Written and fact-checked by the EORquotes research team · Data verified July 2026
Hiring an employee in Canada costs significantly more than their gross salary. This calculator itemizes every mandatory employer contribution so you can budget an offer accurately — before you talk to an EOR provider.
How much does it cost to hire an employee in Canada? Employing someone in Canada costs roughly 13.14% above their gross salary in mandatory employer contributions. A 7,000 CAD per month hire costs about 7,920 CAD per month all-in — 95,038 CAD per year across 12 salary payments.
Cost of hiring in Canada: key facts (2026)
- Employer contributions add about 13.14% on top of gross salary at a typical wage — a 7,000 CAD/month hire costs roughly 7,920 CAD per month all-in.
- Salary is paid 12 times a year.
- There is no single statutory minimum wage in Canada; pay floors come from collective agreements or regional wage boards.
- Several contributions are capped or salary-dependent, so the effective rate falls as salary rises — the calculator handles this.
- Statutory paid leave is 10 days plus 9 public holidays, on a 40-hour week.
Hiring in Canada in 2026: what to know
Canada is a natural nearshore extension for US employers: full time-zone overlap, a highly educated and bilingual (English, and French in Quebec) workforce, and the stability of the USMCA relationship. Toronto, Vancouver and Montreal anchor deep tech, finance and creative talent, and total employer on-costs are lower than in most of Europe or Latin America.
The complexity is jurisdictional. Employment standards, health-tax obligations and workers’ compensation are set province by province, and Quebec has its own distinct payroll regime (QPP, QPIP, health-services fund). The biggest cost surprise for foreign employers is termination: on top of statutory notice, Canadian common law can entitle a dismissed employee to ‘reasonable notice’ far exceeding the legislated minimum, so ending employment can be markedly more expensive than the statutory figures suggest.
For 2026 the CPP Year’s Maximum Pensionable Earnings rose to $74,600 with the CPP2 second ceiling at $85,000, the EI employer rate is 2.324% on insurable earnings up to $68,900, and Ontario’s Employer Health Tax holds at 1.95%. There is no 13th-month salary in Canada; vacation pay and the province-specific health and workers’-compensation levies are the main add-ons beyond CPP and EI.
This page focuses on what a hire costs. For the full employment picture — contract types, probation, benefits, termination — see our Canada EOR country guide.
Calculate the true cost of an employee in Canada
How this calculator works: contributions are computed on the annual gross salary
(12 payments per year), contributions with a statutory ceiling stop at that ceiling, rate ranges use the midpoint, and every rate is cited
in the sources at the bottom of this page.
What a hire in Canada actually costs: worked examples
Example: a typical professional hire (7,000 CAD/month)
Employing a typical professional hire (7,000 CAD/month) in Canada costs 95,038 CAD per year — an effective 7,920 CAD per calendar month, about 13% more than the monthly gross written in the contract.
| Annual gross (12 payments) | 84,000 CAD |
| Canada Pension Plan (CPP, employer) (5.95%), capped at 6,217 CAD/month | 4,439 CAD |
| Employment Insurance (EI, employer) (2.324%), capped at 5,742 CAD/month | 1,601 CAD |
| Employer Health Tax (Ontario, representative) (1.95%) | 1,638 CAD |
| Vacation pay accrual (4.0%) | 3,360 CAD |
| Total annual employer cost | 95,038 CAD |
| Effective monthly cost | 7,920 CAD |
Example: a senior hire (10,000 CAD/month)
Employing a senior hire (10,000 CAD/month) in Canada costs 133,180 CAD per year — an effective 11,098 CAD per calendar month, about 11% more than the monthly gross written in the contract.
| Annual gross (12 payments) | 120,000 CAD |
| Canada Pension Plan (CPP, employer) (5.95%), capped at 6,217 CAD/month | 4,439 CAD |
| Employment Insurance (EI, employer) (2.324%), capped at 5,742 CAD/month | 1,601 CAD |
| Employer Health Tax (Ontario, representative) (1.95%) | 2,340 CAD |
| Vacation pay accrual (4.0%) | 4,800 CAD |
| Total annual employer cost | 133,180 CAD |
| Effective monthly cost | 11,098 CAD |
Where the money goes
At a typical 7,000 CAD/month salary, this is how the annual cost of employing someone in Canada divides between take-home pay and the mandatory contributions on top:
- Annual gross (12 payments) — 84,000 CAD (88.4%)
- Canada Pension Plan (CPP, employer) (5.95%), capped at 6,217 CAD/month — 4,439 CAD (4.7%)
- Employment Insurance (EI, employer) (2.324%), capped at 5,742 CAD/month — 1,601 CAD (1.7%)
- Employer Health Tax (Ontario, representative) (1.95%) — 1,638 CAD (1.7%)
- Vacation pay accrual (4.0%) — 3,360 CAD (3.5%)
Skip the paperwork. An EOR employs your Canada hire through its own local entity — payroll, contributions, insurance and compliance handled for a flat monthly fee. Most teams are up and running in days:
What’s behind each employer cost in Canada
Canada Pension Plan (CPP, employer)
The employer matches the employee’s 5.95% CPP contribution on earnings between the $3,500 basic exemption and the Year’s Maximum Pensionable Earnings of $74,600 (2026). Above that, a second tier (CPP2) adds 4% on earnings between $74,600 and $85,000 — worth at most about $416 per year for higher earners, not shown separately here. Quebec runs its own QPP at a higher rate.
Employment Insurance (EI, employer)
Employers pay EI at 1.4 times the employee premium — 2.324% in 2026 — on insurable earnings up to a maximum of $68,900 per year. Quebec has a lower EI rate because it runs a separate parental-insurance plan (QPIP) alongside it.
Employer Health Tax (Ontario, representative)
Ontario levies a 1.95% Employer Health Tax on total payroll for employers above the $1M exemption (which an EOR exceeds). This is province-specific: British Columbia and a few others levy a similar tax, several provinces levy none, and Quebec’s health-services fund is higher. It is not capped — it applies to the full payroll.
Vacation pay accrual
Statutory vacation is a minimum of two weeks — 4% of wages — rising to 6% (three weeks) with tenure in most provinces. It is accrued and paid to the employee, so it is a real employer cost budgeted from day one.
What the employee pays in Canada
Employer contributions are only one side of the ledger. Employees in Canada pay their own 7.58% social-security contribution out of gross salary, plus progressive income tax withheld at source — the exact rate depends on income level and personal situation. That is why gross salary, net take-home and total employer cost are three different numbers. This page focuses on the employer side: what a hire actually costs your budget.
Salary structure in Canada
Salary is paid 12 times a year — Canada has no statutory 13th-month pay. Vacation pay (a minimum 4% of wages) is accrued and modelled above as a separate employer cost rather than an extra salary payment. In practice: a 2,000 CAD monthly salary in Canada means 24,000 CAD in annual gross pay (12 × 2,000), and every employer contribution above is calculated on that annual figure — which is why the calculator works on an annual basis before showing you the effective monthly cost.
EOR vs opening your own entity in Canada
Incorporating in Canada means federal or provincial registration, a CRA payroll account, and separate registrations for health tax and workers’ compensation in each province you employ in — manageable but multiplied by every jurisdiction. An EOR removes it: the provider’s Canadian entity employs your hire, runs CPP/EI and the correct provincial levies, and — importantly — structures contracts and terminations to manage common-law notice exposure. For distributed Canadian hiring across provinces, an EOR is the pragmatic route. Providers such as Deel and Remote are the usual starting points — or compare quotes from several at once.
Key employment facts for Canada
Beyond the payroll numbers, these statutory rules shape what a Canada hire costs and how the relationship works day to day:
| Working hours | 40 hours/week |
| Paid annual leave | 10 days |
| Public holidays | 9 |
| Maximum probation | 3 months |
| Notice period | 1–8 weeks statutory by tenure (province-specific); common-law reasonable notice can be substantially longer |
| Severance | Statutory severance in some provinces (e.g. Ontario: one week per year of service, 5+ years, capped) plus potential common-law entitlements |
Hire in Canada without an entity
We match you with vetted EOR providers for Canada — free, in one request:
Or go direct to a provider covering Canada:
Frequently asked questions
How much does it cost to employ someone in Canada?
On top of gross salary, employers in Canada pay roughly 13.14% in mandatory contributions at a typical salary. Several of those contributions stop at a statutory wage ceiling, so the effective percentage falls as salary rises — which is why a flat percentage of gross overstates the cost of senior hires here. Use the calculator above for an itemized total at your exact salary level.
What payroll taxes do employers pay in Canada?
Canada Pension Plan (CPP, employer) (5.95%), capped at 6,217 CAD/month. Employment Insurance (EI, employer) (2.324%), capped at 5,742 CAD/month. Employer Health Tax (Ontario, representative) (1.95%). Vacation pay accrual (4.0%). The biggest single item is Canada Pension Plan (CPP, employer) at 5.95% — see the plain-language breakdown of each contribution earlier on this page for what it funds and who pays what.
How many salary payments per year are required in Canada?
12. Salary is paid 12 times a year — Canada has no statutory 13th-month pay. Vacation pay (a minimum 4% of wages) is accrued and modelled above as a separate employer cost rather than an extra salary payment. When budgeting, multiply the monthly salary by 12, not 12: a 2,000 CAD contract is 24,000 CAD a year in gross pay before any employer contributions.
What is the minimum wage in Canada?
There is no statutory national minimum wage in Canada. Pay floors are set through collective agreements negotiated per industry, so the applicable minimum depends on the agreement covering your hire’s role — one more reason to work with a provider that knows the local agreements well.
Can I hire in Canada without opening a local company?
Yes — that is exactly what an Employer of Record does. The EOR already operates a legal entity in Canada: it employs your hire on your behalf, runs compliant payroll including the full ~13.14% of employer contributions, and sends you one monthly invoice. You direct the day-to-day work; the EOR carries the legal employment relationship.
How fast can I hire in Canada through an EOR?
Typically days rather than months. The slow parts of employing in Canada — entity setup, social-security and tax registrations, mandatory insurances — already exist on the EOR’s side. In practice your timeline is usually the candidate’s own notice period with their current employer (notice periods in Canada run 1–8 weeks statutory by tenure (province-specific); common-law reasonable notice can be substantially longer).
What does an EOR service cost in Canada?
Providers charge a flat monthly fee per employee on top of the statutory employment costs shown in the calculator above — the statutory costs are the same whoever you pick, but the fee is not. The same Canada hire can be priced very differently across providers, which is why comparing several quotes at once pays for itself.
What is the notice period and probation limit in Canada?
Probation runs up to 3 months, and statutory notice is 1–8 weeks statutory by tenure (province-specific); common-law reasonable notice can be substantially longer. Getting these right in the contract from day one matters — an EOR applies the correct local terms automatically, which is where compliance risk usually hides.
How is severance calculated in Canada?
Statutory severance in some provinces (e.g. Ontario: one week per year of service, 5+ years, capped) plus potential common-law entitlements. Because severance exposure grows with tenure, it is worth understanding before you make an offer — the calculator above covers ongoing cost, while severance is a separate end-of-employment liability.
How many paid leave days are mandatory in Canada?
Employees are entitled to 10 days of paid annual leave plus 9 public holidays, on a 40-hour working week. Paid leave is part of the true cost of a hire even though it does not show as a payroll contribution.
Is Canada a cost-effective place to hire compared with neighbours?
It depends on the role, but the honest comparison is total employer cost, not gross salary — the effective on-cost here is about 13.14%. Use the calculator for your exact salary, then compare against nearby markets from the country index linked below before you commit to a location.
Compare Canada with other markets
Employer costs swing widely between countries — the same salary can cost far more or less depending on where you hire. See the full employee-cost calculator index for every country, or jump to a neighbour:
Compare EOR providers for Canada
Knowing the cost is half the decision — the other half is which provider handles your Canada hires best. These head-to-heads weigh entity model, strengths and pricing approach specifically for Canada:
- Deel or Multiplier for a Canada hire?
- Canada: Multiplier vs Playroll compared
- Deel vs Remote for hiring in Canada
- compare Remote and Oyster in Canada
More Canada resources
Costs are only part of the picture. Our Canada EOR country guide covers contract types, benefits, termination rules and compliance for Canada in depth — the questions that come up after the budget is approved.
Sources
Every number on this page traces to an official or authoritative source, checked on the date shown. Spot something outdated? Tell us and we will verify and correct it.
- CPP 2026: employer 5.95% up to YMPE $74,600 (basic exemption $3,500); CPP2 4% between $74,600 and $85,000: Canada Revenue Agency (CRA) (accessed 2026-07)
- EI 2026: employer rate 2.324% (1.4x employee) up to maximum insurable earnings $68,900: Canada Revenue Agency (CRA) (accessed 2026-07)
- Ontario Employer Health Tax 1.95% on payroll above the $1M exemption: Ontario Ministry of Finance (accessed 2026-07)
- Statutory vacation minimum two weeks (4% of wages), rising to 6% with tenure: Government of Canada (Labour Standards) / provincial ESAs (accessed 2026-07)
- Typical professional monthly salary reference (~7,000 CAD) used for worked examples: Editorial estimate for a mid-level professional hire; verify per role (Statistics Canada) (accessed 2026-07)