Types of Employee Benefits in Canada: A Comprehensive Guide

Types of Employee Benefits in Canada: A Comprehensive Guide

Most working Canadians need more than just a paycheque as incentive to stay loyal and committed to their workplace. Especially nowadays with the new work-from-home model, incentive is everything in a workplace. Benefits significantly impact an employee’s job performance, satisfaction, and motivation. Employee benefits are designed to support employee’s overall well-being, both in and outside of the workplace. In Canada, many employers offer benefits as a way to attract and retain talented employees. In this article, we discuss the definition of employee benefits, the importance of them and the different types an employer may offer.

Definition of Employee Benefits

Employee benefits are group health insurance plans that are provided by the employer to their employees as a means of making health care more affordable and accessible. These benefits are designed to supplement employees’ salaries and help them meet their basic, or complex depending on the plan, health needs, achieve work-life balance, and improve their access to preventative health care. Providing benefits packages for employees provides a competitive advantage for employers as they are able to attract and retain the best talent in the industry.

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Importance of Employee Benefits for Employee Retention

Employee retention is a major concern in Canada. According to careerwise.ceric.ca, more than one-third of Canadian companies (35%) said employee retention plummeted during the Covid; calling the reason “The Great Resignation”. While employee benefits were always considered a perk for those in the job market, due to the added health concerns of the pandemic, they are even more, and almost mandatory for people.  In today’s competitive job market, providing attractive benefits products can set businesses apart from their competitors. Talented employees are in high demand and they are looking for employers who not only offer high salaries, but comprehensive benefits as well. By offering these benefits, businesses can show their employees that they are valued and invested in their well-being, which can lead to increased loyalty and retention.

Mandatory Benefits in Canada

Although employers in Canada are not legally obligated to provide group benefits products, they are required by law to offer certain benefits to their employees, including the Canada Pension Plan (CPP), Employment Insurance (EI), and Workers Compensation.  These benefits are funded through mandatory contributions, which are deducted from employees’ pay cheques. This ensures that employees have access to critical social safety net programs that can provide financial support in the event of retirement, disability, job loss, or workplace injury. Employers have a responsibility to comply with these legal requirements below and ensure that their employees are enrolled in these programs as mandated by law:

Canada Pension Plan (CPP)

The Canada Pension Plan is a mandatory social insurance program that provides pensioners with a predictable retirement income. As of January 2022, the contribution rate to the CPP is 11.4%, which is split equally between employer and employee. The Quebec Pension Plan functions similarly, but their contribution rate is higher at 12.80%. Benefits are received as early as 60 years of age, or can be deferred to 70 years of age. If accessed earlier, the monthly benefits would be lower than they would if accessed later.

Employment Insurance (EI)

Employment Insurance are temporary benefits provided to a working Canadian citizen who is temporarily unemployed due to losing their job at no fault of their own. To qualify for the benefits, Canadians must have been working a certain number of hours for the past year before their job was terminated. They must also be actively looking for work and be willing to accept something reasonable when it comes along. EI recipients can be compensated up to 55% of their previously earned income. Applications can be made on the Service Canada website and there is a one week waiting period before receiving compensation. Recipients must report their status with respect to willingness to work every two weeks to Service Canada.

Workers Compensation

Worker’s Compensation is a program that provides a temporary benefit to Canadians who become ill or injured due to their employment. Workers compensation benefits vary by province but more or less have similar features. Typically, self-employed and contract workers are not covered under workers comp. Most industries that qualify are manufacturing, construction, healthcare, hospitality and more. The benefits will compensate for lost wages and cover the cost of medical equipment and rehab. The incident must be reported to the employer and after the review process, benefits will be dispensed in a timely manner.

Health and Wellness Benefits

Most employers in Canada care about the overall wellbeing of each of their employees, since employee work performance is better when their health is taken care of too. Employers offer extended health plans at an affordable cost in order to supplement the provincial health care plans so that each employee can show up to work in good health. Some examples of health and wellness benefits could be:

  • Preventative care programs
  • Mental health support
  • Fitness and wellness subsidies
  • Flexible work arrangements
  • Employee wellness programs
  • Health spending accounts
  • Maternity and paternity leave
  • Work-life balance initiatives

Extended Health Care Benefits

Extended Health Care Benefits are group benefits typically provided by a workplace in order to supplement the health care benefits provided by the province. Typically extended health benefits cover the cost of prescription drugs, paramedical services, vision care, hospital care, medical equipment and supplies, and out-of-province emergency medical services. Not all workplaces provide employee benefits, and it is possible for individuals to purchase their own extended health coverage. It’s important to note that specific coverage and benefits offered may vary depending on the plan selected. Employees should review their extended health care benefits carefully to understand what is covered and limitations and exclusions may apply.

Group Dental Plan

Group dental insurance accounts for covering the cost of dental procedures that are typically not covered by the provincial health care plan. Group dental insurance covers the policyholder and their dependants for certain dental services. The procedures that are typically included in the group dental plan are basic and supplementary services such as; x-rays, dental exams, cleanings, scaling, polishing, fluoride, fillings, root canals, extractions, and major restorative services that may include dentures, bridges, crowns, inlays, onlays and veneers. Orthondontic services are sometimes available depending on the size of the group and the amount of members enrolling for Family coverage.  The coverage received depends on the coverage amount selected by the policyholder.

Vision Care

Vision care in Canada has become an increasingly important perk that employees expect in their group benefits products. In Canada, ensuring comprehensive healthcare coverage is essential, and one aspect that should not be overlooked is the importance of including eyecare in group benefits. Our eyes play a vital role in our daily lives, enabling us to navigate the world around us. Regular eye exams not only detect vision problems but can also uncover underlying health issues. By including eye care as part of group benefits, employers demonstrate a commitment to the well-being of their employees. Access to affordable vision care encourages early detection and treatment of eye conditions, improving overall eye health and potentially reducing long-term healthcare costs. Prioritizing eyecare in group benefits fosters a healthier and more productive workforce.

Disability Insurance

Disability insurance provides income replacement to an employee if they are unable to work due to illness or disability. Disability insurance will cover a percentage of the employee’s income up to a certain limit. There is a waiting plan that is between 112-120 days in order to receive compensation. Disability insurance and the compensation time frames vary from case to case. It is typically recommended to refer to the ‘up to 65’ time frame for realistic expectations. The employee must not be able to perform either a portion or all of the required tasks for their job in order to qualify. Disability insurance can either be short term or long term. A full, comprehensive explanation on how this specific type of insurance works can be found here.

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Retirement Benefits

In Canada, most employers offer retirement benefits to their employees as an incentive to stay loyal to the company. Retirement benefits are a way each of us can look to the future, free of worry.  Planning for retirement is a critical aspect of financial well-being in Canada. The two main components of retirement savings and benefits are RRSP’s and Pension Plans. RRSP’s offer working Canadians a tax advantaged way to save for retirement, with options of both group and individual plans.  Pension Plans provide retirement benefits to employees based on factors such as worked hours and years of service. Understanding and utilizing these retirement vehicles can help individuals secure a comfortable future and make the most of their savings.

Registered Retirement Savings Plan (RRSP)

An RRSP is a retirement savings plan that is contributed to by a working Canadian citizen. The RRSPs are deducted from taxes upon each paycheque. There are mainly two types of RRSPs; group or individual. Workplaces have the option of offering their employees a group RRSP plan in which the employer can match the employees contributions, effectively doubling their retirement savings.

Pension Plans

Pension Plans are a type of retirement that provide a benefit to an employee after they retire in Canada. There are two types of Pension Plans; defined benefit plans, and defined contribution plans. The defined benefit plan provides a retirement benefit based on factors like hours worked, and the amount of years worked in Canada. Whereas with the defined contribution plan, the employee contributes to the retirement savings and the employer may contribute to the benefit fund as well.

Time-Off Benefits

Time off is inevitable with the flow of life. Sometimes time off is planned, other times it is a necessity based on life’s circumstances. Canadian employers are mandated by law to provide a certain number of paid days off. There are various time-off benefits that are embedded into the Canadian employment system.

Vacation and Paid Time Off

Paid time off varies by province. In Ontario for example, employees are entitled to two weeks of paid vacation per year after one year of service, and in British Columbia, it is three weeks paid time off per year after one year of service. Employers are required to pay employees their regular pay for paid time off. Employees may have to use their days of paid time off in the same year, whereas some employees will be allowed to carry over their unused paid time off days into the next year.

Sick Leave and Personal Days

In Canada, most employees are entitled to most forms of paid sick leave and personal days. Sick leave, which is typically three days, is paid time off that can be used when an employee is ill or injured. Personal days can also be considered emergency leave regardless if the time is required for the individual or due to a family member. Irrespective of the reason, an employee is entitled to 10 personal days per year, two of which must be paid. The allowed amount of sick leave or personal days varies by province. Typically, employees need to notify their employers before taking any paid days off work. Workers will be compensated their regular pay on paid days off.

Family and Medical Leave

Under certain circumstances in Canada, employees are allowed to take time off for particular situations. Family leave allows a worker to take time off from work to care for a sick family member. In Ontario, a worker may take up to 28 weeks of unpaid time to care for a sick family member. Medical leave allows employees to take time off work to care for themselves if they have a serious medical condition. In Ontario, workers are allowed to take up to 17 weeks of work for medical leave in order to recover. In order to be eligible for family and medical leave, the employee must be employed with the same employer for a certain amount of time.

Work-Life Balance Benefits

Work-life balance benefits have become increasingly more important to today’s workforce. They allow for workers to be more productive, more engaged, happier and less stressed. Increased productivity is also a major benefit for employers to ensure that they are investing in good work-life balance initiatives. Some examples of these types of benefits would be:

Tuition Reimbursement

Some employers in Canada will offer compensation for tuition fees so that employees can further their education and use their new skills to perform better at their job. Tuition reimbursement can be all or in part of the total cost of the program. Typically, there are requirements in order to qualify for the tuition reimbursement such as a minimum number of hours worked at the company and a certain grade point average in school. There may be a limit placed by the employer as to how much tuition fees can be reimbursed per year, per employee.

Employee Discounts

Many employers offer their employees discounts on products and services as part of the employee benefits package. The discounts applied vary by employer. A sample of employee discounts offered in Canada include discounts on company products and services, discounts on partner products and services, fitness reimbursement plans, group buying plans which gives employees access to products and services at a discounted price, employee purchase plans which allows employees to get a discount on products or services via a deduction on their pay.

Recognition Programs

Many businesses have recognition programs in place in order to recognize and appreciate their employees for their efforts and contributions. Some examples of ways companies honour their employees is by having an employee of the month or year, peer recognition programs, performance-based incentive or bonuses and social recognition programs which allow employees to get recognized via social media initiatives. There are various types of employee recognition initiatives to consider, with companies becoming more and more creative each day. The most common types are:

  • Customer service awards, which demonstrate outstanding sales, support and positive feedback
  • Employee recognition wall, which allow for an employee to have their photo and accomplishments displayed to their peers
  • Social media shoutouts, which allow for the world to see that an employee is valued
  • Monetary rewards, which can include extra time off, free meals, gift cards or bonuses
  • Employee appreciation events, which can be planned or as a surprise to publicly praise those who have gone over and above for your company

Related Article

In the next article in this series, read about How to Choose the Right Employee Benefits.


Employee benefits are an important facet for a business to attract top talent. In addition to financial security, employees want to work for a company that looks out for their well-being. Employee benefits are important in attracting top talent in order to be distinguishable from your competitors, retaining top talent employees, and employer branding. Some factors for employers to consider when selecting employee benefits packages include budgeting, employee demographics, legal requirements, employee preference, communication and education. Employee benefits are a crucial component to a competitive employee package offered by a company. Employers can create a positive work environment that looks out for everyone’s well being.

As a trusted provider of group benefits in Canada, Group Enroll offers extensive coverage with tailored solutions. We make the application process simple and offer continued support to our policyholders. Group Enroll provides in-depth knowledge to make the selection process easy, helping businesses navigate the complexity of group insurance options.

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