Canadian Employee Benefits Research: What Companies Must Offer and What Workers Value Most
Employee benefits are an important part of overall compensation and a key factor for attracting and retaining top talent. This article provides a comprehensive guide to understanding the employee benefits landscape in Canada for employers. We will cover the mandatory benefits required by law, common additional voluntary benefits offered, how Canada compares globally, and most importantly, what benefits employees value most and how that can help shape an attractive benefits package.
The goals of this guide are to:
Explain the minimum required benefits in Canada
Highlight popular extra benefits companies provide
Analyze what benefits employees care about most
Offer tips for crafting a competitive benefits plan
Compare Canada's norms to other countries
With this information, business leaders, HR professionals, and managers will be better equipped to make strategic decisions regarding their benefits offerings to recruit and retain the best talent.
Mandatory Employee Benefits in Canada
Canadian employers are required by law to provide certain benefits to their employees. These mandatory benefits include:
Healthcare Benefits
Under Canada's universal healthcare system, all citizens and permanent residents are covered by provincial health insurance plans. Employers do not provide or pay for healthcare coverage. However, they must register employees for provincial plans and deduct premiums from paychecks in provinces that require them, such as Ontario and British Columbia.
Retirement Benefits
The Canada Pension Plan (CPP) requires both employers and employees to contribute funds for retirement income. Employers must deduct CPP contributions from employees' paychecks and match these contributions. CPP contribution rates are set annually.
Time Off Benefits
Employers must provide a minimum standard for paid vacation and holiday time. In most provinces, employees are entitled to 2 weeks of paid vacation per year, along with paid time off for 9-10 public holidays.
Parental Leave Benefits
The federal government mandates maternity and parental leave, which allows new mothers and fathers to take up to 18 months of job-protected unpaid leave. Parental benefits through the Employment Insurance (EI) program provide income replacement during leave.
Healthcare Benefits
All Canadian provinces and territories provide basic healthcare coverage to residents through provincial healthcare plans. These plans are mandated and regulated under the federal Canada Health Act. Coverage includes visits to doctors, hospitals, and emergency services. There are no deductibles or copays required.
Eligibility for provincial plans depends on the province. In general, permanent residents and citizens are eligible after a 3 month waiting period upon taking up residency. Temporary residents may also qualify depending on the province.
Provincial healthcare plans cover basic medical expenses but do not include prescription drugs, dental, vision, etc. Many employers offer extended health benefits to cover these additional costs. Employees may be required to pay a portion of the premiums for extended health through payroll deductions.
Retirement Benefits
Retirement benefits are a crucial part of the overall benefits package for employees in Canada. There are two main mandatory retirement benefits:
The Canada Pension Plan (CPP) is a compulsory contributory pension plan. Both employees and employers must contribute a percentage of earnings, up to a maximum amount per year. CPP aims to replace about 25% of pre-retirement income. The current contribution rate for employees is 5.70% on earnings up to $61,600 for 2023. The employer matches this contribution amount. CPP provides retirement, disability, survivor, and death benefits.
Employer pension plans are voluntary but commonly offered benefits. These include defined benefit (DB) and defined contribution (DC) plans, as well as group Registered Retirement Savings Plans (RRSPs). Employers may match employee RRSP contributions up to a certain percentage. Pension plans help employees save and invest for retirement. Around 37% of Canadian workers are covered by registered pension plans.
Time Off Benefits
Canadian law mandates minimum standards for paid time off, including vacation time and statutory holidays. According to the Canada Labour Code, employees are entitled to a minimum of 2 weeks of paid vacation per year for the first four years of employment. After this initial period, vacation time increases to a minimum of 3 weeks per year. The amount of paid vacation rises further based on years of service. For example, employees with 6 years of tenure or more get a minimum of 4 weeks of paid vacation annually.
There are also 9 paid public holidays that employees are entitled to, including New Year's Day, Good Friday, Victoria Day, Canada Day, Labour Day, Thanksgiving, Remembrance Day, Christmas Day, and Boxing Day. If the holiday falls on a normal work day, employees must receive a day off with holiday pay.
When it comes to sick days, there is no federal mandated minimum in Canada. However, some provinces have enacted legislation providing a minimum number of job-protected unpaid sick days per year, such as Ontario and Quebec. Many employers also choose to offer paid sick leave as part of their benefits package, with an average of 6-10 days per year being common.
Parental Leave Benefits
Canadian parents are entitled to take time off work to care for a newborn or newly adopted child. There are two main types of federally regulated parental leave benefits in Canada:
Maternity leave benefits are available for biological mothers. They can take up to 15 weeks of leave surrounding the birth of a child at 55% of their average insurable weekly earnings, up to a maximum amount. To be eligible, new mothers must have worked at least 600 insured hours in the last 52 weeks.
Parental leave benefits can be accessed after maternity leave. Either parent can take up to 35 weeks of parental leave, also paid at 55% of weekly earnings up to a maximum amount. As with maternity leave, the parent must have worked 600 insured hours in the previous year to qualify. Parental leave can be taken any time within the first year after their child is born or comes into their care.
In total, eligible Canadian parents can take up to 50 weeks of combined maternity and parental leave. These benefits are administered through the federal Employment Insurance (EI) program.
Additional Voluntary Benefits
In addition to the mandatory benefits, many Canadian companies offer voluntary benefits to enhance their overall compensation packages. Some common additional benefits include:
Dental Insurance - Covers services like cleanings, fillings, crowns, braces, etc. This gives employees affordable access to dental care. According to research by Pacific Blue Cross, dental insurance was the second most valued benefit by Canadian employees after extended health coverage.
Life Insurance - Provides a payment to beneficiaries if the employee passes away. This gives financial security to families. Life insurance is offered by 79% of Canadian employers.
Wellness Programs - Includes things like gym memberships, smoking cessation plans, health screenings, etc. This promotes employee health and reduces insurance costs. In a Sun Life survey, 89% of Canadian employers said wellness benefits are very or somewhat important.
Professional Development - Covers expenses for training courses, conferences, tuition, professional memberships, etc. This enables employees to advance their careers. Udemy reports that 89% of millennial employees rate professional development benefits as important.
Offering the right mix of voluntary benefits allows companies to round out their compensation and care for employees' overall wellbeing.
What Employees Value Most
When considering benefits packages, Canadian employees tend to highly value certain offerings over others. According to research conducted in 2023 by Forbes Advisor, the most desired benefits among employees are health insurance, retirement savings plans, and work-life balance programs.
Health insurance consistently tops the list of most valued benefits. Canadian employees want comprehensive coverage for themselves and their families to cover medical expenses and prescription drugs. With healthcare costs on the rise, employees see health benefits as a necessity.
Retirement savings plans like RRSPs also rank very high in importance. Employees want help saving for the future and appreciate matching contributions from employers. The Canada Pension Plan provides only a base level of retirement income, so additional savings are needed.
Finally, work-life balance programs allow flexibility and paid time off. Employees increasingly value benefits like flexible scheduling, telecommuting options, generous vacation allowance, and parental leave. Strong work-life balance policies can reduce stress and improve productivity.
Attracting and Retaining Talent
Companies can leverage their benefits packages as a key tool for attracting and retaining top talent. With the competitive job market in Canada, employees have many options and tend to be drawn to companies that provide the strongest overall compensation and benefits.
Customizing benefit offerings to the specific needs of your workforce can set your company apart. Conducting employee surveys and listening sessions to understand what benefits matter most to them is crucial. For example, younger workers may prioritize flexible work arrangements, paid parental leave, and career development opportunities. More tenured employees may value comprehensive retirement contributions and health insurance.
Effectively communicating your benefits offerings is equally important. Highlight your programs during the recruitment process and onboarding. Use various channels like the company intranet, emails, and team meetings to educate existing employees on how to maximize their benefits.
By addressing the diverse needs of your employees and keeping them informed, you can increase satisfaction, engagement and retention. Employees who feel their benefits needs are met have less reason to leave for another employer.
As the Velocity Global article states, "happy employees are productive employees." Investing in competitive benefits tailored to your people makes good business sense in terms of attracting and keeping top talent.
Comparison to Global Benefits
When comparing employee benefits in Canada to other countries around the world, there are some notable differences in policies, norms, and offerings.
Compared to the United States, Canada has a more robust social safety net and mandated benefits. All Canadians receive public healthcare, whereas in the US healthcare is tied to employment for many workers. Canada also mandates more paid vacation time - a minimum of 2 weeks nationwide, compared to no federal minimum in the US. Maternity leave is much more generous in Canada at 15-18 weeks paid leave, versus 12 weeks unpaid protected leave in the US (though some states have additional policies).
Canada's retirement system also stands apart, with the Canada Pension Plan providing a guaranteed monthly pension for all workers. The US social security system functions differently. However, the US does offer larger tax incentives for private retirement savings in 401(k)s and IRAs. Overall, Canadian workers tend to feel more financially secure given the universal healthcare and stronger social programs.
Compared to countries in Europe, Canada has fewer mandated paid vacation and holiday days off. Most European nations require 20-30 days paid vacation days. Canada also offers less paid parental leave than many countries like the UK, Sweden and Germany, which provide 6 months to 1 year paid leave and have broader family benefit policies. However, Canadian benefits remain more robust than the US in these areas.
Globally, Canada is regarded as having a high quality of life, economic opportunity and work-life balance. The comprehensive social benefits, healthcare access, multicultural society and stable economy make Canada an attractive destination for immigrants and workers from around the world.