"In Canada, the government provides minimum protection to Canadians that find themselves in certain circumstances, such as when they're ill, unemployed, on maternity leave or parental leave, or even retired. However . . . government plans are often insufficient and therefore they will be supplemented by private plans that are offered by employers." Emilie Paquin-Holmested explained in a recent BLR webinar.
Employee Benefits in Canada: Key Differences from the US
Here are some of the main employee benefits in Canada. The details for each of these vary by province:
- Universal health insurance. Canada's system provides universal coverage for medically-necessary hospital and physician services. However, it doesn't cover things like dental, vision, and prescriptions. As such, employers will often provide additional insurance coverage for employees through group insurance plans to cover these types of medical needs.
- Employment insurance (EI). EI is a federally-administered benefit scheme in Canada. It intends to financially assist Canadians who either lost their jobs through no fault of their own, who are sick, who are on family medical leave, or who are on maternity or parental leave. New parents on leave, for example, could benefit from EI for a maximum of 50 weeks (15 weeks of maternity leave and 35 weeks of parental leave). They can receive up to about $500 (Canadian dollars) per week (the details vary by province).
EI benefits are paid by a fund that is financed by both employer and employee contributions and the contributions are fixed by law. When someone receives these benefits, the benefits are taxable in the same way as wages. Some employers will offer private supplemental benefits to complement this EI.
- Canadian pension plan. Canada has a universal pension plan. There's also an equivalent in Québec that is used in lieu of the federal one for those living in Québec. The plans are funded by employer and employee contributions, which are also mandated by law. The maximum benefit available to an individual under this plan will be approximately $800 per month, but most people receive less.
The plan is not intended to provide all of an individual's retirement income. Employers often establish private pension plans for employees to supplement the national plan. The employer-provided plans could be in the form of:
- A defined contribution retirement plan. These have defined contributions that go into the plan, but don't have defined benefits. The benefits on retirement will be based on investment returns.
- A defined benefit pension plan. This guarantees employees a specific monthly benefit at retirement. It is very costly for employers, who are shifting away from it.
- A group registered retirement savings plan (RRSP). This is an employer-sponsored retirement savings plan. It is similar to an individual plan, but administered on a group basis. Contributions are made by payroll deduction through the administrator. Employee contributions are often matched, typically up to 3 to 5 percent of earnings. Contributions by the employer are not mandatory, and if the employer does contribute, the contributions are taxable income for the employee.
For more information on standard employee benefits in Canada, order the webinar recording of "Operating in Canada in 2013: What You Must Know Now Regarding Employment Laws North of the Border." To register for a future webinar, visit http://store.blr.com/events/webinars.
Emilie Paquin-Holmested is a member of Fasken Martineau's Labour, Employment & Human Rights Group in Montreal. Her practice focuses mainly on labour relations, employment law, human rights law and administrative law.