Canada’s Employee Benefits Industry: Size, Share and Growth (2024)
Employee benefits are an important part of compensation and a key tool for attracting and retaining talent. With a competitive job market and growing skills shortages in Canada, employers need to understand the landscape of mandatory and optional benefits to offer a compelling package.
This article provides an overview of the key employee benefits in Canada that employers should be aware of. We'll cover the mandatory benefits required by law, common optional benefits companies provide to stay competitive, how Canada compares globally, recent trends shaping benefits offerings, and considerations for small businesses.
Understanding the benefits landscape can help employers in Canada enhance their compensation packages to attract top talent. With the right mix of legally required and optional perks, companies can build a strong employee value proposition.
The main sections of this article will cover:
Mandatory employee benefits in Canada
Common optional employee benefits
How Canada compares to other countries
Recent trends shaping benefits
Considerations for small businesses
20 Employee Benefits Industry Stats:
Health and Dental Benefits: Approximately 85% of Canadian employers offer health and dental benefits to their employees.
Extended Health Coverage: Around 90% of employees with benefits have extended health care coverage, which includes prescription drugs, vision care, and paramedical services.
Mental Health Support: Over 60% of Canadian employers provide some form of mental health support, such as Employee Assistance Programs (EAPs).
Retirement Savings Plans: Nearly 70% of Canadian employers offer retirement savings plans, including Group Registered Retirement Savings Plans (RRSPs) and Defined Contribution Pension Plans (DCPPs).
Paid Time Off: On average, Canadian employees receive about 20 days of paid time off annually, including vacation days and statutory holidays.
Disability Insurance: Approximately 75% of Canadian employers provide short-term and long-term disability insurance as part of their benefits package.
Flexible Benefits Plans: Around 30% of employers offer flexible benefits plans, allowing employees to choose the benefits that best meet their needs.
Wellness Programs: About 50% of Canadian companies have implemented wellness programs to promote employee health and well-being.
Employee Recognition Programs: Close to 65% of Canadian businesses have employee recognition programs in place to acknowledge and reward employee achievements and contributions.
Cost of Benefits: Employee benefits typically account for 15-20% of total compensation costs for Canadian employers.
Life Insurance: Around 85% of Canadian employers offer life insurance coverage to their employees, often equal to one or two times the employee's annual salary.
Critical Illness Insurance: Approximately 40% of employers provide critical illness insurance, offering financial protection in the event of serious illnesses.
Healthcare Spending Accounts (HSAs): About 25% of Canadian employers offer Healthcare Spending Accounts, allowing employees to use pre-tax dollars for medical expenses not covered by traditional health plans.
Telemedicine Services: Over 50% of employers provide access to telemedicine services, enabling employees to consult with healthcare professionals remotely.
Parental Leave Top-Up: Nearly 35% of employers offer parental leave top-up benefits, supplementing the government-provided benefits to support new parents.
Flexible Work Arrangements: Around 60% of Canadian employers offer flexible work arrangements, such as remote work options and flexible hours.
Education and Training Reimbursement: Approximately 45% of employers provide financial assistance for education and training programs to support employee development and career growth.
Transportation Benefits: About 20% of employers offer transportation benefits, including public transit subsidies and parking allowances.
Employee Stock Purchase Plans (ESPPs): Nearly 30% of Canadian companies provide Employee Stock Purchase Plans, allowing employees to purchase company stock at a discounted rate.
Financial Wellness Programs: Around 35% of employers offer financial wellness programs, providing resources and support to help employees manage their finances effectively.
These additional statistics further demonstrate the diverse range of benefits offered by Canadian employers to enhance employee satisfaction and retention.
Mandatory Employee Benefits in Canada
There are several employee benefits that are mandated by law for employers to provide in Canada. These include:
Healthcare Coverage
Employers must enroll employees in the public health insurance plan in their province, which covers basic medical expenses like doctor visits and hospital care. Each province runs its own plan such as OHIP in Ontario and MSP in British Columbia.
CPP Contributions
The Canada Pension Plan (CPP) provides retirement, disability, and survivor benefits to employees. Employers must deduct CPP contributions from employees' paychecks and match these contributions.
EI Premiums
Employment Insurance (EI) provides temporary financial assistance to unemployed Canadians. Employers must deduct EI premiums from employees' paychecks and remit both the employer's and employees' share to the government.
Minimum Vacation Time
Employers must provide a minimum of 2 weeks of paid vacation per year under provincial employment standards legislation. After 5 years of employment, this increases to 3 weeks.
Maternity and Parental Leave
The government administers maternity and parental leave benefits through the EI system. Employers must grant eligible employees up to 17 weeks of maternity leave and up to 61 weeks of parental leave.
Supplemental Health Benefits
In addition to basic provincial healthcare coverage, many Canadian employers offer supplemental health benefits to fill gaps in coverage. These benefits help pay for essential services and treatment not fully covered by government plans.
Some of the most common supplemental health benefits include:
Dental Insurance
Dental insurance covers services like cleanings, fillings, crowns, braces, and other oral healthcare. Provincial plans only cover dental services for certain groups like children and low-income households, so many employers provide dental benefits.
Vision Care
Vision care including eye exams, glasses, and contacts are not covered by government healthcare. To help employees access eye care, employers often provide vision insurance or discounts on services.
Prescription Drugs
While provincial plans cover some prescription medication costs, many new and expensive drugs are excluded. Supplemental coverage helps employees access a wider range of necessary medications.
Paramedical Services
Services like physiotherapy, massage therapy, chiropractic care, and naturopathic medicine are often not covered by government plans. Employers can provide coverage for these services to support employee health and wellbeing.
Insurance Benefits
In addition to government-mandated benefits, many Canadian employers offer supplemental insurance benefits to provide additional protection for employees. Some common insurance benefits include:
Life insurance - Life insurance provides a payment to beneficiaries if the employee passes away. Most plans pay out 1-2 times the employee's salary. This helps protect families from financial hardship in the event of unexpected loss of life.
Disability insurance - Disability insurance provides income replacement if an employee becomes unable to work due to illness or injury. Short-term and long-term disability plans help replace lost wages during periods of disability.
Critical illness insurance - Critical illness insurance provides a lump sum payment if an employee is diagnosed with a covered critical illness like cancer, stroke, or heart attack. This can help cover treatment costs and loss of income during recovery.
Offering robust insurance benefits is a key way for employers to provide financial security. With the right plans, employees gain peace of mind knowing their families will be taken care of if the unexpected occurs.
Retirement and Savings Benefits
Retirement planning is a major concern for employees in Canada. To attract and retain talent, many employers offer retirement and savings benefits beyond the mandatory Canada Pension Plan (CPP) contributions.
Two of the most common retirement benefits offered are:
Pension plans - Employer-sponsored pension plans provide employees with guaranteed income in retirement based on their years of service and salary. Defined benefit and defined contribution plans are the most common types of pensions in Canada.
RRSP matching - Many employers will match employee contributions to a Registered Retirement Savings Plan (RRSP) up to a certain percentage or dollar amount. This significantly boosts retirement savings.
Other popular retirement and savings benefits include profit sharing, stock options, and stock purchase plans. These types of benefits give employees a stake in the company's success.
Compared to countries like the United States, Canada's national pension system and prevalence of employer pensions provides stronger retirement security overall. However, voluntary retirement plans like RRSPs are still an important supplement.
Lifestyle Benefits
Lifestyle benefits are employer-provided perks that support employees' health, wellbeing, and work-life balance. These benefits go beyond traditional offerings to enhance overall quality of life. Some popular lifestyle benefits in Canada include:
Wellness Accounts
Many companies now provide wellness accounts or stipends that employees can use towards services like fitness classes, massage therapy, counseling, or nutrition programs. These accounts empower employees to choose benefits tailored to their needs. The average wellness account value is around $300-500 per year.
Gym Memberships
Offering fully or partially subsidized gym memberships is a popular way to promote employee health and wellbeing. Some companies also provide onsite fitness centers. Gym benefits provide savings for employees while potentially reducing healthcare costs for employers.
Pet Insurance
With many Canadians considering pets as family, employers are starting to offer pet insurance plans as an attractive benefit. These plans help cover veterinary costs and may include wellness rewards. Pet insurance demonstrates that employers care about employees' lives outside of work.
Legal Services
Access to legal help can provide peace of mind. Some companies offer legal assistance plans covering services like will preparation, real estate transactions, or family law. Legal benefits provide security and convenience, allowing employees to get professional help with personal legal matters.
Work-Life Balance Benefits
Work-life balance has become increasingly important for employees in recent years. To attract and retain top talent, many Canadian employers now offer robust benefits aimed at promoting flexibility, rest, and an overall healthier work-life integration.
Popular work-life balance benefits include:
Flexible scheduling - Allowing employees to modify their start and end times, or shift their hours to accommodate personal needs.
Remote work options - Enabling employees to work from home or other locations outside the office for all or part of their week.
Unlimited vacation - Providing a set number of vacation days can promote a "use it or lose it" mentality. Some companies now offer unlimited vacation within reason.
Sabbaticals - Offering extended paid leave every 5-7 years allows employees to recharge, pursue professional development, or spend time with family.
According to a recent survey, nearly 80% of Canadian employees rate work-life balance as a top factor impacting their happiness. Flexibility and rest are key for motivation, engagement, and retention.
Professional Development Benefits
Professional development benefits help employees advance their skills and knowledge. Some common offerings include:
Training programs - Many companies provide access to internal training courses or budgets for external programs. For example, the University of Alberta offers funding for employee professional development like conferences, courses, and more.
Conferences/courses - Employers may cover or subsidize fees for conferences, seminars, workshops, and professional courses. These allow employees to stay up-to-date on industry trends.
Tuition reimbursement - Companies can offer to reimburse some or all of employees' tuition if they pursue additional education like college courses or advanced degrees. This investment supports skill-building.
Professional development benefits empower employees to reach their career goals and become more effective in their roles. Offering these perks can improve retention and job satisfaction.
How Canada Compares
Canada's employee benefits are robust compared to the United States. All Canadians have access to public healthcare, which is not the case in the US where healthcare coverage is usually tied to employment. Canadians get more guaranteed vacation time - a minimum of 2 weeks federally mandated vacation days compared to no federal minimum in the US. However, Americans often get more optional insurance benefits like vision and dental coverage as part of their compensation packages. Canadians get less paid time off on average than European countries. Most EU countries mandate 4-6 weeks of paid vacation days, compared to Canada's 2 week minimum.
Key Considerations for Small Business
Small businesses often face challenges in offering competitive benefits due to limited budgets and resources. However, benefits remain critical for attracting and retaining top talent.
There are a few strategies small business owners can use to provide quality benefits on a budget:
Leverage group insurance plans to get lower premiums. Associations and chambers of commerce often negotiate discounted rates that small businesses can take advantage of.
Offer a flexible benefits plan that allows employees to customize their coverage based on what matters most to them. This helps maximize the value of your benefits spending.
Carefully evaluate free or low-cost benefits like paid time off, flexible scheduling, professional development stipends and work from home options.
Get creative with lifestyle benefits like gym memberships that can be negotiated at a discount.
It's also important for small business owners to communicate the value of their benefits offering to prospective candidates. Highlighting benefits as part of your recruitment and onboarding process sets expectations and reinforces why your company is an attractive place to work.
While small businesses may not be able to match the benefits of large corporations, strategic planning and employee education can still make benefits a useful tool for recruitment and retention.