Irresistible Employee Benefits in Canada: The Complete Guide
In today's competitive job market, offering a robust benefits package is more important than ever for attracting top talent and retaining valued employees. Studies show that benefits can play a significant role in an individual's decision to join or stay with a company. Strong benefits also boost employee engagement and loyalty by demonstrating that the company cares about their wellbeing and security.
With the "Great Resignation" leading to increased turnover across many industries, companies need to ensure their benefits help differentiate them. Competitive packages not only draw talent in the door but also motivate them to stick around long-term.
While some benefits like health insurance are mandatory in Canada, employers have leeway to sweeten the deal with extras like retirement matching, generous time off, and wellness perks. Investing in benefits makes good business sense when factoring in the high costs of recruitment and lost productivity from turnover.
This article will explore the most popular employee benefits offered by Canadian companies today. We'll look at what's legally required, what leading employers are providing, and why strong benefits translate into recruiting success.
Mandatory Benefits in Canada
There are several legally required employee benefits that all companies in Canada must provide.
Employment Insurance
Employment Insurance (EI) provides temporary financial assistance for Canadian workers in situations such as unemployment, sickness, maternity/parental leave, compassionate care leave, and more. Both employees and employers pay EI premiums, and employees who have paid enough into the system can collect EI benefits when eligible. Some examples of EI benefits include:
Maternity leave (15 weeks)
Parental leave (35 weeks)
Sickness benefits (up to 15 weeks)
Compassionate care benefits (up to 26 weeks)
Canada Pension Plan
The Canada Pension Plan (CPP) provides retirement, disability, survivor, and children's benefits for Canadian workers. Employees and employers both contribute to CPP based on employee earnings. Employees must contribute to CPP if they are over 18 and earning over $3,500 annually. The current employer/employee CPP contribution rate for 2023 is 5.70% each.
Provincial Health Insurance
Employers must enroll employees in the provincial health insurance plan in the province where they work. This provides basic health care coverage for services like doctor visits, hospital care, diagnostic tests, etc. The specifics vary by province. For example, in Ontario this is OHIP (Ontario Health Insurance Plan).
Minimum Vacation Time
Under employment standards legislation, employers must provide a minimum amount of paid vacation time. In most provinces this is 2 weeks after 1 year of employment. Vacation time increases with longer tenure, for example 3 weeks after 5 years of service.
Health Insurance
Health insurance is a mandatory benefit in Canada. All Canadian residents are covered by provincial and territorial health insurance plans that provide access to hospital and physician services. However, these public plans only cover basic medical expenses, so many employers offer supplementary private health insurance.
The public health plans are administered by the provinces and territories and cover services like doctor visits, hospital stays, and diagnostic tests. There is no charge to Canadian residents for insured services. Each province and territory runs its own plan, but they must meet the requirements of the federal Canada Health Act.
While public health insurance covers most major medical expenses, many employers provide additional health benefits to fill gaps like prescription drugs, dental care, vision care, physiotherapy, and more. A survey by Abacus Data found that 41% of Canadian adults get health benefits through an employer plan. These extended health plans are usually administered by private insurance companies.
Offering health benefits helps companies attract and retain talent. Employees highly value health coverage. RBC reports 83% of Canadians with employer benefits are satisfied with their plans. Robust health insurance demonstrates an employer's commitment to caring for employees' wellbeing.
Dental & Vision
Dental coverage is one of the most common benefits provided by Canadian employers. According to the Canadian Dental Association, income and dental insurance are the two biggest factors that determine dental care usage in Canada. With the implementation of the new Canadian Dental Care Plan in 2024, more low-income Canadians will have access to dental insurance. However, employer-provided plans will continue to provide more robust coverage.
The Canadian Dental Care Plan provides limited coverage focused on basic preventative and emergency services. It covers regular exams and cleanings, fillings, extractions, and x-rays up to set limits. Major restorative work like crowns, bridges, dentures, and implants are not covered.
Employer dental plans typically include more comprehensive coverage with higher annual maximums. Many plans cover major dental work beyond basic preventative care. Some common limitations are caps on yearly maximums (often $1000-3000) and coverage percentages (e.g. 80% for basic, 50% for major). Plans may also limit the frequency of certain services like cleanings or x-rays.
Vision coverage for prescription eyewear and exams is sometimes bundled with dental benefits. Vision plans provide set dollar amounts per year or two-year periods to put towards glasses, contacts, eye exams, and sometimes laser eye surgery. Like dental, vision coverage helps reduce out-of-pocket costs for employees.
Disability Insurance
Disability insurance is a crucial benefit that provides income replacement in the event an employee becomes injured or ill and unable to work. There are two main types of disability insurance:
Short-term disability insurance typically provides income replacement for a period of up to 6 months. The average utilization rate for short-term disability insurance is around 5-10%, according to industry data. This type of coverage helps replace lost wages as employees recover and transition back to work.
Long-term disability insurance picks up where short-term coverage ends, providing ongoing income in cases of serious or permanent disability. The typical long-term disability claim can last 2-5 years. Long-term disability claims tend to increase with employee age. This coverage gives employees financial security during an extended illness or injury.
Having both short and long-term disability plans helps protect employees' incomes while also reducing turnover costs for employers. One study found applying for disability benefits doubled the likelihood a worker would leave their job . Providing this coverage can improve retention after a disability by supporting employees until they can return to work. Disability insurance is a key component of a comprehensive benefits package.
Life Insurance
Life insurance is an important benefit offered by many employers in Canada. Group life insurance policies provide coverage for employees in the event of death or terminal illness. According to the Canadian Life and Health Insurance Association, in 2020 approximately 22 million Canadians had life insurance coverage.
Group life insurance is usually paid for partially or fully by the employer. It provides a set amount of coverage, such as 1-2 times an employee's annual salary. Some key facts about group life insurance in Canada:
Over 80% of group life insurance claims are for terminal illness.
The average claim paid out for group life insurance was $53,000 in 2020.
Over 60% of employers with 20 or more employees offer group life insurance.
Having life insurance through an employer provides important financial security for families. It ensures that some income and support continues even after the death of a working adult. Group plans also enable access to coverage for employees who may not qualify for individual policies.
Retirement Plans
Retirement plans are a crucial benefit that help employees save for their future. There are several common retirement plans offered by Canadian employers:
CPP - Canada Pension Plan
The CPP is a mandatory public pension plan that requires contributions from both employers and employees. Employers must match employee contributions up to a certain amount. The CPP provides retirement, disability, survivor, and death benefits.
RRSP Matching
Many employers offer to match a percentage of employee contributions to a Registered Retirement Savings Plan (RRSP). For example, an employer may match 3% of employee RRSP contributions. This greatly helps employees save for retirement. According to StatCan, RRSP participation is higher when employers match.
Pensions
Pensions, such as defined benefit or defined contribution plans, are an important retirement benefit. They provide employees with guaranteed income in retirement. According to BenefitsCanada, over 6 million Canadians participate in employer-sponsored pensions. Pensions help attract and retain talent.
Time Off
Time off is an important benefit that allows employees to recharge and have a healthy work-life balance. Here are some of the common time off benefits provided in Canada:
Vacation
Most employers in Canada offer paid vacation time to their employees. The legal minimum vacation entitlement is 2 weeks per year for employees with less than 5 years of service, and 3 weeks per year for employees with 5 or more years of service. Many employers offer more generous vacation benefits to attract talent.
Personal Days
Some companies provide a set number of paid personal days per year that employees can use for any purpose, such as appointments, errands, mental health days, etc.
Sick Days
Employers typically offer a set number of paid sick days per year which employees can use if they are ill and unable to work. Many provinces and territories have minimum requirements for paid sick leave.
Parental Leave
New parents are entitled to take time off work under the government's Employment Insurance (EI) program. Birth mothers can take up to 17 weeks of maternity leave. Parents can share up to 61 weeks of parental leave. Parental leave is paid through EI benefits. Some employers top-up EI payments to provide better pay during leave.
Financial Benefits
In addition to insurance, retirement plans, and time off, many companies also offer financial benefits to help employees with expenses and provide additional income. Some popular financial benefits include:
Stock Options: Giving employees the option to purchase company stock at a discounted price is a common benefit, especially at startups and tech companies. Stock options help employees feel invested in the company's success. According to the SHRM Employee Benefits Survey, stock options are offered by 19% of organizations.
Bonuses: Performance bonuses are extra pay employees can earn by meeting individual or company targets. Common types of bonuses include holiday bonuses, referral bonuses, profit-sharing bonuses, and spot bonuses for accomplishments. The BLS reports 35% of all workers receive bonuses.
Reimbursements: Companies may reimburse employees for certain expenses like professional dues, continuing education, professional licenses, fitness memberships, and more. These reimbursements help cover costs that benefit both the employee and the employer.
Offering competitive financial benefits is key for attracting top talent, as well as engaging and retaining employees. Bonuses and stock options in particular give employees a vested interest in company success.
Wellness Benefits
Wellness benefits have become increasingly popular additions to employee benefit packages. These benefits aim to support the overall health and wellbeing of employees. Some common wellness benefits offered by Canadian companies include:
Gym Discounts - Many companies partner with local gyms or fitness centers to offer discounted memberships to employees. This makes exercise more accessible and affordable. For example, 44% of Canadian employers offered gym discounts or subsidies in 2022.
Mental Health Support - Access to mental health resources is a key wellness benefit. This may include an employee assistance program (EAP) offering counseling sessions, or apps that provide support for stress, anxiety, depression etc. Despite the need, one study by Attridge found only 21% of workers used their EAP in 2022.
Other wellness benefits could include nutritional counseling, smoking cessation programs, onsite massages, and more. The goal is to give employees tools and resources to take care of their physical and mental health.