Employment Agreement Adjustments in Canada

PTO, notice periods, bonuses, and more.

Updated on January 12th, 2023

Can we adjust paid time off (PTO)? 

In Canada, employers can offer anything above the statutory minimum for PTO (commonly referred to as "vacation time" in Canada). Since most employers offer more than statutory PTO minimums, you should do the same to attract and retain top talent in Canada. 

Can we adjust working hours?

Most full-time employees in Canada have working hours set at a minimum of 37.5 to 40 hours per week, which equates to between 7.5 and 8 hours per day from Monday to Friday. There are maximum hour requirements before overtime sets in. These maximums depend on the province in which your supported employee resides. If your supported employee is employed on a full-time basis, their hours cannot be reduced unilaterally.

It is best practice to keep working hours standard in an employment agreement. Certain clauses state that overtime or irregular working hours may be necessary occasionally. However, some of your supported employees may be classified as exempt when it comes to overtime entitlements depending on the nature of their duties. 

If your supported employee might work overtime, please submit a ticket using the Help widget at the bottom of the page.

Can we remove the notice period?

No, nothing contained in the employment agreement can displace any of the minimum entitlements, including notice and severance, outlined in the provincial employment legislation.

For just-cause terminations, a notice period is sometimes not required. However, just-cause terminations are difficult to enforce and rarely used, especially when it comes to performance-related issues.  

For without-cause terminations, the minimum statutory notice period applies, and we recommend providing an enhancement to obtain a full and final release. Statutory minimum notice periods depend on the province where your supported employee resides and can be working notice, pay in lieu of notice, or a combination of both. This notice is separate from any entitlement to “severance,” which is also governed by provincial employment legislation. To review the specific requirements of notice and/or severance, please submit a ticket using the Help widget at the bottom of the page. 

Can we remove or increase the probationary period?

A probationary period is not required in Canada. However, it is best practice to have a probationary period clause if you want the option to terminate your supported employee within the first three months of employment consistent with the manner outlined in provincial legislation. If seniority is being recognized, this clause must be removed.

Can we add commissions, bonuses, or ad hoc payroll items?

Yes. For commissions and bonuses, we will typically use our Variable Compensation Agreement to outline the performance or measurables that your supported employee needs to meet to receive payment. For the bonus, we typically use a simple clause in the employment agreement stating the percentage of the bonus and the date payment will be received by your supported employee on an annual or semi-annual basis. 

How can we offer equity or stocks to our supported employees?

In Canada, we offer you the option of issuing equity as either “nonemployee” or “employee” grants. Two conditions apply:

  • For clients that issue equity as “nonemployee” grants, we do not facilitate withholding and payroll reporting unless the award is cash-settled
  • For clients that issue equity as “employee grants,” we do facilitate withholding and payroll reporting

How can we offer equity without signing a direct agreement with our supported employee?

We require you to directly issue the grant notice (i.e., side agreement) to your supported employee. This side agreement should not include any language that indicates a direct employer/employee relationship between you and your supported employee.