Insuring Household Employees: Everything You Need to Know

While hiring household employees offers increased convenience and comfort, it also involves unexpected risks. If you fail to provide your Canadian employees with the insurance coverage mandated by the government, you could face legal repercussions. Proper insurance coverage safeguards employees’ health and well-being. Moreover, supplementary benefits can help retain current employees and attract new ones. Read on to learn more about the different types of insurance you can offer your household employees and which are mandatory. 

Understanding the Rights of Household Employees

Household employees include housekeepers, chefs, gardeners, and other individuals who provide essential services within a household. They contribute to the smooth functioning and maintenance of a home. Within Canada, the workplace rights of household staff are largely governed by provincial or territorial law and vary from one province or territory to the next. These laws generally dictate minimum wage, maximum hours of work, minimum working age, and payment of overtime, among other things. Employee benefits, on the other hand, are governed by both provincial/territorial and federal law. All employers should be aware of which insurance plans need to be included on each employee’s paycheck in order to stay compliant. 

Why Employee Insurance Matters

Here is how employee insurance benefits both employees and employers:

Financial Security for Employees

Insurance acts as a safety net, offering financial security for current and former household employees during illness and old age. Benefits such as workers’ compensation can cover medical expenses and lost wages resulting from injury, ensuring your employees receive the support they need during their recovery. 

Employee Retention

Offering additional benefits can also show employees that their work is valued and that you, as an employer, are invested in their well-being. This can boost employee retention and serve as a draw for prospective employees.

Types of Insurance for Household Employees and Employers

Employers have the option to purchase multiple types of insurance for their employees and for themselves. Here are some common types of employee and employer insurance in Canada: 

Workers’ Compensation 

Most employers in Canada need to pay premiums for workers’ compensation, which provides employees with financial protection when work-related injuries or illnesses occur. It covers medical expenses and compensates for lost wages during recovery. This type of insurance is mandatory in most provinces for both full-time and part-time household employees.

Employment Practices Liability Insurance (EPLI)

EPLI provides employers with protection against claims of discrimination, harassment, wrongful termination, and breach of employment contract. It is designed to safeguard employers from claims made by employees alleging workplace misconduct and provides protection by covering legal defence costs and settlements. While you may strive to create a healthy work environment, misunderstandings can still happen. Getting EPLI as a precaution mitigates the risk of financial losses due to workplace conflict. 

Travel Insurance

Travel insurance for household employees is a benefit that you can opt for if you travel frequently with your employees. When travelling overseas, whether for business or a family trip, you may want to bring your personal assistant or chauffeur along. However, if your employee happens to require medical care during the trip, it could cost them a fortune. Purchasing travel insurance for your employees is an excellent way to show you care about their well-being and value their support during trips abroad.  

Life Insurance

While not mandatory, including life insurance in your employee benefit package can attract new staff and help with employee retention. This type of coverage will provide financial security for an employee’s family in the unfortunate event of their passing. 

Extended Healthcare and Dental Insurance

As an employer, you can choose to offer your employees healthcare and dental benefits, which cover services and products that are not covered by public health insurance. Many insurance providers offer group plans for employers. These plans tend to be more cost-effective than individual plans.

Disability Insurance

Disability insurance offers income replacement to employees who become unable to work due to an injury that takes place outside of work. Providing this as a benefit can offer an extra layer of financial protection to your household employees, ensuring they are supported in the event that they become disabled. You can purchase either short-term or long-term disability insurance for your employees.

Employment Insurance (EI)

As an employer, you are required to deduct EI premiums from your employees’ wages. EI provides temporary income replacement for those who have lost their jobs through no fault of their own and for those who need to stop working to take care of a newborn child. Employees who stop working to upgrade their skills may also qualify for EI. 

Canada Pension Plan (CPP)

The Canadian government requires that employers pay half of an employee’s contribution to the CPP and that the employee covers the other half. Contributions must represent a certain percentage of the employee’s earnings. When an employee retires, they will be eligible to receive retirement benefits.

Final Thoughts

Protecting yourself and your household employees with proper insurance is a worthwhile investment. It not only shields you from financial liability but also safeguards your employees’ well-being. As an employer, you have a moral responsibility to provide your employees with the support and reassurance they need to succeed in your household. Looking beyond the ethical considerations, you can significantly increase your appeal as an employer by offering a comprehensive benefit package.