Guide to employee benefits in Canada in 2025

While Canada’s job market faces uncertainty amidst changing government policy, economic turbulence and technological transformation, one thing is certain: employee benefits remain critical for employers looking to attract and retain the best talent.

More than 7 in 10 Canadian workers want to leave their jobs and look for better opportunities this year, according to a recent report. This “loud quitting” means it’s more important than ever for employers to provide robust benefits as part of a compensation package in order to be seen as a workplace of choice for Canadians.

In this article, we’ll look at the state of employee benefits in Canada in 2025, including why these benefits matter, what type of benefits are on offer and how pet benefits, like those delivered by Vetster for Business, can help keep employees feeling valued and appreciated.

In Canada, employers provide employees with benefits in addition to a salary as part of their total compensation package. These types of benefits include vacation and sick days, health, dental and vision insurance and retirement benefits, amongst others. Employee benefits are a way for employers to attract and retain employees and contribute towards their well-being and a positive workplace culture.

Providing benefits to employees makes them feel valued, and employees who feel valued and appreciated by their employers are more likely to be productive and stay with their current company, according to a recent Canadian survey.

Across Canada, employee benefits are also considered standard practice, and prospective employees have come to expect them as part of their total compensation package. Employee benefits allow organizations to provide a comprehensive rewards program to attract and retain staff, support HR strategies and help gain a competitive edge.

As part of their benefits program, employers often promote partnerships with well-known providers, such as health insurance through Sunlife, RRSP matching through WealthSimple, or pet benefits through Vetster for Business. Partnering with established brands helps employers provide trusted, high-quality employee benefits that enhance job satisfaction while streamlining benefits administration.

There’s a wide variety of benefits offered to employees in Canada, and the benefits programs differ greatly depending on the employer. The coverage provided with these plans can also vary, with some plans covering 100% of the costs while others only cover 80% or less (leaving the employee to make up the difference). In some cases, plans may provide an amount per practitioner, while others offer a pot of money to be allocated to various practitioners at the employee's discretion.

In Canada, employer benefits are always exhausted before government-funded benefits (i.e., universal dental coverage) can be used.

Some of the most common types of employee benefits in Canada include:

Extended health benefits: In Canada, extended health benefits reimburse medical expenses and treatments not covered by a government-funded provincial health care plan. Extended healthcare coverage can include: Prescription drugs Paramedical services: These are services provided by professionals who are not part of the public health system such as:

• Acupuncturists
• Audiologists
• Chiropractors
• Massage therapists/Registered Kinesiotherapists (RKT)/Kinesiologists
• Naturopaths
• Osteopaths
• Physiotherapists
• Podiatrists/chiropodists
• Clinical dieticians
• Psychologists/social workers/Registered Clinical Counsellor
• (RCC)/Canadian Certified Counsellor (CCC)/Psychotherapist or any other certified mental health practitioner
• Dental care: Exams, treatments, x-rays, scaling, fillings, extractions, oral surgery anesthesia, dentures and orthodontics.
• Vision care: Eye exams, glasses and contact lenses
• Hospital: Semi-private / convalescent hospital
• Nursing care
• Hearing aids
• Ambulance: Ground and air care
• Telemedicine services

Life insurance: Life insurance helps an employee’s family deal with the financial impact of their death. It provides them with a one-time, tax-free payment called a death benefit. Optional dependent life insurance is an additional insurance policy employees can purchase through their employer to cover the lives of their dependents, such as a spouse or children.

Accidental Death & Dismemberment (AD&D): AD&D insurance is a one-time payment that covers an employee if they unexpectedly die of something other than natural causes. It also provides coverage if they lose a body part or function, like loss of hearing or sight.

Short and long-term disability coverage: Short-term disability insurance generally covers temporary conditions that keep an employee out of work for a few weeks to several months, such as accident, illness or surgery. Long-term disability insurance provides benefits for more severe or permanent conditions that can last a much longer time or become permanent.

Health Spending Accounts (HSA): An HSA is a pot of money allocated to employees to offset additional health-related expenses (e.g. brand-name glasses, extra massage therapy appointments, etc).

Employee Assistance Program (EAP): An EAP is used to help employees find referrals to professional services (like therapists, lawyers, accountants, etc.) and is generally used for one-off requirements rather than ongoing, long-term support.

Premium drug coverage: Some employers are starting to offer coverage for other drugs not typically covered by traditional prescription plans, including IVF medication, name-brand drugs (as opposed to generic alternatives), smoking cessation and obesity treatments.

Parental leave top-up: Some employers choose to offer top-up payments, anywhere from 65% to 100% of an employee's salary, during part of their parental leave, which supplements the government-paid parental benefit.

In Canada, there are certain employee benefits that are legally required, also referred to as statutory benefits (as opposed to optional or supplementary benefits).

There are certain statutory benefits that Canadian employers are required to pay into on behalf of their employees. These include: Pension and retirement benefits: Pension benefits provide financial support for retirees through the Canada Pension Plan (CPP), ensuring income security after retirement. Canadian employers deduct CPP contributions from employees' paychecks and contribute an equal amount to the plan.

Employment Insurance (EI): EI offers financial assistance to individuals who have lost their jobs, are on maternity or parental leave or cannot work due to illness or injury. Employers contribute to the EI program by paying premiums for each employee, up to an annual maximum, based on a percentage of the employee's insurable earnings.

There are other statutory benefits that employers are required to provide directly to their employees, including:

Legislated and parental leave: This leave allows employees to take time off for the birth or adoption of a child, with job protection, and may include financial support through Employment Insurance (EI). Canada is known for offering generous maternity and parental leave policies. Across the country, mothers are entitled to up to 15 weeks of maternity leave at up to 55% of their average weekly earnings.

Parents can then take additional parental leave, choosing between a standard plan of up to 35 weeks at up to 55% of earnings or an extended plan of up to 61 weeks at 33%. Both parents can share the parental leave, offering flexibility to families.

In 2025, maternity and parental leave maxes out at $668 per week for one year of leave and $401 per week for an extended leave of 18 months (the same dollar amount spread out over a longer period of time). The Canadian government increases this weekly amount annually based on inflation.

Paid time off: Paid time off covers vacation days and statutory holidays and is mandated by employment standards. All Canadian employees are entitled to at least two weeks of paid vacation per year, in addition to paid statutory holidays, which varies by province.

There are a variety of pet-related benefits offered by employers across Canada. Some organizations in Canada have chosen to offer pet-friendly offices where employees can bring their pets with them to work. Pet-friendly workplaces are proven to support a more welcoming workplace culture, improve the employee experience and contribute to higher productivity.

Other pet-friendly organizations offer pet insurance through companies like Fetch and Spot, and some even offer ‘paw-rental’ leave benefits, giving pet parents time off to care for their new pets.

Employers can provide access to other pet benefits, like doggy daycare, grooming and dog walking, through payroll deductions or by negotiating discounts with the providers. They can also allow employees to expense these costs by funding a personal spending or wellness account.

As workplaces in Canada evolve, the types of benefits that employees want continue to change. Post-pandemic, employees are reevaluating their well-being, and for many, that means owning and caring for a pet. Since the pandemic started in 2020, about one in three Canadian households have adopted a pet.

To respond to this rise in pet ownership, many employers are looking at how they can support their employees through their benefits programs.

In Canada’s highly competitive employment market, organizations want to offer benefits that help them stand out from the competition, boost their brand, and make their total rewards program look more attractive to existing and prospective employees.

Caring for a pet is serious business for Canadian employees. A recent study of 1,800 employed pet owners by One Poll on half of Vetster revealed some key insights about how pet care influences job choices:

• 60% of pet owners would consider leaving their job if it interfered with their pet care
• 41% would accept a pay cut to work in a pet-friendly environment
• 7% have left a job to better care for their pet

Vetster for Business is a great option for employers looking to support the demand for more pet-focused benefits in the workplace.

The platform offers teams 24/7 access to top-rated licensed veterinarians, ensuring their pets receive the best care possible. The Vetster pet health app also allows employees to easily manage their pet’s care from anywhere — at the office, at home, or somewhere in between.

This new type of affordable benefit is proven to help reduce employee absenteeism, increase job satisfaction and offset rising veterinary costs for pet owners. Vetster’s pet benefits program also helps reduce operating costs for employers.

Employees who use the platform report how helpful, knowledgeable, and attentive Vetster’s top-rated vets are, as well as how easy the application is to use and how simple it is to have their pet examined virtually. They also appreciate getting prescriptions and receiving additional articles and information tailored to their pets' needs as part of their follow-up care.

Beyond employee benefits, Canadian employers also look to offer perks to incentivize employees. While benefits are typically more formal and structured and, in some cases, mandatory, perks tend to be optional incentives that enhance the employee experience but are not an essential part of their compensation.

Some of these include:

Recognition: Whether it’s a new baby, marriage, or a new pet, many employers are celebrating their life milestones for their employees with gifts.

Employee discounts: Some larger companies can negotiate discounted rates with hotels, car rental providers, airlines, etc. They can also get preferred rates on car and home insurance. Some employers also give employees discounted or free access to the company’s products or services. For example, all Vetster employees get free access to the Vetster platform for their pets.

Employee rewards: There are platforms dedicated to offering employee rewards, like Perkoplis in Canada, which offers fully managed perk programs and delivers exclusive, high-value discounts for employees.

Healthy living perks: With healthy living perks, employers fund a pot of money employees can put towards health-related expenses (beyond their extended healthcare benefits) for purchases like gym memberships, workout classes, equipment, etc.