Operating a Business

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In this page: Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labour | Management of Human Resources

 

Legal Forms of Companies

Sole propietorship
Number of partners: 1 person.
Capital (max/min): No minimum capital.
Shareholders and liability: Liable for all debts and obligations.
Partnership
Number of partners: 2 persons or more. All partners must be Canadians to be a Canadian partnership.
Capital (max/min): Personal investment but no minimal capital required.
Shareholders and liability: Personally liable for all the debts and obligations of the company.
Limited liability partnership
Number of partners: 2 persons and more.
Capital (max/min): CAD 1,000
Shareholders and liability: Unlimited for general partners and limited for limited partners.
Private joint-stock company
Number of partners: One or more partners/shareholders. All partners must be Canadians.
Capital (max/min): No minimum capital required.
Shareholders and liability: Limited to share capital for all shareholders.
Cooperative
Number of partners: Minimum three directors.
Capital (max/min): No minimum capital required.
Shareholders and liability: Limited liability.
Limited partnership
Number of partners: person financially involved.
Capital (max/min): No minimum required.
Shareholders and liability: The liability of the silent partner to the company and creditors is limited to the amount of capital he invested.
Company Directories
SEDAR
 

Business Setup Procedures

Setting Up a Company Canada OECD
Procedures (number) 2.00 5.21
Time (days) 1.50 9.47

Source: Doing Business - Latest available data.

 
For Further Information
Consult the Doing Business website, to know about procedures to start a Business in Canada.
Canada Business Network
The Competent Organisation
Registering a company can be done through the office of a notary or a lawyer. Each province has a provincial or regional office to make registering easier. Companies with a business number are registered within 10 days. In Quebec this is the department of the Enterprise Registrar.
 

Recovery Procedures

Principle
Going into receivership is possible when it is not possible to pay creditors all they are owed. First, it is advisable to call on a trustee. He will present an offer proposal to the company's creditors. Presenting a proposal stops all the legal procedures started or envisaged by ordinary creditors. It gives the company a certain leeway, allowing it to discuss its financial situation.
For further information about bankruptcy, consult the Office of the Superintendent of Bankruptcy Canada
Minimum Debt-to-Capital Ratio Triggering Liquidation
Proof of insolvency must be established by a trustee. See the database of the office of trustees.
Bankruptcy Laws
Bankruptcy and Insolvency Act.
Reorganization and Rehabilitation Laws
Act C-12, the act amending the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act, the Wage Earner Protection Program Act and chapter 47 of the Statutes of Canada (2005), received royal approval on 14 December 2007. The date of enforcement has not yet been decided.
To see a summary of changes in legislation, click here.

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The Active Population in Figures

201820192020
Labour Force 20,349,92220,743,97020,457,473

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 78.46%78.47%79.04%
Men activity rate 81.90%81.77%82.46%
Women activity rate 74.99%75.13%75.59%

Source: International Labour Organization, ILOSTAT database

 
Employed Persons, by Occupation (% of Total Labour Force) 2016
Trade, Transportation, Accommodation and Food, and Business and Administrative Services 42.7%
Public Administration, Community, Social and other Services and Activities 36.1%
Manufacturing 9.4%
Construction 7.7%
Mining and quarrying; Electricity, gas and water supply 2.6%
Agriculture 1.6%
 
For Further Statistics
Statistics Canada
For Further Information About the Labour Market
Quebec Ministry of Labour (in French)
Ontario Ministry of Labour

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Working Conditions

Opening Hours
 
  • Legal Weekly Duration
Normal hours of work are eight hours per day and 40 hours per week. The maximum weekly working time is 48 hours.
  • Maximum Duration
There is no maximum. On the other hand, there is a minimum of 3 hours a day. An employer who brings in a worker must pay him for 3 hours even if he only works one hour.
  • Night Hours
4 pm to 8 am
Working Rest Day
24 to 48 hours
Paid Annual Vacation
4% of salary from the 1st to the 5th year of work, and 6% after the 5th year except for the clothing industry where it is 4% for less than a year, 6% for 1 to 3 years, 8% for 3 years or more.
The equivalent number of days is as follows: 1 year's work = 5 days paid. 2nd to 5th year = 2 weeks paid. 5 years and more = 3 weeks.
Retirement Age
The Canadian government removed the age of mandatory retirement in December 2011. All Canadian provinces, with the exception of a few thousand public employees in New Brunswick, have abolished the mandatory departure to retirement. Officials and employees of enterprises under federal jurisdiction can now retire at age 70, or even later if they wish. Workers who stop at age 70 (instead of 65) receive 42% more from the Canadian Pension Plan, the public pension.
Child Labour and Minimum Age For Employment
The working age may vary according to the province. Several provinces have set the age at 18 or after the end of secondary studies. Some provinces have more flexible laws and the age is determined by the type of work and the number of hours a day.
Informal Labour Market
In 2004, "moonlighting" corresponded to about 5% of the volume of paid work and it is growing each year in spite of public awareness campaigns.

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The Cost of Labour

Pay

Minimum Wage
Minimum wages vary by province. As of January 1, 2019, they averaged $12.23 per hour, with a low of $11.00 per hour in Saskatchewan and a high of $14.00 per hour in Ontario (source: Canadian government).
Average Wage
As of January 2020, the average Canadian salary in 2020 was $1,050.59 per week for employees across the country – which means that the annual average salary for full-time employees is just over $54,630 per year (source: Statistics Canada).
Other Forms of Pay
  • Pay For Overtime
At least one and one-half (1.5) times the regular rate of pay must be paid for hours worked during overtime.
  • Pay For Rest Days Worked
Public holidays are paid double.
 

Social Security Costs

The Areas Covered
Employment insurance, health insurance, pensions.
Contributions
Contributions Paid By the Employer: In 2020, employer contribution to Employment Insurance (EI) is 2.21%, with a maximum contribution of CAD 1,199; Canada Pension Plan (CPP) is 5.25%, with a maximum contribution of CAD 2,898. The maximum employer contributions to the Québec Pension Plan (QPP) for 2020 are CAD 3,146, whereas for the EI the maximum contributions of CAD 911. However, they must also contribute to the Québec Parental Insurance Premium plan.
Contributions Paid By the Employee: In 2020, employee contribution to Employment Insurance (EI) is 1.58 %, with an annual maximum contribution of CAD 856; Canada Pension Plan (CPP) is 5.25%, with a maximum contribution of CAD 2,898. The maximum employee contributions to the Québec Pension Plan (QPP) for 2020 are CAD 3,146, whereas for EI the maximum contributions is CAD 650. The Quebec Parental Insurance Plan provides maternity and parental benefits in Quebec.
Competent Organization
Revenu Québec (Quebec Revenue Agency)
Canada Revenue Agency
Ontario Ministry of Health and Long-term Care
British Columbia - Medical Services Plan
New Brunswick Department of Health

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Management of Human Resources

 

Recruitment

Method of Recruitment
Companies still use adverts in newspapers or employment agencies or search engines specialized in job offers. On the other hand, applications are made more and more by Internet or fax, and there is often a first interview over the telephone followed by a face to face meeting.
Recruitment Agencies
The Canada Job Bank and the Quebec employment center are the official agencies.
Recruitment Websites
Jobboom
Canadajobs
Monster
Jobs
Workopolis
 

The Contract

Type of Contract
Federal provisions govern contracts of employment in Canada. The Government of Canada has established minimum standards for employment in Part III of the Canada Labour Code, including the minimum wage, annual leave, public holidays, bereavement leave, etc. Collective agreements and individual negotiations supplement these provisions. In addition, each province has its own labour law.

Breach of Contracts

  • Retirement
There are several ways of retiring: early retirement, automatic retirement and official retirement.
  • Dismissals
The employer initiates dismissals for different reasons:
- redundancy is either individual or mass redundancy
- dismissal for professional misconduct, lack of work, seasonal work
  • Other Possible Methods
Resignation; this is initiated by the employee. On the other hand, he does not receive any severance pay.
Labour Laws
Service Canada, Employment
Labor legislation, on Human Resources and Social Development Canada
Labor Code - Compliance Policy
Consult Doing Business Website, to obtain a summary of the labour regulations that apply to local entreprises.
 

Dispute Settlement

 

Conciliation Process

Cases of Dispute
Working conditions, unfair dismissal, sexual and moral harassment, verbal violence, physical violence
  • Legal Framework
When there is a dispute or a disagreement, the parties first try to come to an amicable agreement. If, however, they cannot come to an agreement, the worker must lodge a complaint with the Department of Human Resources. According to the complaint, the Minister can appoint an inspector who carries out an investigation. The Minister assesses, authorizes the settlement and the sentences to be served by the party in the wrong. The party in the wrong does have, however, a right of appeal to have the case reviewed within a precise time limit.
For further information, see the Canada Labor Code.
  • Procedure
Canada Labor Code
 

Judicial Structures

  • Legal Framework
Canada Labor Code.
  • Competent Legal Body
See the Canada Labor Code.
 

Social Partners

Social Dialogue and Involvement of Social Partners
Labour organisations and trade unions are very strong and well structured in Canada. Quebec is the most unionised province. Canada’s labour unions have frequently clashed with the government and corporations over the past few years. Canada has often resorted to passing “back-to-work” legislation to end labour disputes. Canada justifies introducing the legislation by claiming it is a necessary action to protect the Canadian economy.
Unionisation Rate
22.9 % of part-time workers, 31.2% of full-time workers, 30.2 % of permanent workers, 25.8 % of non-permanent workers. These rates have dropped in companies of less than 20 employees and in those of 100 to 500 employees. On the other hand, they have risen in establishments of more than 500 employees and those of 20 to 99 employees.
Unions
FTQ - Quebec workers federation (in French)
CSN - Canada national federation of labor organizations and trade unions (in French)
CLC-CTC - Canadian Labor Congress
NUPGE - National Union of Public and General Employees
The Union Canada (Unifor)
CUPE - Canadian Union of Public Employees
Regulation Bodies
Employment and Social Development Canada
 
 

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Latest Update: June 2022