Our previous article looked briefly at the basic legal structure of Canada and the U.K., as well as the distinction between employment agreements and independent contractor agreements in Canada. In this article, we discuss other elements of the employment agreement in Canada.
Entitlement to overtime pay is similar across the country, with minor variations. Taking the province of Ontario as an example, eligible employees are entitled to overtime pay at the rate of one-and-one-half times their regular rate after working 44 hours in a work week. Managers, supervisors and designated professionals such as architects, engineers, information technology professionals and lawyers are exempt from overtime pay. When determining whether employees are entitled to overtime pay, employers should refer to how the legislation and courts define these positions.
Even if an employee’s job duties do not fall within one of the above-noted exemptions, it may be possible to structure their employment agreements to reduce the overtime pay they accrue. An employee and employer can agree in writing that the employee will receive paid time off in lieu of overtime pay or to average the number of hours worked by the employee over a specified period of two or more weeks. Under the latter arrangement, the employee would only qualify for overtime pay if their average number of hours worked exceeds 44 hours per week.
Vacation entitlement in Canada, which varies from province to province, is comparable to those of the U.K. In Ontario for example, employees are entitled to annual vacation time subject to their completion of a 12-month vacation entitlement year. Employees with less than five years of service are entitled to two weeks of vacation time, while employees with more than five years are entitled to three weeks. Regardless of the length of their employment, all eligible employees are entitled to vacation pay at a rate of at least four per cent (or six per cent, for employees with more than five years of service) of their gross wages. Employment contracts may provide for vacation entitlements in excess of these statutory minimums.
In addition to two or three weeks of vacation time, all employees are entitled to 10 days of statutory holiday each year. Most employees are entitled to take these days off and receive public holiday pay. While employers are not obligated to give employees time off to observe public holidays recognized in other jurisdictions, employees can agree to work on a Canadian public holiday for their regular wages and take a substitute holiday on another date, on which they must be paid public holiday pay.
In certain personal circumstances, employees have a right by law to take leaves of absence. These “statutory leaves” are generally unpaid job protected leaves, which apply in cases of pregnancy, serious illness or other exceptional personal and/or family circumstances. Unlike “Statutory Sick Pay” in the U.K., Canadian employers are only required to provide their employees with unpaid sick leave. They are not required by law to pay their employees sick pay. For example, each year employees in Ontario who have worked for at least two consecutive weeks are entitled to take three days of sick leave, three days of family responsibility leave and two days of bereavement leave.
Employees in Canada are also entitled to pregnancy and parental leave. In Ontario, pregnant employees may take up to 17 weeks of unpaid time off work. New parents are entitled to take up to 61 weeks of parental leave if they took a pregnancy leave and 63 weeks if they did not take a pregnancy leave. During the period of leave, employees may obtain maternity and parental employment insurance benefits payable by the Government of Canada. Employers are not responsible for paying employees during the leave period, although they are still required to maintain employee entitlement to benefits.
Compensation, payroll and remittances
Beyond providing employees with the above statutory entitlements in the employment relationship, Canadian employers are also legally required to retain payroll records for a period of six years. While Canadian employment law is largely a matter of provincial jurisdiction, employers in all provinces except Quebec remit payroll taxes to the federal Canada Revenue Agency. Unlike the U.K., employers in Canada are not required to offer a workplace pension scheme. However, employers and employees in Canada (except those in Quebec) are required to make contributions to the government-run Canada Pension Plan and Employment Insurance programs.
In addition, employers in Manitoba, Quebec and Ontario must make contributions to the province’s universal health care system. Since Jan. 1, British Columbia employers with annual payroll over $500,000 are required to pay an “employer health tax” to the province. Because all Canadian provinces provide universal health care, employers do not need to bear the responsibility of providing basic health insurance to their employees. However, many employers choose to offer supplemental insurance to their employees as part of their benefits plans. Typically, this insurance will cover vision and dental care and prescription drugs — medical services not paid for by public universal care.
Employee entitlements and employer obligations discussed above are in many respects similar between the two jurisdictions. There is, however, no equivalent requirement in Canada to statutory sick pay in the U.K. In the next part of this series, employer obligations in the termination of an employment relationship and the concept of common law “reasonable notice” — a concept that is unique to Canadian employment law — will be discussed.
*This article was originally published in The Lawyer's Daily on October 7, 2019.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.