Payroll and HR Fact Sheet for Canada
1. Employment Contracts
Types of Employment Contracts:
- Permanent Contracts: Ongoing employment with no specified end date, offering long-term job security.
- Fixed-Term Contracts: Employment for a specific period or until the completion of a particular task. These contracts must have a clear end date or project completion criterion.
- Part-Time Contracts: Employment with fewer working hours compared to full-time positions, but with similar entitlements on a pro-rata basis.
- Casual Contracts: Employment without guaranteed hours, often on an as-needed basis. Casual employees typically receive a higher hourly rate (casual loading) instead of entitlements like paid leave.
Essential Elements of Employment Contracts:
- Written Form: While not mandatory, a written contract is strongly recommended. It should outline job duties, salary, working hours, and termination conditions.
- Probation Period: Commonly six months, during which either party can terminate the employment with minimal notice.
- Notice Period: Varies by length of service, ranging from 1 week (for less than 1 year of service) to up to 4 weeks (for more than 5 years of service), with additional notice for employees over 45 years old who have at least 2 years of service.
2. Working Hours
Standard Working Hours:
- Normal Working Hours: Typically, 38 hours per week. Hours beyond this are considered overtime.
- Overtime: Generally paid at a higher rate (usually 1.5 times the normal rate for the first 2-3 hours, then 2 times thereafter) or compensated with time off in lieu. Specific rates and conditions are often determined by awards or enterprise agreements.
Breaks and Rest Periods:
- Breaks: Employees are entitled to a 30-minute unpaid meal break after 5 hours of work. Specific awards or agreements may provide additional or different break entitlements.
- Daily Rest Period: At least 10 consecutive hours off between shifts.
- Weekly Rest Period: At least one full day off per week.
3. Leave Entitlements
Annual Leave:
- Minimum Entitlement: 4 weeks of paid leave per year for full-time employees, with part-time employees entitled on a pro-rata basis. Shift workers may be entitled to 5 weeks.
Public Holidays:
- Employees are entitled to be absent from work on public holidays without loss of pay. The number and dates of public holidays vary by state and territory.
Sick and Carer’s Leave:
- Entitlement:10 days of paid personal/carer’s leave per year for full-time employees. Part-time employees receive this entitlement on a pro-rata basis. Unused leave accumulates from year to year.
Maternity and Paternity Leave:
- Parental Leave: Eligible employees are entitled to 12 months of unpaid parental leave, with the option to request an additional 12 months.
Parental Leave Pay:
- Government-Funded: Up to 18 weeks of pay at the national minimum wage, provided by the government to eligible primary caregivers.
4. Compensation and Benefits
Minimum Wage:
- As of July 2024, the national minimum wage is $23.23 per hour or $882.80 per 38-hour week. Specific industries and occupations may have higher minimum rates set by awards or agreements.
Superannuation:
- Employer Contributions: Employers must contribute a minimum of 11.5% of an employee’s ordinary time earnings to a superannuation fund. This will increase as of 1st July 2025 to 12% as of current law.
- Employee Contributions: Voluntary contributions are encouraged, often with tax benefits.
Components of Superannuation:
- Retirement Savings: Funds are preserved until retirement age, with some exceptions for severe financial hardship or health issues.
Additional Benefits:
- Salary Sacrifice: Employees can opt to sacrifice part of their pre-tax salary into additional superannuation contributions or other benefits.
- Fringe Benefits: Non-cash benefits provided by employers, such as a company car or health insurance, which may be subject to fringe benefits tax (FBT).
5. Expense Reimbursement
Travel Expenses:
- Employees are entitled to reimbursement for travel expenses incurred during business trips. This includes transportation costs (e.g., public transport tickets, mileage allowance for personal vehicle use), accommodation, and meals.
Per Diem Rates:
- Domestic Travel: Per diem rates for domestic travel vary by location and are set by the Australian Taxation Office (ATO). As of 2024, rates range from $30 to $150 per day, depending on the city and duration of the trip.
- International Travel: Per diem rates for international travel also vary by destination and are specified by the ATO. Rates range from $70 to $250 per day, depending on the country.
Mileage Rates:
- For employees using their personal vehicle for business purposes, the standard mileage reimbursement rate is $0.78 per kilometre as of 2024.
Receipts and Documentation:
- Employees must provide receipts and appropriate documentation to claim reimbursement for expenses. Detailed and accurate records are essential for compliance with tax and audit requirements.
Home Office Expenses:
- Reimbursement for home office expenses, such as internet costs, office supplies, and equipment, may be provided based on company policies or individual agreements.
6. Termination of Employment
Notice Periods:
- Notice periods vary based on the length of service. For instance, employees with less than 1 year of service require 1 weeks’ notice, which increases up to 4 weeks for those with more than 5 years of service. Employees over 45 years old with at least 2 years of service are entitled to an additional week of notice.
Redundancy Pay:
- Entitlement: Employees with at least 1 year of continuous service are entitled to redundancy pay, which scales with length of service. For example, an employee with 1-2 years of service is entitled to 4 weeks of redundancy pay, while an employee with 9-10 years of service is entitled to 16 weeks of pay.
Unfair Dismissal Protection:
- Employees who believe they have been unfairly dismissed can lodge a claim with the Fair Work Commission. Protection against unfair dismissal generally applies to employees who have been with the employer for at least 6 months (or 12 months for small businesses).
7. HR Administration
Employee Records:
- Retention Period: Employment records, including contracts, payroll, and tax information, must be kept for at least 7 years.
- Contents: Records should include personal details, employment history, salary, leave entitlements, and any disciplinary actions.
Data Protection:
- Privacy Act 1988: Employers must handle personal information in accordance with the Privacy Act, ensuring it is collected, used, and stored securely. Employees have rights to access and correct their personal information.
Workplace Safety:
- Work Health and Safety (WHS) Act: Employers are responsible for providing a safe work environment, including conducting risk assessments, providing safety training, and adhering to safety standards.
8. Recruitment and Selection
Non-Discrimination:
- Employers must ensure non-discriminatory practices in recruitment, promotion, and employment conditions. Decisions must not be based on race, gender, age, disability, religion, sexual orientation, or political beliefs.
Work Permits:
- Australian Citizens and Permanent Residents: No work permit required.
- Temporary Visa Holders: Required to have a visa with work rights, such as the Temporary Skill Shortage (TSS) visa.
Employee Onboarding:
- New hires should be provided with information on company policies, job responsibilities, workplace safety, and benefits. Induction programs and training sessions are recommended to integrate new employees effectively.