🇨🇦 Hiring in Canada

Employer payroll taxes and contributions

• CPP (base + first additional)

  Statutory

  Employer 5.95% of earnings between $3,500 and $74,600 (max $4,230.45 per employee).

  Source: CRA: CPP contribution rates, maximums and exemptions · as of 2026-11-10 · effective 2026-01-01

• CPP2 (second additional)

  Statutory

  Employer 4% of earnings between $74,600 and $85,000 (max $416).

  Source: CRA: Second additional CPP (CPP2) rates and maximums · as of 2026-11-10 · effective 2026-01-01

• Employment Insurance (EI)

  Statutory

  Employer pays 1.4× the employee rate: 1.4 × 1.63% = 2.282% of insurable earnings up to $68,900 (max $1,572.30).

  Quebec has a lower EI rate (1.30% employee) because it runs QPIP.

  Source: CRA: EI premium rates and maximums · as of 2026-11-10 · effective 2026-01-01

• Ontario Employer Health Tax (EHT)

  Statutory if conditions apply

  0.98%–1.95% of total Ontario payroll. Eligible private employers are exempt on the first $1 million; no exemption if payroll is over $5 million.

  A small startup with one or two Ontario hires is usually under the exemption.

  Source: Ontario: Employer Health Tax (EHT) · as of 2026-11-10

• Workers' compensation (WSIB)

  Statutory if conditions applyverify

  Premium rate depends on the industry class. Many office-based businesses still need to register.

  Not included in the calculator because the rate varies by class.

  Source: WSIB Ontario: 2026 premium rates · as of 2026-11-10

• 2027 changes already published

  Statutory

  CPP rate 5.75% with a $76,700 maximum; EI employee rate 1.64% with a $70,800 maximum.

  Source: CRA: CPP contribution rates, maximums and exemptions · as of 2026-11-10 · effective 2027-01-01

Bonuses: statutory vs customary

Statutory and customary items are kept separate. Customary items are never added to the statutory cost.

• Statutory bonus

  Statutory

  None. Canada has no 13th-month or mandatory bonus.

  Source: Ontario: Your guide to the Employment Standards Act · as of 2026-11-10

• Customary bonus

  Customary (not required by law)

  Discretionary or contractual bonuses are common in tech, but set by the employer.

  Source: Ontario: Your guide to the Employment Standards Act · as of 2026-11-10

Mandatory benefits

• Health care

  Customary (not required by law)

  Provincial public health care. Private health, dental and drug plans are common but not required by law.

  Source: Ontario: Your guide to the Employment Standards Act · as of 2026-11-10

• Vacation pay (Ontario)

  Statutory

  At least 4% of wages (2 weeks) for under 5 years of service, 6% (3 weeks) from 5 years.

  For salaried staff this is normally paid as time off within the salary, not on top.

  Source: Ontario: Your guide to the Employment Standards Act · as of 2026-11-10

Leave

• Pregnancy and parental leave (Ontario)

  Statutory

  Up to 17 weeks pregnancy leave and up to 61 weeks parental leave (63 if no pregnancy leave). Job-protected and unpaid by the employer; EI pays benefits.

  Source: Ontario: Your guide to the Employment Standards Act · as of 2026-11-10

• Sick leave (Ontario)

  Statutory

  3 unpaid, job-protected sick days a year.

  Source: Ontario: Your guide to the Employment Standards Act · as of 2026-11-10

Termination, notice and severance

• Statutory notice (Ontario ESA)

  Statutory

  After 3 months: 1 week if under 1 year, 2 weeks for 1–3 years, then 1 more week per year of service up to 8 weeks. Pay in lieu is allowed.

  Source: Ontario: Your guide to the Employment Standards Act · as of 2026-11-10

• Statutory severance (Ontario ESA)

  Statutory if conditions apply

  1 week per year of service (max 26) if the employee has 5+ years and the employer's global payroll is $2.5 million or more.

  Source: Ontario: Your guide to the Employment Standards Act · as of 2026-11-10

• Common-law reasonable notice

  Statutoryverify

  Without a well-drafted termination clause, courts can award far more than the ESA minimum.

  Case law, not statute: get Ontario employment counsel to review your contract.

  Source: Employment Standards Act, 2000 (Ontario) · as of 2026-11-10

Contracts and working time

• Which law applies

  Statutory

  Provincial employment standards (Ontario: Employment Standards Act, 2000). Canada Labour Code only for federally regulated work.

  Source: Employment Standards Act, 2000 (Ontario) · as of 2026-11-10

• Hours of work (Ontario)

  Statutory

  Normally up to 8 hours a day and 48 hours a week; more only with a written agreement.

  Source: Ontario: Your guide to the Employment Standards Act · as of 2026-11-10

• Overtime (Ontario)

  Statutory

  1.5× regular pay after 44 hours in a work week, unless an exemption applies.

  Source: Ontario: Your guide to the Employment Standards Act · as of 2026-11-10

• Public holidays (Ontario)

  Statutory

  9 public holidays a year with public holiday pay.

  Source: Ontario: Your guide to the Employment Standards Act · as of 2026-11-10

• Minimum wage

  Statutoryverify

  Set by each province and territory; see the official table for current and forthcoming rates.

  Source: Government of Canada: Current and forthcoming minimum wage rates · as of 2026-11-10

Hiring options: EOR, contractor or your own entity

• Own entity

  Statutoryverify

  Register federally or provincially, then open CRA payroll (RP) and Ontario EHT/WSIB accounts as they apply.

  Setup time and cost depend on the structure; get advice from a Canadian accountant.

  Source: CRA: Employment status, employee or self-employed · as of 2026-11-10

• Employer of record (EOR)

  Vendor / optional

  Common for a first hire before an entity exists. The EOR is the legal employer and runs payroll.

  Source: CRA: Employment status, employee or self-employed · as of 2026-11-10

• Contractor risk

  Statutory

  CRA decides employee vs self-employed on the whole relationship (control, tools, chance of profit or risk of loss). Misclassification can mean back CPP/EI plus penalties.

  Source: CRA: Employment status, employee or self-employed · as of 2026-11-10