A Guide to Workers’ Compensation in Canada

As hard as we all try to avoid it, accidents do happen in the workplace—even in a place as nice as Canada. Workers’ compensation is simply one of those issues that must be dealt with when conducting business.

Workers’ compensation in Canada is paid by the employer and makes sure that if an employee is injured on the job, they won’t be on the hook for the financial burden that comes with it.

What is Canadian workers compensation and how does it work?

Workers’ compensation in Canada is a provincial insurance scheme that provides employees with income if they experience injury or illness at work while performing valid employment tasks.

Canada’s national and provincial social programs provide insurance, but each province has its own plans and benefits. Not all industries require workers’ compensation insurance, but many do.

Most Canadian employees are eligible to apply for workers’ compensation insurance if they experience a work-related illness or injury, according to Canada’s Workers’ Compensation Act.

The Association of Workers’ Compensation Boards of Canada (AWCBC) gathers and publishes information on Canada’s workers’ compensation system and serves as a good resource for employers interested in expanding into Canada or hiring talent in the country.

Employers pay for workers’ compensation

Businesses with employees in Canada are responsible for offering workers’ compensation insurance. Employers must first register their companies with the Workers’ Compensation Insurance Board (WCB) and then pay their employees’ insurance premiums.

Employers must also establish adequate safety measures to protect their workforce and quickly report accidents or injuries to the WCB to assist injured employees in their recovery.

Workers’ compensation benefits vary by province

Each province’s WCB determines when employers must provide workers’ compensation insurance. The board also decides how and when employers must report work-related incidents and who is eligible for coverage.

For example, the WCBs in New Brunswick and Nova Scotia require employers who manage a team of three or more staff to register for coverage. However, companies in the Northwest Territories must register with the WCB before they even hire their first employee.

The premiums for workers’ compensation benefits also vary. Below are the average workers’ compensation rates, per $100 insurance earnings, in 2023:

Workers’ compensation eligibility depends on industry

While most Canadian employees are eligible for workers’ compensation, there are some exceptions. Industries like dentistry, banking, and insurance are exempt from workers’ compensation.

Many employers must contribute to workers’ compensation, which, by extension, covers their employees. However, independent contractors or self-employed talent don’t pay into the national scheme. Self-employed talent may purchase personal coverage, but it’s not required.

Is workers’ compensation mandatory in Canada?

Any employer with a business in Canada must provide workers’ compensation insurance to their employees—save for those in exempt industries.

If a business hires a Canadian employee, they must first register with the WCB in the corresponding province—keep in mind that Canada is a big place and regulations vary by province.

Other mandatory employee benefits in Canada

Canadian employment law requires employers to provide several other statutory employee benefits to their talent apart from workers’ compensation. These include the following:

• Provincial healthcare coverage. Canadian Medicare provides health benefits to all employees, which include basic medical care and standard hospital care. Healthcare coverage varies depending on the province or territory.
• Pension contributions. There are two pensions in Canada: Canada Pension Plan (CPP) and Quebec Pension Plan (QPP). The CPP is for all Canadians residing outside of Quebec and is a taxable benefit that replaces part of an employee’s income when they retire. The QPP is only for the Quebecois and gives employees and their families financial protection for retirement, death, or disability.
• Employment Insurance. Employment insurance is temporary income support for unemployed talent while they look for employment or take time off for a specific life event such as illness, pregnancy, or caring for a newborn, newly adopted child, or a critically ill or injured person.
• Survivor insurance. Similar to life insurance, survivor insurance provides monthly payments for spouses or common-law partners of deceased employees.

Canadian vs. U.S. workers’ compensation

There are a few notable differences between U.S. and Canadian workers’ compensation that U.S. employers should consider before hiring employees in Canada.

Workers’ compensation boards (WCBs)

Canada’s WCBs operate independently from the government and are funded by employers, just like in the U.S.. However, Canadian employers must purchase workers’ compensation through a WCB, while U.S. employers have the option to purchase it through private insurers.

Cost factors

In Canada, the primary cost factors driving workers’ compensation rates are loss of earnings and wage-loss benefits. In the U.S., the primary cost factor is medical benefits.

Return-to-work programs

In the U.S., medical providers often set clear timeframes that determine how long an employee should be away from work while they heal from injury or illness. However, in Canada, medical providers are not involved in the decision process regarding an employee’s return to work.

While Canadian employers typically do not consult doctors regarding their employee’s return-to-work process, they can request an independent medical examination by a WCB-recommended doctor or by a doctor of their own choosing.

When should Canadian employers report workplace incidents?

Canadian employers must typically report work-related accidents or illnesses to the WCB within 72 hours after learning that an employee needs medical treatment or:

• Is absent from work
• Earns less than regular pay for regular work
• Requires modified work at less than regular pay

The reporting time frame varies depending on the province or territory.

Let Pebl simplify workers’ compensation in Canada with an EOR

Navigating benefits and workers’ compensation can be challenging in your home country. When expanding your business beyond that? It can be downright headache-inducing. By partnering with an employer of record (EOR) like Pebl, you can avoid the headaches (the paperwork-related ones at least) and grow your team with ease.

An EOR serves as the legal employer of your global workforce, allowing you to hire across borders without having to set up an entirely new legal branch of your business. And the EOR (staffed with country-specific experts) makes sure onboarding, payroll, benefits administration, HR support, and everything else is smooth and compliant. You sit back and do what you do best (which most of the time isn’t having a comprehensive understanding of the laws of 185+ countries worldwide).

Our Global Benefits service has competitive offers we can tailor to your employees’ specific needs and locales. Let us remove the HR complexities so you can hire, pay, and manage top talent in Canada.

Care for your Canadian team with help from Pebl. Consult our experts to learn more.

This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. You should contact your attorney or tax advisor to obtain legal and/or tax advice with respect to your particular situation. Only your individual attorney or tax advisor can provide assurances that this information—and your interpretation of it—is applicable or appropriate to your specific situation. All liability with respect to actions taken or not taken based on this information is hereby expressly disclaimed. All content is provided “as is,” and Pebl makes no representations or warranties concerning this information.

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