What Canadian Employers Should Know About Domestic Employment Laws

Canadian employers navigate a split regulatory system, with most workforces falling under provincial employment standards and regulations. Domestic employment law can be complicated, as employment policies and labour laws for domestic workers may vary between provinces. To stay compliant with industry regulations, Canadian employers need to know how to protect themselves and their workers at all times. That begins with understanding the basics of the law.

Understanding Domestic Employment in Canada

Canada’s federal law recognises the need of private households and employers to hire domestic workers, such as caregivers, housekeepers, or drivers, to work and/or reside in their private households. However, domestic employment is governed by provincial labour laws to keep workers protected. Provincial and territorial employment standards regulate work hours, rest periods, overtime, and other aspects of the job. 

Federal vs. Provincial Employment Laws

When hiring an employee, remember that employment isn’t solely governed at the national level. Some aspects are handled by federal law, but most aspects of employment are governed by provincial employment laws.

Role of Federal Laws

Federal law does play a role in domestic employment. This is related to:

• Immigration and work permits: If you are hiring a foreign domestic worker in your private household, you need to follow the national laws regarding work permits, immigration, and employment contracts.
• Employment insurance (EI): Employment insurance (EI) is an income-based benefit, so it must follow the federal guidelines.
• Canada Pension Plan (CPP): The Canada Pension Plan (CPP) is also an income-based benefit, which means employers must comply with the federal program to offer CPP.

Provincial and Territorial Employment Standards

Provincial and territorial employment standards govern:

• Minimum wage: Minimum wage, frequency of payment, permissible deductions, and pay for meal breaks are all governed by provincial and territorial employment standards.
• Hours of work and overtime: Maximum daily or weekly hours, daily rest periods, weekly days off, mandatory overtime pay, and other schedule-related policies are also governed at the jurisdictional level.
• Vacation and statutory holidays: Provincial and territorial standards also govern paid time-off, minimum annual vacation pay and time, and paid or unpaid public or statutory holidays.
• How laws vary by province: Each province or territory in Canada has its own employment standards, such as Ontario’s Employment Standards Act or Alberta’s Employment Standards Code. 

Household Staff Employment Laws Canadian Employers Must Know 

When hiring household staff, employers need to consider many factors, especially when drafting job descriptions and written agreements. The exact policies regarding these aspects may vary from province to province, but understanding the laws governing them can help you stay compliant.

Wages, Hours, and Overtime 

Wage rates, work hours, and mandatory overtime pay are governed by provincial and territorial law, and wage rates should be adjusted annually for inflation. Make sure you are aware of the latest policies when hiring employees; the rules for wages, work hours, and overtime may differ for live-in employees.

Payroll, Taxes, and Employer Contributions

Payment frequency and payment method are crucial policies to consider. You must also obtain a 9-digit Business Number (BN) and a payroll program account from the Canada Revenue Agency (CRA). As an employer, you’re also responsible for deducting and remitting Income Tax, Canada Pension Plan (CPP), and Employment Insurance (EI) premiums, as well as issuing a T4 slip (Statement of Remuneration Paid) to employees by the end of February each year.

Vacation, Holidays, and Leave Entitlements

Most provinces require 2 weeks of paid vacation after 1 year of employment, and vacation pay is typically calculated as 4% of gross earnings for the year. Vacation time and pay change after long-term employment, though exact numbers vary by province. Leave entitlement laws and policies regarding holiday hours are also governed locally, so make sure you’re aware of them when drafting contracts.

Health, Safety, and Workplace Standards

Many provinces require household employers to register for mandatory workplace insurance to cover medical costs and lost wages if the employee is injured, such as WSIB in Ontario for staff working 24+ hours per week. You should also check your homeowner’s insurance to see if it covers injuries to domestic staff; this is often separate from mandatory provincial workers’ compensation.

Privacy, Confidentiality, and Human Rights

Under provincial Human Rights Codes, you cannot discriminate against household staff during hiring or employment based on protected grounds, which include race, religion, sex, sexual orientation, disability, age, and family status. There are no laws regarding privacy or confidentiality, but employers have the right to use cameras in common areas (living room, kitchen) for security or child safety. Since household staff see your family at their most vulnerable, a legally binding confidentiality agreement (NDA) is highly recommended.

Live-In Domestic Workers: Legal Considerations

Legal considerations for live-in domestic workers balance employees’ rights as workers and as residents in your home. Depending on provincial laws, employees have an additional right to privacy (which means you can’t survey or search their personal quarters without their permission). However, employers also have the right to deduct wages to cover room, board, meals, and utilities. The wage deduction rate varies by province.

Termination, Notice, and Severance

Most provincial laws require employers and employees to provide a written notice period (depending on the scale of employment) before terminating employment. Severance pay is only mandatory in cases where specified in the contract. The laws governing termination “for cause” (such as gross misconduct) differ and carry unique legal implications in each case.

Penalties and Consequences for Non-Compliance 

In the case of non-compliance, most provincial laws impose financial penalties on employers, in addition to “damages” depending on the laws broken, which can range from $500 to $25,000. Several provinces maintain public registries of employers who have been issued penalties, which can make hiring staff difficult in the future and permanently damage your reputation.

Common Legal Mistakes Canadian Household Employers Make

As a household employer, avoid these common mistakes when dealing with your domestic staff:

• Paying cash “under the table”: Paying cash under the table to household employees without reporting income or withholding taxes is a violation of labour and tax laws and creates risks for penalties, fines, and lawsuits.
• Omitting payroll deductions: Failing to properly calculate payroll deductions is another common legal mistake that household employers make, which can result in missing deadlines and legal issues.
• No written agreements: Relying on verbal agreements rather than written agreements for duties, hours, wages, incentives, and termination clauses leaves many terms undefined, which can lead to legal disputes later.
• Misclassifying staff as contractors: Treating a housekeeper or driver as a contractor when they meet the criteria for an employee (controlled hours and wages) is misclassification of staff. This is a legal mistake that can potentially lead to penalties.

Best Practices for Staying Compliant 

Staying compliant is crucial to avoid penalties and avoids and preserve your reputation as an employer. To stay compliant with the legal regulations, make sure that you prioritise:

• Written contracts and job descriptions: Everything from job descriptions and wages to duties and work hours should be documented in written agreements signed by both parties.
• Regular payroll audits: Conduct regular payroll audits to identify proper calculations, deductions, and tax reporting. 
• Updating policies with legal changes: When a labour law changes in your jurisdiction, update the contract and policies so that they are legally accurate.
• Working with staffing and payroll professionals: The best way to stay compliant is to work with recruitment specialists in your location and take their professional help in developing written job descriptions.

Hiring Household Staff Legally in Canada

Hiring household staff legally in Canada involves following several specific regulations. These are key to staying compliant.

Right to Work and Immigration Compliance

When hiring Canadian citizens or foreign workers for your household, make sure you consider.

• Canadian citizens and permanent residents: Make sure the employee or staff member is a Canadian citizen or permanent resident, or has a valid work permit.
• Temporary foreign workers and caregivers: If hiring a foreign worker, you must follow the guidelines outlined in the Temporary Foreign Worker Program (TFWP).
• Employer obligations under IRCC programs: Immigration, Refugees and Citizenship Canada (IRCC) considers whether the TFW has the necessary qualifications to perform the work in Canada before issuing a work permit. Employers must follow IRCC requirements before hiring a foreign worker.

Employment Agreements and Job Descriptions

When you are ready to create a job offer, here are a few considerations to make:

• Importance of written contracts: Written contracts may not be a strict legal requirement in your jurisdiction, but they are crucial to protect your privacy, safety, confidentiality, and security as a household employer. It also gives your employee peace of mind knowing that everything is in accordance with the law and their signature on the contract is legally binding. 
• Contract elements: To avoid legal issues, conflicts, and disputes, make sure you include all important information in the contract, including
  • The agreed-upon job description
  • Job duties
  • Key roles and responsibilities
  • Work hours
  • Weekend policies
  • Leave entitlement
  • Vacation and holiday policy
  • Wages, bonuses, and incentives
  • Privacy policies
  • Performance reviews
  • Termination clauses

How Charles MacPherson Associates Helps Canadian Employers Stay Compliant

Charles MacPherson Associates helps Canadian household employers stay compliant with legal regulations and adhere to industry standards through three core functions.

• Pre-vetted candidates: We have a strong network of pre-vetted household candidates, including house managers, butlers, estate managers, private drivers, private chefs, chauffeurs, housekeepers, personal assistants, and more. We find the best match for your expectations and help you place the ideal candidate in your household. 
• Legal documentation support: Our placement specialists work with you and the candidate throughout the process to close the gap between your expectations and your employee’s.
• Payroll and HR guidance: Our team can suggest several payroll companies and explain the Ontario Employment Standards Act.

Schedule a Consultation With Charles MacPherson Associates for Expert Household Hiring 

Following the regulations outlined in your territory’s labour law protects your status while hiring household staff. Depending on your location, these laws may require careful consideration, especially regarding wages, payroll, and foreign workers. Our placement specialists at Charles MacPherson Associates help you every step of the way for hiring the ideal household staff candidates. In addition to finding a suitable match for your household, we also offer help with job descriptions, written agreements, and HR consultations. Schedule a consultation today.