Before an applicant starts working, they must know the wages & deductions in Canada. The employer makes certain deductions from the gross income. Thus, the salary one receives might be lower than they expect. 

 

Wages

The employer pays the wages on a regular payday established. Getting a salary twice a month is common, which might differ from your home salary. 

Moreover, you have certain wage protections if you work as an employee in a federally regulated business/ company/ industry. Specifically, you will obtain at least the minimum wage. If the base wage set by the province is higher than the federal minimum wage, then the provincial/ territorial rate will apply to the applicant. On the contrary, if an applicant is not paid hourly, he/ she must receive at least the minimum wage equivalent to the salary provided. 

In addition to wages & deductions in Canada, an applicant requires a salary slip, a record of what an applicant has earned from the employment. For every salary/ payment, the employee gets a pay stub depicting how the amount was calculated, including deductions. The stub might be in paper or digital format and might be given in person or via email. Moreover, the pay slip might even be stored in a system employees can access.

While paystubs from employers might seem different, they primarily include similar information. 

 

The paystub will include the following: 

  • Applicant’s name 
  • Pay date or the date on which an applicant receives the salary
  • Pay period – the period for which one is paid
  • Deductions for the pay period, like income tax
  • Net pay for the pay period, i.e., the salary after tax & deductions
  • Year-to-date gross deductions & payments
  • Gross earnings or an applicant’s income for the period before taxes and deductions 

 

A pay stub varies from a paycheque, which is the payment of wages through a physical cheque. In addition, many Canadian employers ask their workers to sign up for a direct deposit. This implies that an applicant’s wage can directly be transferred into the account instead of being given a cheque.

 

Deductions 

The employer might make specific deductions from an applicant’s salary. The deductions can go towards funding public systems, which assist an applicant at certain life stages, like unemployment, parental leave, or retirement. 

 

As an employee, the employer can make specific deductions from the pay, like: 

  • Requirement by federal/ provincial law, like taxes and employment insurance premiums 
  • Authorization by court order, like child support payments 
  • Authorization by a collective agreement, like union dues     
  • Intention to collect overpaid wages

 

In addition to the wages & deductions in Canada, an employer is authorized to make other deductions, like: 

  • Charitable donations 
  • Savings plan contributions 
  • Life insurance & long-term disability 
  • Medical & dental premiums 
  • Pension plans 
  • RRSP contributions 

 

For the authorization to be valid, it must be in writing & set out the specific amounts, frequency, & purpose of the deductions. This ensures that an applicant completely understands what they are signing & how and when it will affect their pay. Moreover, it is vital to know that the employer cannot force the applicant to sign an authorization. The consent must be voluntary. 

 

Standard Wages & Deductions In Canada 

In order to work in Canada, one must know the country’s most common payroll deductions. They are CPP, i.e. Canada Pension Plan; QPP, i.e., Quebec Pension Plan; EI, i.e., Employment Insurance premiums & tax deductions. 

The CPP is a government plan that offers a taxable pension to replace a part of your income after you retire. Quebec has its pension plan, and the workers and employers in the province must contribute to QPP instead of CPP. 

The maximum earnings via pensions under CPP is $66,000, thus having a basic exemption of $3,500. In addition, the employee & employer contribution rates are 5.95% in 2023. This implies that if the annual income is almost $66,000, then the yearly CPP contribution will be $3,718.75, i.e., ($66,000 – $3,500) x 5.95/ 100. 

On the contrary, if the annual income is below $66,000, then the CPP contribution will be (Applicant’s Income – $3,500) x 5.95/ 100. Employment insurance insures employment earnings & offers temporary financial assistance to people who are eligible and have their jobs or aren’t able to work. 

The maximum insurable earnings percentage is 1.63% for 2023, and the maximum insurable earnings are $61,500. This implies that if the annual income is $61,500 or more, the applicant needs to pay $61,500 x 1.63/ 100 = $1002.45 in EI yearly premiums.