If you’re hiring employees in Canada as a foreign company, understanding the country’s leave entitlements and benefits landscape is essential before you make your first offer. Canada operates under a dual-jurisdiction system: federal law governs roughly one million workers in industries like banking, telecoms, and interprovincial transport, while provincial law covers everyone else. That split matters enormously for sick leave, and it shapes how you think about compliance across a workforce spread across multiple provinces. This guide covers the statutory minimums you’re legally required to meet, the market expectations that determine whether you’ll win the talent you need, and the role a local employer of record plays in keeping everything compliant.
Statutory minimum vacation entitlements
Vacation entitlements in Canada scale with tenure. Under the Canada Labour Code, which applies to federally regulated employees, workers are entitled to a minimum of two weeks of paid vacation after completing one year of service. That increases to three weeks after five years and four weeks after ten years. Most provinces mirror this structure or set higher floors, so it’s worth checking the rules for the specific province where each employee is based.
Vacation pay is calculated as a percentage of gross earnings: 4% for two weeks, 6% for three weeks, and 8% for four weeks. Employees are entitled to take their vacation as a continuous period unless they request to split it. You can’t substitute a cash payment for vacation except on termination, and you can’t ask employees to waive their entitlement.
Public holidays
Canada has 10 federal statutory holidays that apply to federally regulated employees:
- New Year’s Day
- Good Friday
- Victoria Day
- Canada Day
- Labour Day
- National Day for Truth and Reconciliation (September 30)
- Thanksgiving
- Remembrance Day
- Christmas Day
- Boxing Day
Provincial employees follow the public holiday rules in their province, which typically overlap with most federal holidays but aren’t identical. Ontario, for example, has its own list of public holidays that differs from the federal standard, and Quebec has several province-specific observances. When you’re onboarding employees in multiple provinces, you’ll need to track each province’s holiday calendar separately. Employees who work on a statutory holiday are generally entitled to premium pay or a substitute day off, depending on the applicable legislation.
Sick leave: federal vs provincial rules
Canada doesn’t have a single national paid sick leave standard. The rules depend entirely on whether your employee falls under federal or provincial jurisdiction, and the gap between the two tiers is significant.
Federally regulated employees
Workers in federally regulated industries are entitled to 10 days of paid medical leave per calendar year under the Canada Labour Code. The entitlement accrues gradually: employees earn three days after 30 days of employment and then one additional day per month up to the 10-day maximum. Unused days carry over to the following year, but carried-over days reduce the amount that accrues in the new year, so the 10-day cap remains. Employers can request a medical certificate if an employee has been absent for five or more consecutive days, but they can’t demand documentation for shorter absences.
Provincially regulated employees
The picture is more fragmented for the roughly 90% of Canadian workers covered by provincial legislation. Several provinces have introduced paid sick day requirements in recent years, but entitlements are typically lower than the federal standard, and some provinces still have no paid sick day requirement at all. British Columbia provides five paid sick days per year; Prince Edward Island provides one. Ontario requires three paid sick days for some workers, though the rules are narrow. Manitoba, Alberta, Saskatchewan, and Nova Scotia have unpaid sick leave obligations but no statutory paid requirement as of 2026.
The practical implication: if you’re hiring across multiple provinces, you can’t apply a single sick leave policy to your entire Canadian workforce. You’ll need province-specific policies or a blanket policy set at a level that satisfies the highest applicable standard.
Maternity and parental leave
Canada provides one of the more generous parental leave frameworks globally, funded largely through Employment Insurance (EI) rather than employer payroll. Your obligation as an employer is job protection, not income replacement. Employees on maternity or parental leave have the right to return to their position (or an equivalent one) at the end of their leave, and you can’t penalize, demote, or terminate them because of their absence.
Ei-based leave (outside quebec)
For employees outside Quebec, maternity and parental leave benefits flow through the federal EI system. A birth parent can claim 15 weeks of EI maternity benefits at 55% of insurable earnings (up to a weekly maximum set by the federal government each year). After maternity leave ends, parents can choose between two parental leave options:
- Standard parental leave: up to 40 weeks at 55% of insurable earnings, shared between both parents if they choose. One parent can take all 40 weeks, or they can split them. A two-parent family gets a maximum of 40 weeks combined under the standard option.
- Extended parental leave: up to 69 weeks at 33% of insurable earnings, shared between both parents. The extended option spreads the benefit over a longer period at a lower weekly rate.
Both parents can’t claim EI parental benefits simultaneously, and the total weeks available don’t increase if both parents claim. Some employers offer supplemental unemployment benefit (SUB) top-up plans to bridge the gap between EI rates and full salary, but there’s no statutory requirement to do so.
Quebec: qpip
Quebec operates entirely outside the federal EI maternity and parental system. Employees based in Quebec are covered by the Quebec Parental Insurance Plan (QPIP), which is funded through separate employer and employee premiums and administered by the provincial government. The benefit rates and structure differ substantially from the rest of Canada.
QPIP offers two plans, and both parents must choose the same one:
Basic plan:
- 18 weeks of maternity benefits at 70% of insurable earnings
- 5 weeks of paternity benefits at 70% of insurable earnings
- 32 weeks of shareable parental leave: 7 weeks at 70%, then 25 weeks at 55%
Special plan:
- 15 weeks of maternity benefits at 75% of insurable earnings
- 3 weeks of paternity benefits at 75% of insurable earnings
- 25 weeks of shareable parental leave at 75% of insurable earnings
The special plan offers a higher replacement rate over a shorter period; the basic plan pays less but lasts longer. Additional weeks are available for multiple births, premature births, and other specific circumstances. Unlike the federal system, QPIP has no waiting period, so benefits begin from day one of leave.
As with EI-based leave, your obligation as the employer is job protection. QPIP benefits are paid directly to the employee by the Quebec government, not by you.
Supplemental benefits: what the market expects
Canada doesn’t require employers to provide health insurance, dental coverage, or vision benefits. Provincial health plans (such as OHIP in Ontario) cover basic medical care, but they don’t extend to prescription drugs, dental work, paramedical services, mental health therapy, or vision care. That gap is wide enough that most competitive Canadian employers fill it with a group benefits plan.
The standard package at larger employers typically includes:
- Extended health: prescriptions, physiotherapy, massage therapy, chiropractic, mental health services, and other services not covered by provincial health
- Dental: preventive, basic restorative, and sometimes major dental work
- Vision: eye exams and prescription eyewear
- Life insurance: group term life, often set at a multiple of annual salary
- Short-term and long-term disability: income replacement during periods of illness or injury; LTD becomes especially important for higher earners since EI sick benefits max out quickly
- RRSP matching: contributions to an employee’s Registered Retirement Savings Plan; common but not mandatory, with matching rates typically ranging from 3% to 6% of salary
None of these are statutory requirements. You won’t be fined for not offering them. But in a market where mid-to-large employers treat extended health and dental as baseline, not offering a benefits package will put you at a disadvantage in hiring, particularly for professional and technical roles.
Why benefits matter for hiring in canada
Canada’s labour market is competitive, especially in technology, finance, and knowledge work. Salaries in major cities like Toronto, Vancouver, and Calgary have risen steadily, and candidates evaluate total compensation packages, not just base pay.
The absence of a statutory employer mandate for supplemental health and dental benefits creates an opportunity: you can differentiate on benefits in ways that some local competitors haven’t. A well-structured group benefits plan, a generous RRSP match, and flexible time off signal that you take the employment relationship seriously and plan to retain people long-term.
There’s also a compliance angle. Canada’s provincial human rights codes require benefits to be provided equitably across employee groups. If you offer benefits to some employees and not others in similar roles, you need a defensible, documented rationale. This is an area where informal benefit arrangements, common in early-stage hiring, create risk as headcount grows.
Retention is a direct cost consideration, too. Replacing a salaried employee in Canada typically costs between 50% and 200% of their annual salary once you account for recruiting fees, onboarding time, and productivity loss. A competitive benefits package is a fraction of that cost.
How an EOR manages benefits in canada
Setting up a legal entity in Canada, registering with provincial payroll authorities, sourcing a group benefits provider, navigating QPIP contributions for Quebec employees, and keeping up with legislative changes across 10 provinces and three territories is a significant operational undertaking for a foreign company. An Employer of Record (EOR) handles that infrastructure on your behalf: it employs your Canadian workers on the local payroll, administers statutory leave entitlements, and sources group benefits plans that meet local market expectations without you needing a domestic entity.
RemotePass offers EOR services across Canada, covering both federally and provincially regulated employees and handling Quebec’s separate QPIP framework. Book a demo to find out how RemotePass structures compliant, competitive benefits packages for Canadian employees.
