The cost of employee benefits in Canada

The cost of employee benefits in Canada depends on your industry, location, and employee salary. For example:

Mandatory employer cost	Salary: $144,480 CAD	Salary: $100,000 USD
Employer Health Tax (EHT)	$2,817	$1,950
Canadian Pension Plan (CPP)	$4,034	$2,792
Employment Insurance (EI)	$1,508	$1,044
Total estimated employer costs	$8,359	$5,786
Total compensation costs	$152,839	$105,786

Larger businesses can expect to pay a higher ratio of benefits to payroll costs. As you have a higher income, you’re exempt from fewer of the federal and provincial programs.

Likewise, companies with only a handful of employees in Canada may find their overall costs are significantly lower. You’re more likely to be exempt from programs like workers’ compensation and health insurance tax. In some instances, you may be eligible for a reduced contribution rate.

Best practices for managing employee benefits in Canada

Canada has a competitive labor market as job opportunities surge, but worries about inflation and the cost of living continue to grow.

In a recent survey, employees said they were optimistic about their career prospects. At the same time, around a third said they’re willing to look for a new job if their current employer doesn’t offer better compensation.

Providing the right benefits can help companies attract talent and find their footing in this volatile market. However, you may be limited by your budget if you’re newly established in Canada. Here are some strategies for making the most of your benefits plans and keeping costs low while maintaining compliance with regulations:

Minimize the risk of penalties:

Stay updated with Canadian regulations to ensure you maintain compliance and avoid fines. For example, the CRA charges up to 20% of the unpaid amount for late CPP contributions, which can significantly drive up your costs. Solutions like Deel send you regular compliance updates to help you keep track.

Tailor benefits to your workforce

Employees are not a monolith, and certain groups are likely to have distinct needs and preferences. For example, Gen Z workers are more likely to appreciate flexible work options and health insurance top-ups.

Offer extras

Sticking to mandatory benefits is unlikely to attract top workers or niche specialists. Aim to offer some additional plans, even if they’re lower-cost perks like hybrid working arrangements or Friday afternoons off.

Focus on flexibility

75% of Canadian workers would like to work remotely at least some of the time. Even if your industry requires an on-site presence, consider which benefits work best for your industry and incorporate them into your structure. For instance, perhaps customer-facing roles can choose to work from home for purely administrative tasks.

Stay true to your culture

Think about which benefits reflect your company values the best. For example, refurbished laptops could be a great choice for an environmentally friendly start-up—and they’re a low-cost option. Deel IT offers these as part of our extensive catalog so you don’t need to shop around to find good quality, second-hand equipment.

Hire through an Employer of Record (EOR)

Foreign companies may not be able to justify the cost of registering and managing benefits for a few Canadian workers but desperately need their expertise. An EOR like Deel hires these workers on your behalf and handles all the HR, payroll, and compliance.