In today’s globally connected workforce, understanding Labour Laws in Canada is critical for both employers and employees. Canada offers one of the most employee-centric legal frameworks in the world, with labour regulations that vary significantly across provinces and federally regulated industries. Whether you’re a Canadian business or a global organization hiring employees in Canada, compliance is non-negotiable.
From wage standards and statutory leaves to termination procedures and remote work compliance, this guide will walk you through the most essential aspects of Canadian labour law in 2025. We’ll also discuss how global companies can simplify hiring through an Employer of Record in Canada to stay compliant and competitive.
Table of Contents
- Overview of Labour Laws in Canada
- Federal vs. Provincial Labour Law Jurisdiction
- Hiring Employees in Canada: Legal Requirements
- Minimum Wage and Compensation Standards
- Working Hours, Overtime, and Breaks
- Statutory Leaves and Paid Time Off
- Employee Benefits and Deductions
- Termination Rules and Severance Pay
- Remote Work and Cross-Province Employment Compliance
- Using an Employer of Record (EOR) to Hire in Canada
- Penalties for Non-Compliance with Canadian Labour Laws
- Staying Compliant in 2025: Best Practices for Employers
- Conclusion
- FAQs
Overview of Labour Laws in Canada
Labour laws in Canada are designed to promote fairness, protect employee rights, and ensure safe working environments. These laws are governed at both the federal and provincial levels, creating a dual-layered system of compliance.
Federal laws apply to specific sectors such as banking, telecommunications, and interprovincial transportation. In contrast, provincial laws apply to most private-sector workers. This system means that understanding the jurisdiction applicable to your business is the first step in compliance.
Labour laws typically cover minimum wage, working hours, rest periods, public holidays, vacation pay, sick leave, parental leave, termination rights, health and safety, and workplace discrimination. Staying updated with frequent legislative changes is key to maintaining a lawful and ethical workplace.
Federal vs. Provincial Labour Law Jurisdiction
Federal Labour Code Overview
The Canada Labour Code sets out minimum employment standards for federally regulated industries. It includes rules about hours of work, overtime pay, general holidays, annual vacations, and termination of employment. The Code also provides for health and safety requirements and protections for employees engaging in union activities.
Federally regulated employers must also ensure compliance with updates to the Code, such as the requirement to provide 10 days of paid sick leave to full-time employees, and mandates surrounding predictable work schedules and breaks.
Key Provincial Differences
Each province has its own employment standards legislation. For example:
- Ontario: Employment Standards Act
- British Columbia: Employment Standards Act
- Quebec: Act Respecting Labour Standards
These laws vary significantly. For instance, statutory holidays, vacation entitlements, and notice periods differ from one province to another. Quebec, for example, mandates communications in French and has unique requirements around terminations and benefits. Employers must ensure that HR policies are customized to each province where their employees reside.
Hiring Employees in Canada: Legal Requirements
Hiring in Canada involves several legal obligations to ensure fair treatment and full compliance with local laws. Employers must:
- Verify the employee’s Social Insurance Number (SIN) for work eligibility
- Provide a written employment agreement (strongly recommended)
- Adhere to provincial privacy laws for any background or reference checks
Hiring also includes compliance with anti-discrimination laws under the Canadian Human Rights Act, ensuring no bias based on race, gender, disability, religion, or age.
Employment Contracts in Canada
While not always legally required, employment contracts are crucial in defining roles, responsibilities, compensation, benefits, notice periods, and governing law. A well-drafted contract protects both parties and reduces the risk of future legal disputes.
Background Checks and Privacy
Background checks are permissible but must align with the Personal Information Protection and Electronic Documents Act (PIPEDA) and relevant provincial legislation. Employers must obtain informed consent and limit checks to relevant information only. Misuse of personal data can lead to penalties and damage to the company’s reputation.
Suggested Read: Employer of Record Canada: A Comprehensive Guide
Minimum Wage and Compensation Standards
Canada does not have a national minimum wage; each province and territory sets its own rates. These are reviewed and updated regularly to reflect inflation and economic conditions. As of 2025:
- Ontario: Expected to exceed CAD 17/hour
- British Columbia: Indexed to inflation
- Quebec: Slightly lower but includes strong union protections
Employers must ensure employees are paid according to their location’s prevailing wage and meet all recordkeeping requirements, including time worked and wages paid.
Working Hours, Overtime, and Breaks
Standard working hours in most provinces are 8 hours per day or 40 hours per week. Overtime is generally paid at 1.5 times the regular wage after these limits.
Break entitlements include a 30-minute unpaid break after five consecutive hours of work. Some provinces, like British Columbia, have rules about minimum rest periods between shifts.
Employers must also be mindful of exceptions in specific industries such as healthcare, agriculture, and emergency services where different standards may apply.
Statutory Leaves and Paid Time Off
Vacation and Public Holidays
Vacation entitlements begin at two weeks per year after one year of employment, increasing to three weeks after five years in most provinces. Employers must pay vacation pay at a minimum of 4% of gross wages.
Public holiday entitlements differ by province. For instance, Ontario recognizes nine statutory holidays, while Alberta observes fewer. Employees are entitled to either a paid day off or premium pay plus a substitute day off.
Sick Leave and Medical Absences
Some provinces now require paid sick days. For example, BC mandates five paid sick days, while Ontario provides three unpaid days. Federally regulated employees receive 10 paid sick days annually.
Documentation may be required for extended absences. Employers should establish clear policies on sick leave entitlements and procedures.
Maternity, Parental, and Compassionate Care Leave
Employees are entitled to job-protected maternity and parental leave. In most provinces, maternity leave is up to 17 weeks, followed by up to 63 weeks of parental leave, which can be shared between parents. Compassionate care leave is available to care for a seriously ill family member.
Benefits during these leaves are provided through the federal Employment Insurance (EI) system, provided employees meet eligibility requirements.
Employee Benefits and Deductions
Employers must deduct:
- Income tax
- Canada Pension Plan (CPP) or Quebec Pension Plan (QPP)
- Employment Insurance (EI)
These deductions must be remitted to the Canada Revenue Agency on time. Penalties apply for missed deadlines or inaccurate filings.
In addition to statutory benefits, many employers offer extended health coverage, dental insurance, mental health support, and retirement savings plans to remain competitive in attracting talent.
Termination Rules and Severance Pay
Just Cause vs. Without Cause Termination
Terminating an employee for just cause requires serious misconduct such as theft or gross insubordination. This allows termination without notice or severance but demands strict documentation and legal clarity.
Most terminations in Canada are “without cause,” requiring notice or pay in lieu. The employee must be treated with dignity, and the process must comply with both statutory and common law obligations.
Notice Periods and Severance Obligations
Statutory notice ranges from 1 to 8 weeks depending on tenure. However, common law notice—which applies when no written contract limits it—can range from a few weeks to several months based on age, role, and length of service.
In Ontario, severance pay may also be required if:
- The employer has a payroll of CAD 2.5 million or more, and
- The employee has five or more years of service
Employers must calculate both termination and severance obligations accurately to avoid wrongful dismissal claims.
Remote Work and Cross-Province Employment Compliance
With remote work becoming mainstream, employers must apply the labour laws of the province where the employee resides, not where the company is based. This has implications for:
- Minimum wage
- Working hours
- Leave entitlements
- Tax obligations
Right to Disconnect and Flexible Work
Ontario introduced legislation requiring employers with 25 or more employees to have a policy on disconnecting from work outside business hours. This reflects a broader push for mental wellness and work-life balance.
Employers with remote teams across provinces must ensure that contracts, leave policies, and payroll practices align with local laws and expectations.
Using an Employer of Record (EOR) to Hire in Canada
International companies looking to expand into Canada without setting up a local legal entity can simplify the process by partnering with an Employer of Record in Canada. An EOR serves as the official employer on paper, taking full responsibility for local compliance while allowing the company to manage day-to-day work relationships.
Key responsibilities handled by an EOR include:
- Local onboarding and ensuring employees meet provincial hiring standards
- Drafting and managing employment contracts that comply with relevant provincial laws
- Running payroll and managing tax deductions including CPP, EI, and income tax remittance
- Administering statutory and optional benefits such as health coverage and paid leave
- Managing compliant terminations and offboarding processes, including notice and severance calculations
Asanify, for example, provides customized EOR solutions that make it easy for global companies to hire talent across all Canadian provinces. This model minimizes legal risks, removes administrative burdens, and enables faster, more flexible entry into the Canadian market—ideal for startups, remote-first teams, and businesses scaling internationally.
Penalties for Non-Compliance with Canadian Labour Laws
Failing to comply with Canadian labour laws can lead to serious legal and financial consequences for employers. Regulatory bodies at both the provincial and federal levels actively monitor employer practices and enforce penalties for violations.
Consequences may include:
- Fines issued by provincial ministries or federal agencies for breaches related to wages, hours, or leave entitlements.
- Orders for back pay or compensation to employees who were underpaid or wrongfully terminated.
- Public disclosure of violations, which can damage an employer’s reputation and deter future job applicants.
- Legal fees and tribunal decisions following disputes brought before employment standards boards or human rights commissions.
- Reputational harm that impacts employee retention, brand image, and overall business credibility.
Labour boards and human rights tribunals take non-compliance seriously, particularly in cases involving discrimination, unjust dismissal, or wage violations. To avoid these risks, employers must implement strong internal controls and stay updated on regulatory changes.
Staying Compliant in 2025: Best Practices for Employers
To remain compliant with Labour Laws in Canada, employers should take a proactive and structured approach to HR and legal responsibilities, especially when managing teams across multiple provinces.
- Regularly review and update employment contracts to ensure they align with the latest federal or provincial legal standards and reflect any internal policy changes.
- Provide ongoing training for HR and managers so they stay informed about compliance obligations, workplace rights, and evolving employment legislation.
- Monitor law changes in each province where employees are based, as minimum wage, leave entitlements, and termination rules can vary significantly.
- Document performance and disciplinary actions thoroughly, as clear records help protect against wrongful dismissal claims and support fair decision-making.
- Engage local legal experts or use an Employer of Record in Canada to handle payroll, onboarding, and compliance—especially useful for remote teams and cross-provincial operations.
Staying compliant isn’t just about avoiding fines—it builds transparency, strengthens employee trust, and protects your business from costly legal risks.
Suggested Read: Remote Employees Onboarding Checklist with EOR in Canada
Conclusion
Understanding and implementing Labour Laws in Canada is crucial for building a compliant, ethical, and resilient workplace. Whether you’re a Canadian business or a global company hiring employees in Canada, you must navigate both federal and provincial legislation carefully.
From fair hiring practices to remote work policies and termination procedures, Canadian labour law demands clarity, documentation, and continuous updates. Partnering with an Employer of Record in Canada like Asanify offers an efficient way to stay compliant while scaling your team across provinces.
In 2025 and beyond, compliance is not just a requirement—it’s a competitive advantage.
FAQs
No, they vary by jurisdiction—federal laws apply to specific industries, while most workers are covered by provincial or territorial laws.
Not mandatory in all provinces, but highly recommended to outline terms and reduce legal risk.
It varies by province; for example, Ontario’s minimum wage is expected to exceed CAD 17/hour.
Yes, in some provinces like BC; others may offer unpaid leave or fewer days depending on local laws.
Only for just cause; otherwise, notice or pay in lieu is required under provincial or federal law.
Employers must deduct income tax, CPP/QPP, and Employment Insurance (EI).
Up to 17 weeks for maternity and up to 63 weeks for parental leave, with EI benefits available.
Usually 3 months, but this should be clearly stated in the employment contract.
No, remote employees are governed by the labour laws of the province where they reside.
By partnering with an Employer of Record in Canada, which handles local compliance and payroll.
Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant or Labour Law expert for specific guidance.
