Employee benefits in Canada can run the gamut from basic health care plans to travel benefits, company cars, and cellphones, so it’s easy to see why some businesses have trouble deciding what’s best for their organisation.

More importantly, it can be difficult to keep track of the constantly changing rules surrounding taxes and employee benefits in Canada. Still, employee benefits can help lead to happier, healthier, and more productive employees, so it makes sense to design and invest in an effective benefits program.

Here’s a basic overview of employee benefits in Canada, including a look at legislation, best practices, and examples of a few companies with interesting policies.


Between employment standards legislation and tax rules set out by the CRA, there’s plenty to keep track of when it comes to employee benefits in Canada. It’s important to be careful, as trying to cut costs the wrong way can actually end up costing your business much more in the long run.

The main thing to keep in mind is that some benefits are taxable and/or must be added to employee income, while others are not. As an employer, your responsibilities include determining whether certain benefits are taxable, calculating their value, making the appropriate payroll deductions and filing an information return.

Examples of taxable benefits include:

  • Company cars
  • Company cell phones
  • Transit passes

The CRA gives a full rundown on the rules of employee benefits in Canada here, and it’s definitely worth a look. Things can get a bit complicated. For example, employers who provide free board and/or lodging to employees must calculate the fair market value of said lodging and add it to their employees’ income.

However, the value of board/lodging may be excluded from employee income if the situation meets a number of specific conditions (e.g., temporary work at a special site).

Beyond that, there are federal and provincial/territorial legislated minimums for items such as vacation time and vacation pay. Furthermore, if an employment or collective agreement offers a “greater right or benefit,” the larger number trumps legislation.

Finally, while overtime isn’t exactly a benefit, we think it’s relevant here to note the importance of rules surrounding extra work. Although there are some exceptions, employers usually still need to pay overtime to salaried employees.

The problem of cost

According to a 2014 survey conducted by Arthur J. Gallagher & Company, the number one challenge for US employers when it comes to employee benefits is controlling the cost of benefits programs.

No doubt, a costly benefits program and rising healthcare premiums can be a worrisome burden for small businesses. However, the survey also found that only 31 percent of survey respondents had quantified the cost of healthcare reform, and 90 percent of those organizations lacked a written employee benefits plan with measurable objectives.

Clearly, more strategic planning is needed to help mitigate the costs of benefits plans. Taking a look at Canada, Brian Lindenberg drew attention to a bigger benefits issue back in 2013 – the changing demographics of the workforce. “It’s been well documented that Canada’s population is aging, so it stands to reason that most workforces are getting older,” he wrote. “As a consequence, age-rated benefits will cost more, and utilization in the areas of health and disability will increase.”

Lindenberg also suggested that aging Canadians would begin to prefer different benefits, such as those with a post-retirement focus. And with the retirement age shifting back and with people living longer lives, employee benefits programs may be used more extensively and for longer periods of time.

That said, Lindenberg did see a bit of a silver lining. “There is a tremendous opportunity to better manage and make benefits plans more relevant by understanding these demographic shifts and recalibrating as necessary,” he stated.

Best practices

Aside from making sure you’re compliant with tax regulations and employment standards legislation, there are a few general best practices that can be helpful to follow in terms of employee benefits:

  • Culture – Make sure your benefits program aligns with your company’s mission and culture. When assessing your needs, it can be easy to get caught up in data, but a program that doesn’t sync with your people or your workplace won’t stick.
  • Look beyond health – As mentioned above, there’s more to employee benefits than medical and dental insurance. Consider other perks like additional time off, transit passes, and more.
  • Risk management – There’s a balance between meeting employee wants and addressing the biggest risks for your organisation. A good employee benefits program looks at the biggest risk factors for your business and helps to mitigate them.
  • Treat it like an investment – While many employers simply see employee benefits programs as a cost, it’s important to consider that an investment in the health of your employees is an investment in your company’s future.

Strategies for designing & implementing employee benefits programs

Some tips for putting a program together or updating your current program:

  • Communicate clearlyThis should be the number one rule for implementing any program in the workplace. Communicate clearly via multiple channels so there’s no confusion as to the benefits employees are entitled to and how to claim them.
  • Shop around for insurersThere are a number of options for small and large businesses out there, so make sure you choose one that truly fits your needs. Useful features might include pay-direct cards, or the ability to file claims online.
  • Get inputIt’s definitely worth your time to talk to employees and find out what they really want, especially if you’re a small business. There’s no sense paying extra for a benefit that no one cares about.
  • Offer wellness programsOffering additional wellness programs can help encourage employees to get proactive about their health. That can lower usage and costs for benefits programs longer term.

What to include?

Beyond health and dental insurance, fitness and wellness programs are popular benefits, as are retirement planning and RRSP contribution matching programs. In fact, retirement is becoming more and more important to young Canadians amidst uncertainty around whether they’ll be able to afford to retire on their own.

To further get your creative juices flowing, here are a few examples of interesting employee benefits:

  • Cameco has a lounge and nap room for employees who need to recharge
  • Richard Branson famously offers an unlimited vacation policy for employees of Virgin
  • Molson Coors Canada runs in-house brewing and beer tasting programs
  • At Rise, we offer paid birthdays off as well as subsidized transit and fitness passes

Over to you

Employee benefits are more than just a perk; they can be key to the success of a business. As a tool for keeping employees happy and healthy while managing risk, employee benefits programs are certainly a good investment.

There’s no cookie-cutter, one-size-fits-all benefits program out there. However, with a little research and planning, managers and HR teams can certainly come up with an effective solution for their organizations.

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