An Employer’s Guide to Benefits for Employees in Canada
By Marta Gongos Attracting and retaining top talent is a huge concern for businesses big and small. Quite often, it comes down to employee compensation, which includes benefits for employees like health insurance, retirement plans, and other perks that make any job more appealing.
Offering comprehensive employee benefits packages is a great way to help your company stand out from the competition. These benefits don’t just meet your employees’ basic needs—they also show you care for their well-being and future. Employees feeling confident that you have their best interests in mind is crucial in creating a workplace culture where everyone feels valued. Trust us, investing in your employees’ satisfaction will make a world of difference in creating a productive workforce.
If you’re wondering how to plan and select benefits for employees, you’ve come to the right place. In this guide, we’ll break down all the details you need to know to build the best benefits packages for your business.
| An Overview of Benefits for Employees | |
What Are Employee Benefits?
Employee benefits are non-wage compensations employers provide on top of regular salaries. These are designed to enhance employees’ overall well-being, financial security, and work-life balance. Think of them as an employer’s way of saying, “You rock, and we want to support you and keep you on our team!”
Types of Employee Benefits in Canada
Employee benefits in Canada fall under two categories. They are either mandatory or supplementary.
As the name mandatory benefits suggests, employers must provide these legally required benefits (a.k.a. statutory benefits) to employees. Supplemental benefits, on the other hand, are additional perks that employers offer to attract and retain employees. Take a look at the table below to see which benefits for employees fall under which category.
| Mandatory Benefits for Employees | Supplementary Benefits for Employees |
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Why Benefits for Employees Are Important
Comprehensive benefits packages offer numerous advantages for both employees and employers. Beyond complying with labour laws, employee benefits in Canada are strategic investments in your employees’ well-being, boosting job satisfaction and morale.
Attracting and Retaining Top Talent
Top performers aren’t just looking for a paycheck. They’re seeking companies that are willing to invest in their well-being. Job seekers are drawn to a positive work environment where their efforts are rewarded and compensated.
The proof is in the data, as an overwhelming majority (80%) of Canadian workers look at health benefits before accepting a new role. Statistics also show that employees who are satisfied with their benefits are 70% more likely to remain loyal to their employer. Recruiting and training new hires is expensive, so reducing turnover rates can have significant financial advantages for your business.
Related Resources:
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Boosting Employee Satisfaction and Engagement
Offering insurance benefits for employees and other perks that support their well-being also fosters a more positive and engaged workforce. When your team feels valued and supported by a comprehensive benefits package, you’re likely to see higher rates of employee engagement and job satisfaction. This directly translates to increased productivity and an outstanding company culture!
☝️Fun fact: Companies with happy employees enjoy a higher 147% earnings per share versus their competitors. It seems happiness can buy money.
Related Resource: How to Keep Employees Engaged During a Recession
Increased Productivity and Improved Performance
Speaking of productivity, did you know that employees who feel valued and supported by their employers tend to be more productive and motivated? Benefits promoting work-life balance, such as paid leave and flexible work arrangements, can thus contribute to improved performance. This is proven by statistics that show:
- Highly engaged employees are 21% more productive than their less-engaged counterparts.
- Strong wellness programs help reduce absenteeism by up to 25%.
- Employees at companies with good service benefits and incentive programs are 14% more productive than companies without these benefits.
Related Resource: 8 Effective Ways to Keep Employees Motivated
Creating a Healthy Workforce
Your people are your most valuable asset, and they need to be healthy to thrive. Providing robust health insurance benefits is important for employees, ensuring their access to preventive care, treatments, and medications.
Providing health insurance benefits to employees helps them manage the financial strain of costly medical expenses. Ultimately, this helps your team stay healthy and avoid preventable illnesses, resulting in fewer sick days and smoother operations for your business.
Supporting Mental Health in the Workplace Through Employee Benefits
Mental health is a workplace issue. In Canada, over 500,000 employees miss work every week because of psychological concerns. These concerns are largely the result of work, with workplace stress, burnout, and poor work-life balance significantly impacting mental well-being.
For this reason, it’s important Canadian employers create supportive environments that destigmatize mental health issues. Lead by example and encourage your employees to prioritize their well-being by offering mental health benefits like:
- Mental health coverage
- Employee assistance programs
- Wellness initiatives
- Flexible/remote work arrangements
These work benefits go a long way in supporting the mental health of your employees. This will ultimately benefit both your employees and your business as poor mental health can lead to decreased productivity, increased absenteeism, and higher employee turnover. All of these can hurt your company.
Upskilling Employees
Professional development opportunities are another competitive advantage, which is a win-win for both your business and your employees. By offering these benefits, you ensure your employees’ skills stay sharp and relevant while they grow professionally and feel more valued in their roles.
Related Resource: The Importance of Upskilling Employees
Enjoying Tax Advantages
Tax advantages are a nice way to sweeten the deal as far as benefits for employees are concerned. They are often tax-deductible for employers and may be tax-free or tax-deferred for employees, making them a cost-effective way to compensate your workforce.
Let’s break this down in more detail:
- Employer contributions to employee Registered Retirement Savings Plans (RRSPs) are tax-deductible for the employer and reduce taxable income for the employee.
- Healthcare spending accounts (HSAs) allow employees in Canada (except Quebec) to spend tax-free money on medical expenses.
The Cost of Employee Benefits in Canada
On average, the cost of employee benefits Canada-wide can range from 15% to 30% of a company’s payroll, with larger companies typically spending more on a wider range of benefits. Of course, the exact costs can vary.
Employers typically cover a significant portion of extended health insurance benefits for employees, but employees may also contribute through payroll deductions or premiums. The cost-sharing arrangement depends on the specific benefit and the company’s policies.
☝️Pro tip: While benefits do cost money, you can design a strategic benefits package that balances cost-effectiveness with attracting and retaining top talent.
7 Tips to Design an Effective Employee Benefits Package
Now that we have the whats and whys covered, it’s time to explore how you can actually go about creating an effective employee benefits package!
1. Understand Your Goals and Budget
Step one is knowing what you want to achieve and how much you can afford to offer. Is your goal to better attract and retain top talent? Improve productivity? Enhance employee well-being? All three?
Identify your priorities so you can then set a realistic budget based on your company’s financial resources. Then, come up with a plan to maximize your return on investment.
2. Analyze Your Workforce
Conduct a thorough analysis of your workforce to understand their demographics, life stages, and unique needs. This information will help you identify which benefits are most valuable and relevant to your employees.
Different generations have different priorities when it comes to benefits for employees. Boomers and Gen X often prioritize family health benefits and parental PTO, while both Millennials and Gen Z usually put mental health coverage and flexibility first.
3. Review Legal Requirements
You need to ensure compliance with all applicable employment laws and regulations in Canada. Some benefits, such as employment insurance and workers’ compensation, are mandatory, while others may be required based on the size or industry of your organization.
✅ Pro tip: Hire an experienced HR professional or legal advisor to ensure you comply with all legal requirements related to offering employee benefits. This will help you avoid potential penalties or legal issues down the line.
4. Research the Market for Their Offers
Another crucial step to creating an effective benefits package is looking into what other companies offer. You want to check your packages against competitors in your industry and geographical area to help you understand the market standards and ensure that your offerings remain competitive.
5. Choose the Right Employee Benefits Mix
Now that you understand the needs of your workforce and the market landscape, it’s time to select the perfect combination. Here are some things to consider:
- You may want to offer a core set of essential benefits such as health and dental insurance but also allow employees to customize their packages with optional benefits.
- Analyze the cost of each benefit option against its perceived value to each of your employees.
- Leverage your company size or industry specifications to get more competitive rates on group insurance plans.
- Promote healthy habits through wellness programs or health risk assessments to improve employee well-being and potentially reduce future healthcare costs.
The key is to strike a balance between offering an attractive selection of benefits and staying within your financial means. Choose a mix that caters to your workforce demographics while ensuring your company’s long-term sustainability.
Related Resource:
📝 Diversity and Inclusion: 5 Best Practices for the Workplace
6. Communicate Your Benefits to Your Employees
Once you’ve chosen the type of employee benefits, the next step is to ensure that your employees understand and appreciate the value in what you’re offering. Revisit your initial goals for the benefits program (attracting talent, boosting morale, etc.) and prioritize benefits that directly support them.
Then, create a clear, easy-to-understand document outlining all of the offered benefits, eligibility criteria, and enrollment processes. You may also want to integrate employee benefits information into the onboarding process.
Related Resource: The Ultimate Guide to Onboarding New Hires
7. Continuously Evaluate and Improve
Employee benefits in Canada are constantly evolving. Keep an eye on the insurance benefits that you offer, and be ready to tweak them as needed for the best results.
Make sure to regularly survey employees to understand their satisfaction with the benefits program and identify areas for improvement. You also want to stay updated on market changes and employee needs to ensure your package remains competitive. Adjust your benefits program based on feedback and evolving needs!
Image source: Canva
Employee Benefits are Just the Beginning
A comprehensive employee benefits package is a must-have for future employees, but it’s just one piece of the puzzle when you’re hiring. Top talent is looking for a strong company culture and mission with ample opportunities for growth, so make yours shine!
That’s where we come in. Ad Culture is a Toronto-based digital advertising recruitment firm that matches talented individuals with incredible companies like yours. We’ll take the time to understand your company from top to bottom—culture, values, and the specific skills you’re looking for—so we can match you with the right talent.
Ready to find rock stars who will appreciate your awesome benefits for employees (and everything else your company has to offer)? Let’s chat!
Contact us today and ditch the hiring headaches for good!
