Canada Salary Laws

April 12th 2024

Are you navigating the complexities of salary laws in Canada? Whether you’re an employer ensuring compliance or an employee seeking clarity on your rights, understanding Canadian salary laws is crucial. This comprehensive guide delves into the essential aspects of salary management in Canada, covering everything from the payment of wages and overtime rules to the latest on pay equity and termination procedures. So, without further ado, read on. 

This Article Covers:

Payment of Wages for Salaried Employees in Canada
Salary Deductions for Canada Salaried Employees
Salaried Employees’ Eligibility for Overtime in Canada
Pay for Working Overtime for Canada Salaried Employees
Exemptions for Canada Salaried Employees
Pay Equity Act on Equal Pay for Salaried Employees in Canada
Break and Rest Entitlements for Salaried Employees in Canada
Leave Entitlements for Salaried Employees in Canada
Termination of Employment for Salaried Employees in Canada

Payment of Wages for Salaried Employees in Canada

The payment of wages for salaried employees in Canada is governed by both federal and provincial regulations. These regulations dictate the frequency and methods of payment, ensuring all employees receive hourly/monthly wages regularly and without undue delay. Additionally, the rise of remote work post-COVID-19 has led to updated guidance from the Canada Revenue Agency (CRA) and Revenu Québec on payroll deductions for remote workers, which can affect the provincial payroll table applied to employees based on their work location​​.

Important Considerations for Canadian Employers

  • Minimum Wage Compliance: It’s important to note that salaried employees in Canada must be paid at least the minimum wage applicable in the province or territory. As minimum wage rates can vary, employers need to stay updated with the latest rates and ensure compliance.
  • Salary Payment Frequency: Typically, employers are required to pay employees at least monthly, bi-monthly, or semi-monthly, depending on the province or territory. The specific requirements for the timing of wage payments vary, but all ensure timely distribution.
  • Record Keeping: Employers are obligated to keep accurate records of hours worked, wages paid, and deductions made for each employee. These records are crucial for compliance with labour laws and may be required for routine or specific inspection by regulatory authorities.
  • Wage Protection: In the event of bankruptcy, Canadian law provides certain protections to employees for unpaid wages. This includes the Wage Earner Protection Program (WEPP), which compensates workers for unpaid wages as well as vacation, termination, and severance pay.
  • Direct Deposit and Pay Statements: While direct deposit is a common method for wage payment, employers usually need to provide employees with a detailed pay statement with information on the pay period, hours worked, wage rate, gross earnings, and deductions.
  • Remote Work Implications on Taxation: For remote workers, the location of their home office can impact the taxation and deduction process. It’s important to clarify that an employee’s home office is generally not considered an establishment of the employer for taxation purposes​​.
  • Impact of Employment Contracts: Some salaried employees may have specific terms outlined in the employment contracts that relate to the wage payments. Employers must adhere to these contractual terms as long as they comply with the minimum standards set by law.
  • Adjustments for Remote Work Expenses: With the shift to remote work post-COVID pandemic, there may be considerations for reimbursement or allowances for expenses incurred by employees while working remotely from home, such as internet costs or office supplies.

Salary Deductions for Canada Salaried Employees

In Canadian employment law, employers are legally required to make specific statutory deductions from employee wages. These mandatory deductions include federal and provincial taxes, Employment Insurance (EI), and Canada Pension Plan (CPP) contributions. However, the exact amounts of these salary/pay deductions can vary based on factors such as the employee’s income level, the province or territory of residence, and other specific circumstances.

Additionally, employers in Canada are permitted to make certain deductions from wages for reasons authorized by federal or provincial law, court orders, collective agreements, or with the employee’s proper written consent. These can include garnishments for child support, union dues as per collective agreements, and overpaid wage adjustments, among others. 

  • Garnishments: Such as child support payments ordered by a court.
  • Union Dues: If agreed upon in a collective bargaining agreement.
  • Overpaid Wages: Adjustments for any payroll errors.
  • Voluntary Deductions: These can include charitable donations, savings plan contributions, or insurance premiums but must be authorized in writing by the employee, specifying the amount, purpose, and frequency of the deduction, ensuring clear employee consent

For situations like traffic fines or property damage, the employer requires written consent from the employee, ensuring mutual agreement. If there is a dispute about the responsibility for the damage, the issue may be resolved in a civil court, offering a formal avenue for resolution.

Recent administrative policy changes may also impact how payroll deductions are calculated and applied. For instance, for full-time remote workers, the province of employment for payroll purposes might be determined based on where they are paid from, which could differ from the location of the establishment they are associated with, according to the CRA’s guidelines​​.

Salaried Employees’ Eligibility for Overtime in Canada

Salaried employees’ eligibility for overtime in Canada encompasses both federal and provincial regulations, which are explicitly designed to ensure fair compensation for additional hours worked beyond the standard workweek, aligning with labour standards and fair work practices. 

Federal Overtime Rules in Canada

  • General Threshold: The federal overtime rules in Canada set a general threshold of 44 hours per workweek. Salaried employees working more than this are entitled to overtime pay.
  • Emergency Work: In emergencies, employers may exceed the maximum hours without a permit. However, they must report these hours and emergencies to relevant authorities.
  • Averaging and Modified Work Schedules: For workplaces with irregular hours due to seasonal or other factors, employers may average hours over 2 or more weeks. Modified work schedules can include compressed work weeks and flexible hours. For such schedules, standard hours of work for a period of 2 or more weeks cannot exceed an average of 40 hours per week, and the maximum cannot exceed an average of 48 hours per week. Overtime must be paid when hours exceed these averages or the daily/weekly hours established under the schedule.

Provincial Overtime Rules in Canada

  • Provincial Variations: Each province has its own distinct overtime rules. For instance, the general threshold for overtime in most provinces is 40 hours per week, but it’s higher in Ontario (44 hours), Nova Scotia (48 hours), and PEI (48 hours), reflecting regional differences.
  • Specific Calculations: Provinces like British Columbia, Alberta, and Saskatchewan have specific rules for overtime, such as time and a half after 8 hours a day or 40 hours a week.

Exemptions and Non-Exemptions

  • Exempt Employees: Certain employees may be exempt from receiving overtime pay, typically including managers and supervisors, with this exemption varying based on industry and job nature. For example, in Manitoba, employees who substantially control their hours of work and earn more than twice the average industrial wage may be exempt from standard overtime rules.
  • Non-Exempt Employees: Most of the workforce, both hourly and salaried, falls under the non-exempt category and is eligible for overtime pay. This classification applies across various industries and job roles, with specific criteria varying by province. Non-exempt employees are entitled to additional compensation for hours worked beyond standard workweek thresholds.

Special Considerations

In most provinces, overtime can be banked as future time off instead of being paid out immediately. On the other hand, depending on the province, employers can require employees to work overtime, but there are limits to this. For example, in Ontario, employers can require up to 13 hours a day and 48 hours per week before employees can refuse additional overtime.

Pay for Working Overtime for Canada Salaried Employees

Overtime compensation for salaried employees in Canada is typically calculated at a rate of 1.5 times the regular hourly wage, which applies to hours worked beyond the standard workweek. In some provinces, employers are allowed to offer time off in lieu of overtime pay, where employees can accrue time off equivalent to the overtime worked, ensuring flexible compensation options.

Exemptions for Canada Salaried Employees

In Canada, while most salaried employees are eligible for standard hours of work provisions and overtime pay, there are specific classes of employees who are exempt from these regulations. These exemptions are typically based on the industry and nature of the job. Here’s an overview:

These exemptions are designed to accommodate the specific requirements and nature of work in these industries, acknowledging that a one-size-fits-all approach to work hours and overtime may not be feasible or appropriate. Canadian Employers and employees in these industries must be aware of these specialized regulations to ensure compliance and fair labour practices.

Pay Equity Act on Equal Pay for Salaried Employees in Canada

In Canada, the Pay Equity Act, introduced in the year  2018 and enforced starting in the year 2021, is a landmark legislation ensuring that employees receive equal pay for work of equal value, irrespective of their gender. This act is particularly significant in addressing the persistent issue of gender-based wage disparities in the workplace. It is enforced by the Office of the Pay Equity Commissioner, a body that not only oversees the implementation of the Act but also provides crucial support and tools to help employers achieve and maintain pay equity.

This legislation mandates federally regulated employers with 10 or more employees to take proactive steps toward identifying and rectifying any gender wage gaps. Employers are required to conduct comprehensive reviews of their pay practices, ensuring that their compensation structures are equitable and non-discriminatory. This proactive approach is designed to identify and correct systemic pay disparities that have traditionally affected women in the workplace.

The impact of the Pay Equity Act on Canadian workplaces is substantial. It places a greater responsibility on employers to ensure compensation practices are fair and equitable. This means a continuous effort to maintain pay equity, including regular assessments and adjustments to pay practices as necessary. For employees, particularly women, this Act provides a legal framework that supports fair compensation, contributing to a more equitable environment.

Break and Rest Entitlements for Salaried Employees in Canada

In Canada, the entitlements for break and rest periods for salaried employees are governed by specific labour laws, ensuring adequate rest and recovery during work hours. According to the Canada Labour Code, these break and rest periods are structured to promote a healthy work-life balance, essential employee well-being, and to maintain workplace safety and productivity.

Employees are entitled to a 30-minute unpaid break for every five consecutive hours of work. This 30-minute break is designed to be taken as one continuous period and cannot be divided into shorter intervals/segments. The purpose is to provide a meaningful rest period during the workday. However, if an employee is required to remain on-call or available during this break, such as answering calls or attending to critical tasks, they must be compensated for this time.

In some cases, especially for certain professionals and managers, these break entitlements may not be applicable. Employers have the discretion to postpone or cancel these breaks in cases of emergencies or unforeseen circumstances that pose serious threats to life, health, safety, property, or the normal operation of the establishment, always ensuring employees’ well-being. 

Additionally, employees have the right to medical breaks as needed. These are unpaid breaks for any medical reason, and employees are required to provide a written request along with a certificate from a healthcare practitioner specifying the necessity, duration, and frequency of these breaks. On the other hand, nursing employees are also entitled to take unpaid breaks as necessary to nurse or express milk. This provision acknowledges the needs of nursing mothers in the workplace, ensuring they have the time and space to attend to their child’s feeding needs.

Furthermore, there is a stipulation for a minimum rest period between work shifts. Employees are entitled to an uninterrupted rest period of at least eight hours between shifts. This rule is crucial for ensuring employees have enough time to rest between working days, fostering overall well-being and productivity. However, in certain circumstances, such as emergencies or other critical work-related exigencies, employers may require employees to work beyond their scheduled hours, consequently reducing the rest period below the eight-hour minimum.

It’s important to note that labour laws in Canada are subject to change every year, and new regulations related to work hours and break schedules may be introduced. These changes are typically outlined in the Labour Program’s Forward Regulatory Plan (2022 to 2024) and reflect ongoing efforts to adapt labour standards to evolving workplace needs and practices.

Leave Entitlements for Salaried Employees in Canada

In Canada, salaried employees have a range of leave entitlements that are regulated both federally and provincially. These entitlements are designed to ensure that employees have access to necessary time off for various reasons, ranging from personal needs to family responsibilities.

  • Maternity Reassignment and Leave: Pregnant or nursing employees can request job modifications or reassignments if their current roles pose a risk to their or their child’s health. This leave is paid while the employer reviews the request. On the other hand, pregnant employees are entitled to up to 17 weeks of unpaid maternity leave. This leave can begin 13 weeks before the expected date and extend if the child isn’t born within the 17-week period.
  • Parental Leave: Natural or adoptive parents are eligible for up to 63 weeks of unpaid parental leave. This period increases to 71 weeks if both parents are employed by federally regulated employers. The leave can be taken within a 78-week window from the child’s birth or adoption.
  • Compassionate Care Leave: Employees in Canada can take up to 28 weeks of unpaid leave in a 52-week period to care for a family member with a serious medical condition/sickness.
  • Critical Illness Leave: Employees in Canada can avail of up to 37 weeks of leave for caring for a critically ill child and up to 17 weeks for an adult family member. This unique provision in the country ensures support for employees during challenging family medical health situations.
  • Child Death or Disappearance Leave: Up to 104 weeks of unpaid leave is available for employees in Canada whose child under 25 years old is missing or has died due to a crime.
  • Personal Leave: Employees in Canada are entitled to up to 5 days of leave per year for personal reasons, with the first 3 days paid if they have 3 months of continuous employment.
  • Family Violence Leave: Employees in Canada affected by family violence can take up to 10 days off per year, with the first 5 days paid after 3 months of continuous employment.
  • Aboriginal Practices Leave: Aboriginal employees are entitled to up to 5 days of unpaid leave per year to participate in practices such as fishing, hunting, or harvesting. This leave recognizes the importance of cultural activities in the lives of Aboriginal employees.
  • Jury Duty Leave: Unpaid leave is available for participating in legal proceedings.
  • Bereavement Leave: Employees are entitled to up to 10 days of leave for the death of an immediate family member, with the first 3 days paid after 3 months of employment. This provision is designed to provide necessary time for grieving and attending to family matters.
  • Medical Leave: Employees can take up to 27 weeks of unpaid leave for medical reasons.
  • Reserve Force Leave: Unpaid leave is available for military-related reasons for members of the Canadian Armed Forces Reserve to support in fulfilling their military duties easily.
  • Annual Vacation: In Canada, employees are entitled to vacation time that ranges from 2 to 4 weeks per year, which is determined based on length of service. This progression of vacation time rewards long-term employment and ensures adequate rest periods for employees.
  • General Holidays: In Canada, employees are entitled to 10 paid general holidays each year, with specific rules governing working on holidays and the calculation of holiday pay. These holidays include both nationally recognized dates and region-specific observances.

These leave entitlements, as outlined in the Canada Labour Code and complemented by provincial legislation, ensure that employees across various sectors have access to necessary time off for a range of personal and family-related reasons. Employers are encouraged to offer more generous leave policies, as such benefits can significantly enhance their ability to attract and retain talented employees, thereby contributing to a positive work environment.

Termination of Employment for Salaried Employees in Canada

In Canada, terminating the employment of salaried employees is a process governed by specific laws and regulations, primarily the Canada Labour Code and relevant provincial legislation.

  • Voluntary Termination: Employees have the option to end their employment voluntarily. This typically involves adhering to notice requirements as outlined in their employment contract or under applicable employment standards legislation. Federally regulated employees, however, have the option to resign without the obligation of providing notice to their employer.
  • Employer-Initiated Termination: When an employer decides to terminate an employee’s position, they must follow certain legal procedures. These include providing the employee with either a two-week written notice or compensation equivalent to two weeks’ regular wages. This is to ensure that the employee has adequate time and resources to transition out of their job.
  • Group Termination: In situations where an employer plans to terminate a large group of employees, defined as 50 or more employees at a single industrial establishment, there are additional requirements. The employer must provide a 16-week notice to the Head of Compliance and Enforcement and to each affected employee. This notice period allows for appropriate planning and adjustment for both the employees and the employer.
  • Layoffs and Unjust Dismissal Protection: In the context of layoffs, which are considered a form of termination when there is no intention to recall the employee, the employer is required to fulfill certain obligations. These include providing appropriate notice or severance pay. Additionally, employees, excluding managers, who have been with the same employer continuously for at least 12 months and are not covered by a collective agreement are protected against unjust dismissal under the Canada Labour Code. This includes protection against ‘constructive dismissal,’ a situation where the employer/company has not explicitly terminated the salaried/hourly employee but has made significant changes to the employment contract.
  • Severance Pay: Employees who are laid off or dismissed and have completed at least 12 consecutive months of employment are entitled to severance pay. This is calculated based on the employee’s length of service with the employer, ensuring fair compensation for their tenure.
  • Record-Keeping Requirements: In Canada, employers are mandated to maintain comprehensive employment and payroll records for each employee. These records must be kept for a minimum of 36 months and include details such as general records, earning records, and averaging records, among others. The upkeep of these records is crucial for compliance with labour laws and is subject to inspection during workplace investigations. Specific details of what should be included in each employee record file are set in the Canada Labour Standards. On the other hand, employers must also keep records for student interns for at least 36 months after the internship period ends, and the Standards for Work-Integrated Learning Activities Regulations outline the specific details that must be included in each student intern’s record file.

The termination of employment for salaried employees in Canada involves various legalities and procedures that employers must carefully adhere to. It’s important for both employers and employees to be aware of these regulations to ensure a smooth and fair termination process.

To learn more about the various aspects and nuances of Canadian labour regulations, delve deeper into the topic by exploring our comprehensive guide on Canada Labour Laws.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.