Payroll in Canada

Pay frequency and payday rules

Canada has no single national pay cycle. Most employment standards depend on the province or territory of work, so the cycle you must follow depends on where the employee works. Biweekly pay is the common practice, but the law sets different limits in each province.

• Ontario: you must set a regular pay period and a regular payday.
• British Columbia: pay at least twice a month, with pay periods no longer than 16 days. Wages are generally due within 8 days after the period ends.
• Alberta: regular pay periods can be up to one month. Payment is due within 10 consecutive days after the period ends.

For any other province or territory, check the local employment standards rules before you fix the payday. Federal labour standards cover specified industries, such as banking, interprovincial transport and telecommunications. A foreign client or a remote job does not by itself make a hire federally regulated.

Payslips and extra payments

The dossier for this guide does not set out payslip content rules for each province. Before your first pay run, confirm the required payslip contents with the employment standards office that covers the employee. As a working practice, show gross pay, each pay component, each deduction and net pay as separate lines.

There is no 13th-month or other mandatory extra payment in Canada. The annual cost of a salary is the salary you agree plus employer contributions. Vacation pay is the main pay item that accrues on top of wages, and it is a percentage of qualifying wages. In Ontario and British Columbia it is normally 4%, rising to 6% at the longer service band. Time off and vacation pay are separate entitlements, so paying the allowance does not replace the leave.

Remitting tax and contributions

You withhold income tax and the employee share of contributions from each payment, then remit them with your own employer share. Federal marginal income tax rates for 2026 run from 14% to 33%. Provincial or territorial income tax is additional, and credits and residence affect the amount withheld.

• CPP (outside Quebec): employer and employee each pay 5.95% on pensionable earnings between C$3,500 and C$74,600. CPP2 adds 4% each on earnings above C$74,600 and up to C$85,000.
• QPP (Quebec): 6.30% each on the same band, plus 4% each on the second band.
• EI: insurable earnings are capped at C$68,900. The employee rate is 1.63% outside Quebec and 1.30% in Quebec. The standard employer premium is 1.4 times the employee premium.
• QPIP (Quebec): 0.430% for the employee and 0.602% for the employer, on eligible earnings up to C$103,000.

The dossier does not give remittance due dates or filing forms. Confirm your remitter category and the current deadlines with the Canada Revenue Agency, and with Revenu Quebec for Quebec, before the first pay run.

Working hours that affect pay

Overtime thresholds differ by province, so a single rule will misprice some hires. The usual cash overtime rate is 1.5 times regular pay.

A salary does not by itself remove overtime rights. Averaging agreements, variances and occupational exemptions can change the calculation, so check them for each role. Public holiday entitlements also vary: 2026 lists 9 holidays in Ontario, 9 in Alberta and 11 in British Columbia.

Canada has no single income tax rate that applies to every employee. Federal income tax is charged in bands, and provincial or territorial income tax is added on top. Withholding therefore depends on where the employee works and lives, not only on salary.

Federal income tax bands

For 2026, federal marginal income tax rates run from 14% to 33% across five bands. The top personal income tax rate is 33%. The dossier we work from does not give the band thresholds, so check the current federal schedule before building a payroll calculation. A marginal rate applies only to the slice of income inside its band. It is not a percentage of the employee's whole salary.

How withholding works

The employer withholds income tax from each payment and remits it. The amount depends on the employee's pay, credits, deductions and residence. Two people on the same salary can see different take-home pay. Quebec has its own provincial rules, so confirm the applicable withholding method for any Quebec hire.

Credits and deductions change what an employee actually takes home. The dossier does not list specific credit amounts, so confirm the employee's declared credits and the current withholding rules before you set up payroll.

Employee deductions outside income tax

Employees also pay payroll contributions. For 2026, the main ones outside Quebec are the Canada Pension Plan (CPP) and Employment Insurance (EI).

• CPP: 5.95% on pensionable earnings between the C$3,500 annual exemption and the C$74,600 first ceiling, up to C$4,230.45.
• CPP2: 4% on earnings above C$74,600 and up to C$85,000, a maximum additional C$416.
• EI: 1.63% outside Quebec on insurable earnings capped at C$68,900.

Quebec uses the Quebec Pension Plan (QPP) instead of CPP. The employee rate is 6.30% between the C$3,500 exemption and the C$74,600 first ceiling, up to C$4,479.30, plus 4% on the C$74,600 to C$85,000 band, up to another C$416. Quebec's employee EI rate is lower at 1.30%. Employees there also pay Quebec Parental Insurance Plan (QPIP) premiums of 0.430% on eligible earnings up to C$103,000, with a maximum of C$442.90.

The standard employer EI premium is 1.4 times the employee premium, and approved reduced employer rates can apply. CPP and QPP also depend on payroll-period, age and other coverage rules.

Business taxes are separate

The corporate tax rate is 15% and the VAT rate is 5%. These are business and transaction taxes. Neither is an extra percentage taken out of an employee's salary. In Quebec, employers also pay a health services fund contribution based on total payroll, which is an employer cost rather than an employee deduction.

Canadian employer contributions are mostly statutory payroll premiums set by federal and Quebec rules. The OECD puts the average employer social contribution at 9.6% of gross pay and the average employee contribution at 6.77%. Actual cost depends on the province, because Quebec runs its own pension and parental insurance schemes. The real figures are per-programme rates with annual ceilings, shown below for 2026.

Employer and employee rates, 2026

Quebec uses QPP instead of CPP, and QPIP applies alongside its lower EI premium. The employee share is withheld from pay. The employer share is an additional cost.

Ceilings and annual maximums

• CPP: up to C$4,230.45 each for employer and employee. CPP2 adds up to C$416 each.
• QPP: up to C$4,479.30 each on the first band, plus up to another C$416 each on the second band.
• EI employer premium: up to C$1,572.30 outside Quebec or C$1,253.98 in Quebec. Approved reduced employer rates can apply.
• QPIP: maximum C$620.06 for the employer and C$442.90 for the employee.

Payroll-period, age and other coverage rules also apply, so check how the annual limits are applied in each pay run.

What is and is not included

The contributions above are the main statutory employer premiums. Income tax is separate. Federal marginal rates run from 14% to 33%, with provincial or territorial tax on top. The employer withholds it from the employee, so it is not an employer cost, but it affects take-home pay.

These figures do not cover vacation pay, paid holidays, overtime, termination pay or any employer-provided benefits. Vacation pay is a separate minimum entitlement. It is often 4% rising to 6% of qualifying wages, depending on the jurisdiction and length of service. Provincial rules differ and federally regulated employers use different bands, so confirm which regime applies to the hire.

Budgeting without a worked example

This section does not give a full worked cost example, because the total depends on the province, the salary level relative to each ceiling, and any reduced EI rate. To estimate cost, apply each rate above to the portion of salary inside its earnings range, cap each result at the stated maximum, and add the Quebec payroll levy where relevant. Then add vacation pay and benefits.

Also check whether the hire is provincially or federally regulated, since that can change other employment costs. For workers whose status is unclear, the actual working relationship decides it, not the contract label.

Canada has no single set of leave rules for every employee. Most employment standards depend on the province or territory where the person works. Federal rules cover specified industries such as banking, interprovincial transport and telecommunications. A foreign client or a remote role does not by itself make a hire federally regulated, so confirm the actual employing arrangement before you choose the rules.

Leave from work and income during that leave are separate questions. Provincial law mostly gives job-protected time off without pay. Where pay exists, it often comes from Employment Insurance (EI) benefits, not from you.

Annual leave

Time off and vacation pay are separate entitlements. Paying the allowance does not normally replace the time off.

• Ontario: 2 weeks per completed entitlement year before 5 years, then 3 weeks. Minimum vacation pay is 4% or 6% of qualifying gross wages.
• British Columbia: 2 weeks after 12 months and 3 weeks after 5 consecutive years. Vacation pay is normally 4%, rising to 6% after 5 years.
• Alberta: 2 paid weeks after each of the first 4 years and 3 after 5 consecutive years. For workers not paid monthly, vacation pay is normally 4% then 6% of qualifying wages.
• Quebec: 2 weeks from one year to under 3 years and 3 weeks from 3 years. Vacation indemnity is normally 4% before 3 years and 6% after.
• Federal: 2 weeks after one year, 3 after 5 and 4 after 10, with vacation pay of 4%, 6% and 8%. Do not apply these bands to provincially regulated hires.

Public holidays

There is no national paid-holiday calendar. For 2026, Ontario lists 9 public holidays, Alberta 9 general holidays and British Columbia 11. Eligibility, holiday work, substitute days and pay calculations depend on the local rules. Federal office closures are not a national employee entitlement.

Sick leave and illness benefits

Short-absence entitlements differ widely, and most are small. A contract or plan can give more.

For longer illness, EI sickness benefit pays up to 26 weeks at 55% of insurable earnings, capped at C$729 a week in 2026. Benefit eligibility is separate from leave protection and from any employer sick-pay plan. Ontario and British Columbia protect up to 27 weeks of unpaid serious-illness leave. Alberta's entitlement rose to up to 27 weeks per calendar year from 1 January 2026.

Maternity, paternity and parental leave

Job-protected leave comes from provincial law and is generally unpaid. Ontario gives up to 17 weeks of pregnancy leave, then up to 61 weeks of parental leave, or 63 weeks for other eligible parents. British Columbia gives up to 17 weeks of maternity leave and up to 61 parental weeks, or up to 62 for other eligible parents. Alberta gives up to 16 maternity weeks and up to 62 parental weeks after 90 days of service. Quebec gives up to 18 maternity weeks, 5 paternity weeks and up to 65 parental weeks. Each also has its own service tests and notice rules.

Outside Quebec, income replacement comes from EI, not the employer:

• 15 maternity weeks at 55% of insurable earnings, capped at C$729 weekly.
• Standard parental benefits of 40 shared weeks, with a maximum of 35 per parent, at the same rate and cap.
• Extended parental benefits of 69 shared weeks, with a maximum of 61 per parent, at 33%, capped at C$437 weekly.

In Quebec, QPIP provides income replacement. Premiums in 2026 are 0.430% for the employee and 0.602% for the employer, on eligible earnings up to C$103,000.

The dossier does not set out a national paternity entitlement outside Quebec. Check the provincial parental rules for the work location. Confirm any employer top-up in the contract, and confirm leave dates and benefit evidence before the leave starts.

Canada has no single employment code. Most employment standards depend on the province or territory where the work is done, and federal rules cover only specified industries such as banking, interprovincial transport and telecommunications. A foreign client or a remote role does not by itself make a hire federally regulated. Settle the jurisdiction first, because notice, pay timing, leave and written-terms rules all follow from it.

Registration and right to work

Confirm the person's right to work before you set a start date. An employer-specific permit needs a job offer and may need a Labour Market Impact Assessment. Open permits exist only in qualifying situations. A contract does not create work permission, and an employer of record must confirm that its employing arrangement supports the particular route.

Also settle employee status on the real working relationship, not the contract label. CRA assesses CPP and EI coverage using facts such as control, tools, and financial risk and opportunity for profit. Quebec's civil-law analysis differs, and employment-standards status needs its own assessment.

Filing and payment

The dossier does not set out remittance deadlines or filing forms for source deductions. Check the current CRA schedule, and Revenu Quebec for Quebec employees, before the first pay run. Payroll frequency also depends on the jurisdiction:

Written terms

Use written terms that identify the legal employer, role, location, pay, hours, benefits and lawful termination arrangements. Requirements vary. CNESST explains that Quebec contracts may be verbal or written, while recommending writing. Quebec's French-language rules affect offers, individual contracts and workplace documents, so have compliant French documentation prepared. Ontario agency workers have specific written-information rights. Ontario also requires employers with 25 or more employees on 1 January to have a written disconnecting-from-work policy.

Probation, notice and termination

There is no Canada-wide probation rule. A trial period in the contract does not remove statutory protections or automatically remove notice duties. Ontario's ordinary statutory termination entitlement generally starts after 3 months of continuous employment. Alberta's notice exemption applies to employment of 90 days or less. Check the law and the contract before ending a trial.

Termination pay can generally replace notice. Ontario severance is separate from notice and applies only above service and payroll thresholds. Common-law rights can exceed statutory minimums, and just cause, mass termination and exemptions need separate review. Federally regulated employers follow different notice and severance rules. The dossier records no statutory dismissal procedure period.