This article explains how payroll works for employees engaged in Canada through RemoFirst, covering pay schedules, deductions, contributions, leave, working time and end-of-employment entitlements. Employment standards in Canada vary by province. The default RemoFirst setup is based in Ontario, so much of the payroll and employment standards information below follows Ontario legislation.
If you have a question that is not answered below, contact RemoFirst support, and the team will be happy to help.
Payroll Schedule in Canada
How often are employees paid in Canada?
Employees in Canada are paid semi-monthly.
When are employees paid in Canada?
The standard pay dates in Canada are:
- The 15th of the month
- The last day of the month
If a payday falls on a weekend or public holiday, payment is generally advanced to the preceding business day.
What currency are employees paid in Canada?
Employees in Canada are paid in Canadian Dollars (CAD).
Payslips in Canada
When are Canadian payslips issued?
Payslips in Canada are delivered electronically and include salary, tax deductions, CPP deductions, EI deductions, benefits deductions and reimbursements.
What deductions appear on a Canadian payslip?
Common deductions on a Canadian payslip include:
- Federal Income Tax
- Provincial Income Tax
- Canada Pension Plan (CPP)
- Employment Insurance (EI)
- RRSP contributions, if applicable
- Benefits contributions, if applicable
Salary Proration in Canada
Why was my first salary in Canada lower than expected?
Employees who join during a pay cycle in Canada receive a prorated salary, and are only paid for the actual working days within the applicable pay period.
How is proration calculated in Canada?
Proration in Canada is calculated as:
Daily Rate = Annual Salary ÷ 52 ÷ 5
Prorated Pay = Daily Rate × Working Days Worked
Tax and Government Contributions in Canada
Updated for 2026: CPP, CPP2, EI and the federal tax rates were all updated for 2026, including the reduction of the lowest federal rate to 14%. The figures below reflect the current year.
What taxes apply to employees in Canada?
Employees in Canada pay federal income tax and provincial income tax (Ontario, in the default RemoFirst setup). The rates depend on the province of residence, salary level, and the tax credits claimed on the employee's TD1 forms. Income tax is progressive. For 2026, the lowest federal tax rate was reduced to 14% (from 15%), and the federal basic personal amount, the income an employee can earn before paying federal tax, is $16,452.
What is CPP in Canada?
The Canada Pension Plan (CPP) provides retirement and disability benefits. CPP contributions are mandatory until the annual maximum is reached. For 2026, employees contribute 5.95% on earnings between the $3,500 basic exemption and the Year's Maximum Pensionable Earnings of $74,600, up to a maximum employee contribution of $4,230.45.
What is CPP2 in Canada?
CPP2 is an additional CPP contribution that applies to higher earners. For 2026, it applies at 4% on earnings between $74,600 and $85,000 (the second ceiling, known as the YAMPE), up to a maximum employee contribution of $416.
What is Employment Insurance (EI) in Canada?
Employment Insurance (EI) provides unemployment benefits, parental leave benefits, maternity benefits and sickness benefits. For 2026, employees outside Quebec pay 1.63% on insurable earnings up to a maximum of $68,900, for a maximum annual premium of $1,123.07. Contributions stop once the annual maximum is reached.
RRSP (Retirement Savings) in Canada
What is an RRSP in Canada?
A Registered Retirement Savings Plan (RRSP) is a tax-advantaged retirement savings account in Canada.
Can payroll deduct RRSP contributions in Canada?
Yes. Employees in Canada who are enrolled in the Group RRSP program may have contributions deducted through payroll.
Do RRSP contributions reduce taxable income in Canada?
Yes. RRSP contributions generally reduce taxable income in the year they are contributed.
Benefits and Health Insurance in Canada
Does Canada provide public healthcare?
Yes. Each province in Canada provides healthcare coverage to its residents.
Does RemoFirst provide additional benefits in Canada?
Optional benefits plans in Canada may include extended health coverage, dental coverage, life insurance and vision care. Coverage depends on the plan selected by the client.
Can employees choose their own benefits level in Canada?
No. In Canada, benefit eligibility is determined by the client and the applicable plan class.
Public Holidays in Canada
Are employees entitled to public holiday pay in Canada?
Yes. Public holiday rules in Canada vary by province. Ontario, the default setup, recognizes 9 public holidays per year.
What happens if an employee works on a public holiday in Canada?
Employees in Canada are generally entitled to either premium pay (typically 1.5 times the regular rate) or a substitute paid day off, depending on the applicable legislation and agreements.
Leave in Canada
What vacation entitlement applies in Canada?
In Ontario, employees are entitled to a minimum of 2 weeks of vacation per year, with vacation pay of at least 4% of gross earnings. After 5 years of employment with the same employer, this increases to 3 weeks of vacation and 6% vacation pay. Higher entitlements may apply based on tenure, contract or province.
What other leave types exist in Canada?
Employees in Canada may be eligible for:
- Maternity Leave
- Parental Leave
- Sick Leave
- Bereavement Leave
- Family Responsibility Leave
Eligibility depends on provincial legislation.
Working Hours in Canada
What are standard working hours in Canada?
A typical full-time schedule in Canada is 40 hours per week.
When does overtime apply in Canada?
In Ontario, overtime generally applies after 44 hours worked in a week, at a premium rate of typically 1.5 times the regular rate.
Are all employees eligible for overtime in Canada?
No. In Canada, certain managerial and supervisory positions may be exempt from overtime.
Expenses and Reimbursements in Canada
How are expenses reimbursed in Canada?
In Canada, employees submit receipts and obtain client approval. Approved reimbursements are generally processed on the second payroll cycle.
Are reimbursements taxable in Canada?
Business expenses supported by receipts are generally non-taxable in Canada.
What documentation is required for Canadian expense claims?
For an expense claim in Canada, the following are required:
- A receipt or invoice
- A business justification
- Client approval
Can mileage be reimbursed in Canada?
Yes. CRA-approved mileage reimbursement is generally non-taxable when properly documented. For 2026, the CRA prescribed rate in Ontario is 73 cents per kilometre for the first 5,000 kilometres driven and 67 cents per kilometre after that. Mileage claims must include:
- Date
- Destination
- Kilometres travelled
- Business purpose
Probation in Canada
Is a probation period required in Canada?
No. A probation period is not required in Canada.
What is the standard probation period in Canada?
Most employers in Canada use a 3-month probation period. This aligns with Ontario employment standards, under which employees with less than three months of service are generally not entitled to statutory termination notice.
What happens during probation in Canada?
Employment may generally be terminated without statutory notice during the first three months in Ontario. Protections against discriminatory or reprisal-based termination still apply throughout.
Employment Changes in Canada
What changes commonly require contract amendments in Canada?
Examples of changes in Canada that commonly require a contract amendment include:
- Salary changes
- Benefits changes
- RRSP contributions
- Position changes
- Working arrangement changes
Can contracts be backdated in Canada?
No. Employment contracts in Canada must be signed before employment begins.
Resignation in Canada
What happens when an employee resigns in Canada?
An employee resigning in Canada should provide contractual notice where applicable. Final pay may include:
- Outstanding salary
- Vacation pay owing
- Approved reimbursements
- Other contractual entitlements
Termination in Canada
Can employees be terminated without cause in Canada?
Yes. However, notice obligations and termination pay requirements may apply in Canada.
What payments may apply on termination in Canada?
Depending on the province and length of service, termination payments in Canada may include notice pay, termination pay, severance pay where applicable, and vacation pay. In Ontario, statutory termination notice or pay in lieu is generally 1 week per year of service, up to a maximum of 8 weeks.
Does severance always apply in Canada?
No. In Ontario, statutory severance pay is separate from termination notice and applies only in specific situations. Where it applies, statutory severance is 1 week per year of service up to a maximum of 26 weeks. Additional entitlements may apply depending on the circumstances.
For any payroll question about Canada not answered above, contact RemoFirst support and the team will be glad to help.
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