Employee benefits in Canada: what a U.S. employer must provide and what Canadians expect

A U.S. company employing someone in Canada must provide a short list of benefits by law, and health insurance is not on it. Each province’s public plan covers doctor and hospital care for residents, and Employment Insurance pays parental leave. What the law leaves out, candidates still expect: a group health and dental plan, a retirement plan match and, often, a third week of vacation.

Three layers of benefits

Benefits in Canada are easier to plan once they are sorted into three layers:

1. What the law requires. Contributions and paid time off that every employer provides. They are not negotiable and can’t be traded for a higher salary.
2. What public programs cover. Health care, parental leave pay and a retirement pension, funded through taxes and the contributions in layer one.
3. What employers add by choice. A group plan and other extras. Optional in law, standard in practice for professional roles.

A U.S. benefits package doesn’t map one to one, so each layer is covered below, followed by a side-by-side translation.

What the law requires

Requirement	What the employer does	2026 figures
Canada Pension Plan (Québec Pension Plan in Québec)	Matches the employee’s contribution	5.95% of earnings between $3,500 and $74,600, plus 4% up to $85,000; 6.3% in Québec
Employment Insurance	Pays 1.4 times the employee’s premium	2.282% of earnings up to $68,900; lower in Québec, where employers also pay into the Québec Parental Insurance Plan
Workers’ compensation	Registers and pays premiums where coverage is required	Set by each provincial board by industry
Provincial health payroll taxes	Pays a tax on payroll in Ontario, British Columbia, Québec, Manitoba, and Newfoundland and Labrador	Ontario and B.C. exempt the first $1 million of payroll for smaller employers
Paid vacation	Gives time off and vacation pay	At least 2 weeks and 4% of wages
Paid public holidays	Gives the day off with pay, or premium pay for working it	8 to 11 days in the four largest provinces
Job-protected leaves	Holds the job during maternity, parental, illness and family leaves	Mostly unpaid by the employer

The CRA publishes the pension rates and maximums and the Employment Insurance premium rates. To see these contributions in dollars for a salary and province, use the employer cost calculator.

Vacation, holidays and sick days by province

Minimums follow the province where the employee works, not where the employer is.

Province	Minimum vacation	Paid public holidays	Sick or personal days
Ontario	2 weeks (4%); 3 weeks (6%) after 5 years	9	3 unpaid days a year
Québec	2 weeks (4%) after 1 year; 3 weeks (6%) after 3 years	8	2 paid days a year, after 3 months of service
British Columbia	2 weeks (4%); 3 weeks (6%) after 5 years	11	5 paid days and 3 unpaid days a year, after 90 days
Alberta	2 weeks (4%); 3 weeks (6%) after 5 years	9	5 unpaid days a year, after 90 days

Longer leaves for serious illness are job-protected but unpaid by the employer: up to 27 weeks in Ontario and up to 26 weeks in Québec. Canadian employment law basics covers overtime, notice and termination, which sit beside these rules.

What public programs cover

Health care. Every province runs a public health plan that covers medically necessary hospital and physician services. Residents qualify by living in the province, not by holding a job. The employer does not buy the cover, enrol anyone in it or administer it, and an employee who leaves keeps it.

Parental leave pay. Employment Insurance pays maternity benefits for up to 15 weeks and standard parental benefits for up to 40 weeks shared between two parents, at 55% of earnings up to $729 a week in 2026. An extended option spreads parental benefits over up to 69 shared weeks at 33%. In Québec, the Québec Parental Insurance Plan pays these benefits instead. The employer’s legal duty is to hold the job, not to pay salary.

Retirement. The Canada Pension Plan and Québec Pension Plan pay a retirement pension built from the contributions in the table above.

The public health plans generally do not cover prescription drugs outside a hospital, dental care, vision care or services such as physiotherapy and psychology for working-age adults. That gap is what a group plan is for.

What Canadian employees expect

More than 27 million Canadians, about 70% of the population, have workplace health benefits, according to the Canadian Life and Health Insurance Association. A candidate comparing two offers will treat a group plan as standard. A typical package for a professional role includes:

• Extended health and dental. Prescription drugs, dental, vision, and practitioners such as physiotherapists and psychologists.
• Life and disability insurance. Group life, and long-term disability cover for an illness that outlasts sick days and Employment Insurance.
• A retirement plan match. Usually a group Registered Retirement Savings Plan (RRSP), the closest counterpart to a 401(k).
• More vacation than the minimum. Offers for professional roles commonly start at three weeks.
• A parental leave top-up. Some employers add to Employment Insurance for a set number of weeks. It is optional.

Your U.S. plans generally don’t extend to a Canadian resident: a U.S. health plan is built around U.S. providers, and a 401(k) is built for U.S. taxpayers. The Canadian equivalents are separate plans, held by the Canadian employer.

How benefits are taxed

Benefits reach the employee’s pay stub differently in Canada, which matters when you compare packages:

• Health and dental premiums paid by the employer are not a taxable benefit for federal income tax. Québec taxes them as employment income for Québec income tax.
• Group life insurance premiums paid by the employer are a taxable benefit.
• Employer RRSP contributions are taxable income for the employee, who claims an RRSP deduction for the same amount. Canada Pension Plan contributions are deducted on them.
• Long-term disability. Many plans have the employee pay this premium, so that any benefit paid later is tax-free.
• Dental cover on the T4. Employers report on each year-end T4 slip whether dental cover was offered. People with access to an employer’s dental plan are not eligible for the federal Canadian Dental Care Plan.

Canada vs. U.S. payroll explains how deductions and slips differ between the two countries.

Québec’s extra rules

Québec adds four points that change how a package is built:

• Prescription drug insurance is compulsory. A resident under 65 who has access to a private group plan must join it for drug cover, and cover their spouse and children. Any group plan offered in Québec must include at least basic drug cover.
• Health premiums are taxable for Québec income tax, as noted above.
• Retirement savings. An employer above the headcount threshold in Québec’s rules must offer a Voluntary Retirement Savings Plan, unless it already offers all employees a workplace savings plan such as a group RRSP. Employer contributions are optional.
• Parental benefits come from the Québec Parental Insurance Plan, with its own premiums and benefit rates.

Hiring an employee in Québec covers the French employment contract and the province’s other differences.

Benefits continue during leave and notice

Two rules surprise employers used to at-will employment. In Ontario, an employer must keep paying its share of benefit plan premiums while an employee is on pregnancy or parental leave. On termination, the employer must also keep up its benefit plan contributions through the statutory notice period, including when it pays termination pay instead of working notice. Plan the cost of benefits to the end of the notice period, not to the last day worked.

How benefits work through an employer of record

When an employer of record employs your hire, it is the legal employer in Canada. The statutory layer is its responsibility: registering with the CRA and the province, remitting pension and Employment Insurance contributions, carrying workers’ compensation, and applying the right vacation, holidays and leaves. Group benefits come through the employer of record’s own plan, because a group plan belongs to the employer.

Through InfraDev, group benefits are optional: you decide whether your hire’s package includes them. Employer of Record explains what InfraDev handles as the employer, and what stays with you.

A Canadian offer in six decisions

1. Province of work. It sets vacation, holidays, sick days and the payroll taxes.
2. Vacation. The statutory minimum, or the three weeks many candidates expect.
3. Health and dental. Whether to include a group plan, and the share of the premium the employee pays.
4. Disability and life. Whether long-term disability is included, and who pays its premium.
5. Retirement. Whether to match RRSP contributions, and to what percentage of salary.
6. Parental top-up. Whether to add to Employment Insurance, and for how many weeks.

Write each choice into the offer in Canadian dollars. The employment agreement then records them under the law of the province where the person works.

Summary

• Employers in Canada must provide pension and Employment Insurance contributions, workers’ compensation, paid vacation, paid public holidays and job-protected leaves.
• Health insurance is not required: public plans cover doctor and hospital care, and a group plan covers drugs, dental, vision and disability.
• Vacation starts at two weeks and 4% of wages and rises to three weeks, after five years in Ontario, British Columbia and Alberta and after three in Québec.
• Maternity and parental leave pay comes from Employment Insurance or the Québec Parental Insurance Plan, at 55% of earnings up to $729 a week in 2026.
• A group RRSP match is the counterpart to a 401(k) match, and it is taxed differently.
• Through an employer of record, the statutory layer is handled by the employer in Canada and group benefits come through its plan.

Sources

• CRA: T4130 Employers’ Guide, Taxable Benefits and Allowances
• Government of Canada: EI maternity and parental benefits
• Health Canada: About Canada’s health care system
• Government of Canada: Canadian Dental Care Plan, who qualifies
• Ontario, Your guide to the Employment Standards Act: vacation, public holidays, sick leave, pregnancy and parental leave and termination of employment
• Ontario: Employer Health Tax
• British Columbia: vacation, paid sick leave and employer health tax
• Québec, CNESST: annual vacation and non-work-related accident or illness
• Québec, RAMQ: prescription drug insurance and private plans
• Retraite Québec: Voluntary Retirement Savings Plans
• Alberta: vacation pay, general holidays and personal and family responsibility leave
• Canadian Life and Health Insurance Association: workplace health benefits (August 2026)

This article is general information, not legal or tax advice. Figures are 2026 rates and rules as published by each government in November 2026.