How Does Paid Time Off Work For Remote Canadian Employees

How Does Paid Time Off Work For Remote Canadian Employees 

Understanding paid time off in Canada can get confusing, especially for US companies hiring in Canada. Employment and labour laws in Canada include federal legislation and guidelines and provincial ones. Federal employment laws pertain to federal employees and anyone in a federally regulated industry, while provincial employment laws pertain to most other employees. (To learn more about the division between federal and provincial rules, read our blog on the Ontario ESA.)  

This complex network of rules and regulations is why so many US companies opt to work with a PEO when hiring in Canada. Professional Employer Organizations hire your workers compliantly, handling payroll, taxes, PTO, employment standards and other administrative services so that you don’t have to.  

The Different Kinds of Paid Time Off in Canada  

Vacation Time and Vacation Pay 

Canadian labour laws on vacation time are complicated by the split between federal and provincial jurisdiction. The basic entitlement for Canadian workers is two weeks of paid vacation after a year of employment. After five years of employment that rises to three weeks, and after ten years it rises to four.  

Hourly workers often receive vacation pay, rather than vacation time, calculated as a percentage of their earnings during the entitlement year. Vacation pay is often paid as a lump sum before workers go on holiday, or near the end of the year. In contrast, salaried workers receive their regular salary when they go on holiday, coded as vacation rather than salary.  

While they follow the federal government’s lead in terms of how vacation time and pay works, Canadian provinces and territories each have different rates of vacation time accrual and different rates of vacation pay.  

Employers can restrict the period within which vacation days are availed, and do not have to carry them over into following years. 

Sick Time and Pay  

Just like with vacation time, Canadian labour laws on sick days are split between federal and provincial rules. Sick time and pay has also been complicated by the Covid-19 pandemic, introducing paid sick days to provinces that have never had them in the past.  

Federally regulated employees in Canada earn paid sick leave at the rate of 9.375 hours each month in which you work 75 hours. In contrast, provincially regulated employees may accrue paid sick time, they may have a set number of paid sick days per year, or they may have no paid sick days at all. The basic sick day entitlement varies from one paid day per year in PEI, to 5 days unpaid per year in Alberta.  

To avail sick day, employees should notify their employers as soon as possible and may be asked to produce a doctor’s note under certain circumstances. As with anything else, this varies by province.  

Statutory Holidays and Public Holidays  

There are many statutory (or paid public holidays) in Canada with their observance differing by province. National holidays are observed by federally regulated workplaces and provincially regulated workplaces alike. Where a province is excluded in the table below, the holiday is nationally observed and in some provinces. When statutory holidays fall on a weekend, the following weekday is generally designated as the paid day off.   

Employees are entitled to a paid day off on all statutory holidays observed in their province. Employees who are required to work on statutory holidays are paid at a rate of 1.5 – 2 times their normal rate of pay for all hours worked, or higher if their contract specifies. They may also opt to receive a day in lieu, or a paid day off later in the year. Employers can restrict the period within which lieu days are availed, and do not have to carry them over into following years.  

Holiday Date in 2024 Observance
New Year’s Day January 1, Monday National
Islander Day February 19, Monday PEI
Louis Riel Day February 19, Monday MB
Heritage Day February 19, Monday NS
Family Day February 19, Monday BC, AB, SK, ON, NB
Good Friday March 29, Friday Except QC
Easter Monday April 1, Monday QC
Victoria Day May 20, Monday Except NB, NS, NL
Aboriginal Day June 21, Friday NWT
St. Jean Baptiste Day June 24, Monday QC
Canada Day July 1, Monday National
Civic Holiday August 5, Monday AB, BC, SK, ON, NB, NU
Labour Day September 2, Monday National
National Day for Truth and Reconciliation September 30, Monday National
Thanksgiving  October 14, Monday Except NB, NS, NL
Remembrance Day November 11, Monday Except MB, ON, QC, NS
Christmas Day December 25, Wednesday National
Boxing Day December 26, Thursday ON

Leaves  

In the Canada labour code personal leave for federally regulated employees is 5 days per year. The provinces do not generally follow the lead of the federal government when it comes to personal days. The exception to this is pandemic-specific personal days in the Canada labour code. (You can learn about provincial Covid-19 regulations in this blog.) Instead, workers may apply for various leaves through the national Employment Insurance program, including maternity leave, sick leave, and caregiver leave.  

How a PEO Can Help  

Paid time off in Canada is obviously complicated! Canadian employers struggle to get it right every year some of them don’t! Errors in paying time off account for some of the biggest fines that Canadian employers pay each year (along with unpaid wages). That’s why so many US and global companies work with a PEO. Professional Employer Organizations like Canadian Payroll Services specialize in employment compliance. While we deliver international payroll and a variety of other services to our clients, compliance is at the core of our work.  

PEOs hire and onboard your international employees so that you don’t have to open a local subsidiary or deal in depth with local employment standards. They then lease your employees back to you, so that you can manage their day to day. This keeps your focus on running your business, while your PEO handles all the administrative aspects of employment, from payroll, to taxes, to paid time, and more. Handling paid time off and leaves appropriately is a core service of most PEOs.  

Work With Canadian Payroll Services Today  

Unlike global PEOs, Canadian Payroll Services (CPS) specializes in the Canadian market. Our expert staff keeps on top of changes to Canada labour laws, so you don’t have to. Every aspect of the employee life cycle is managed by local HR account manager or certified payroll practitioner, who will support you and your team every step of the way.  

Ready to learn more about how we can help? Contact us today!  

Frequently Asked Questions

Do I need to track paid and unpaid time off?

Employers in Canada must track all paid and unpaid time off in order to make accurate payroll and benefits calculations. In addition, there are several forms of protected unpaid leave during which employees cannot be fired, demoted, or replaced.

How many paid holidays do Canadians get?

The average Canadian gets 10 days of paid vacation and 7 days of paid holidays. There are only 5 holidays which are paid in every Canadian jurisdiction: New Year’s Day, Good Friday, Canada Day, Labour Day, and Christmas Day.

Is unpaid time off protected?

There are several forms of unpaid protected leave in Canada including sickness, parental, compassionate care, leave related to the death or disappearance of a child, and some provincially protected leaves. Outside of these leaves, unpaid time off is not protected in Canada.

Table of Contents