Employment insurance also provides income replacement during maternity and parental leaves. In Québec, however, employees must apply to the Québec Parental Insurance Plan (QPIP), which provides more generous benefits to new parents. One interesting feature of the QPIP is that it provides certain benefits that can only be used by the new father and cannot be transferred or shared with the new mother. This benefit is designed to encourage new fathers to take an active role in parenting a new infant right from the beginning.
Canada/Québec Pension Plan
The Canada Pension Plan (or, in Québec, the Québec Pension Plan) is administered by the government and requires contributions from both employers and employees at prescribed rates. Employers are required to deduct a percentage of an employee's pensionable earnings and remit that amount to the federal government together with an equal amount contributed by the employer. For this reason, an employer is unable to extend or offer their United States pension benefit plans to their Canadian employees.
In 2016, the contribution rate was 4.95 per cent of annual income, to a maximum of $2,544.30 for both the employer and employee.
Ontario Retirement Pension Plan
The Ontario Retirement Pension Plan (ORPP) is a new, provincially managed pension plan being created for residents of Ontario. It is intended to cover people who don't have workplace pension plans, giving them extra income in retirement.
The ORPP is similar in many ways to the Canada Pension Plan. It requires contributions from workers through payroll deductions, as well as matching contributions from employers. It will pay a benefit in retirement that will vary, depending on how many years an employee contributes to the plan and how much he or she earns.
The ORPP will begin enrolling employers in 2017, with the first phase of contributions beginning January 1, 2018. By 2020, subject to legislative approval, every employee in Ontario would be part of either the ORPP or a comparable workplace pension plan.
Employees and employers would contribute an equal amount, capped at 1.9% each (3.8% combined) on an employee's annual earnings up to $90,000.
Private pensions are heavily regulated. Federal and provincial laws regulate the terms, conditions and administration of private pensions.
Executive compensation refers to both financial payments and non-monetary benefits provided to senior management, such as corporate presidents, chief executive officers, chief financial officers, vice-presidents and other senior executives of the corporation. It is a typically a mix of salary, bonuses, shares of the company's stock, benefits, and other privileges. Designing, implementing and administering compensation and benefits arrangements for foreign businesses operating in Canada must take into account Canadian tax and employment laws, securities disclosure and compliance requirements, and heightened scrutiny by shareholders and other stakeholders, regulators and the courts.
Director and Officer Liability
If a company fails to pay its employees due to insolvency or other reasons, legislation in certain Canadian jurisdictions can impose personal liability on directors and officers of the company for unpaid wages and other amounts that may be owing to employees.
Sale of a Business – Successor Employers
The purchaser of a business can inherit a wide variety of employment-related liabilities and obligations as a "successor employer" to the vendor. These can include termination costs, employment standards violations, workers' compensation costs, pay equity adjustments, collective agreements and union bargaining rights. Only careful due diligence can bring to light the liabilities being acquired along with a business. To reduce exposure for such liabilities, transactions can be structured in various ways and vendors may provide appropriate indemnities.
(Note: this is the third installment of a five part series on Employment Law. View the full article)
About Mackrell International - Canada - MacDonald Sager Manis LLP is a full service business law firm in Toronto, Ontario and a member of Mackrell International. Mackrell International - Canada is comprised of four independent law firms in Alberta, British Columbia, Ontario and Quebec. Each firm is regionally based and well-connected in our communities, an advantage shared with our clients. With close relations amongst our Canadian member firms, we are committed to working with clients who have legal needs in multiple jurisdictions within Canada.
This article is intended to be an overview and is for informational purposes only.