🇨🇦 Hiring in Canada

💡 Everything you need to know to hire and manage employees in Canada through Toku. Toku handles payroll processing, tax withholding, social contributions, and statutory compliance. This guide covers what you need to plan costs and manage your team.

A quick note on Canada: employment rules are set federally and by each province, and entitlements such as minimum wage, leave, and notice vary by where your employee works. The figures below reflect federal standards; Toku applies the correct provincial rules for each hire.

At a Glance

Onboarding a New Hire

Plan for 5-7 business days between submitting a new hire and their start date. Toku completes payroll registration before the start date and, depending on the province, may also need to register for workers' compensation. Your new hire provides proof of their right to work in Canada, and salaries are set and paid in CAD (Toku converts if you budget in another currency).

Submit your new hire through the Toku platform and we take it from there: local employment agreement, statutory registrations, and payroll setup. See Onboard Contributors as a Client Admin in Toku for the step-by-step process, and the Country Readiness Live Tracker for lead times across all countries.

Employer Costs

Canada is one of the lower-cost countries to employ in. On top of gross salary, employers pay:

As a rule of thumb, total cost of employment is roughly 108-110% of gross salary, and because contributions are capped, the effective percentage drops for higher earners. There is no 13th month salary in Canada.

Employees pay their own CPP and EI contributions plus federal income tax (14-33%) and provincial income tax, all withheld from gross salary, not paid on top. Toku calculates and remits all of the above.

Compensation & Payroll

Toku runs two payrolls per month in Canada, and employees receive a pay stub each cycle showing gross pay, deductions, and net pay. All wages are paid in CAD by direct deposit.

The federal minimum wage is CAD 18.15 per hour from April 1, 2026; provincial minimums range from roughly CAD 15.00 to CAD 19.75 per hour, and the higher applicable rate governs. There is no statutory 13th month salary or mandatory bonus, though many employers offer annual or performance bonuses.

Employment Contracts & Probation

• Toku issues a compliant local employment agreement for every hire, in English or French (employees in Quebec have the right to a French-language contract).
• Indefinite-term, fixed-term, and part-time arrangements are all recognized; indefinite-term is the standard.
• Probation is 3 months under Toku's employment agreement. Note that some statutory protections, such as unjust dismissal remedies and statutory severance, apply once an employee reaches 12 months of continuous service.

Working Hours

The standard is 8 hours per day and 40 hours per week. Overtime is paid at 150% of the regular wage for hours beyond 8 in a day or 40 in a week, with a general cap of 48 hours per week. Employees are entitled to at least 8 consecutive hours of rest between shifts and 24 consecutive hours off per week. Managers and certain professionals may be exempt from overtime, and provincial thresholds can differ.

Leave Entitlements

Federal entitlements are below; provincial rules vary, and Toku applies the correct ones for each employee's location.

Maternity and parental leave pay comes from Employment Insurance, not from you, and returning employees must be reinstated to the same or a comparable position.

Public Holidays (2026)

There are 10 federal statutory holidays in 2026. Provincial lists differ: some provinces add holidays such as Family Day or Civic Holiday while not observing all federal ones, so your employee's entitlement depends on their province.

Benefits: Required vs. Common Extras

Statutory (included in employer costs above): CPP pension coverage, Employment Insurance, and provincial workers' compensation. All employees also have access to publicly funded universal healthcare through their provincial health plan, covering hospital and physician services.

Toku offers a supplemental benefits package for Canadian employees through Sun Life, covering extended health, dental, and vision, plus disability and life insurance and a Group RRSP/DPSP with matching. See the Canada Employee Benefits Overview for details.

Other common extras in Canada include employee assistance programs, wellness spending accounts, and enhanced retirement matching. Toku can advise on the cost impact of any of these.

Ending Employment

Employees with 12 or more months of continuous service are protected against unjust dismissal, and court-determined (common law) severance often significantly exceeds the statutory minimums, so involve Toku early before making any termination decision. For the process, see How to Terminate an Employee or Contractor.

Federal minimum notice for termination without cause:

Statutory severance for employees with 12+ months of service is the greater of two days' wages per completed year or five days' wages. In practice, common law entitlements (often around one month per year of service, depending on age, role, and job market) usually set the real cost, and provincial rules can add more. Toku will calculate the full exit cost for you before anything is signed.

Hiring Someone from Overseas?

Foreign nationals generally need a work permit: either an employer-specific permit (usually requiring a Labour Market Impact Assessment showing no Canadian worker is available) or an LMIA-exempt permit under the International Mobility Program, such as intra-company transfers or CUSMA professionals. Processing takes anywhere from several weeks to several months. Canadian citizens and permanent residents need no permit. Talk to Toku before extending an offer to a candidate who needs sponsorship.

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Last verified July 2026. This guide is for general information and doesn't constitute legal or tax advice. Your Toku account manager can confirm specifics for your situation.