How do Canada working time and leave rules work in 2026?

The hours-of-work rules come from Part III of the Canada Labour Code. The Code applies directly to federally regulated industries: banking, telecoms, broadcasting, interprovincial transport, and some others. Most Canadian employees (around 94 percent of the workforce) fall under provincial employment standards law, which has similar but not identical rules.

What counts toward the weekly limit

• Scheduled work time
• Time the employer requires the employee to remain available on-site
• Travel time between work locations during the workday
• Mandatory training during working hours

What is excluded

• Meal breaks where the employee is free to leave the work site
• Commuting time to and from the fixed workplace
• Voluntary overtime not required by the employer

Overtime

Overtime begins after 40 hours in a work week. The Canada Labour Code requires overtime pay at one-and-a-half times the regular rate. Alternatively, an employer and employee may agree in writing to bank overtime hours as paid time off at the same one-and-a-half ratio. Averaging agreements that spread hours across multiple weeks are permitted under certain conditions and require the employee's written consent.

The 30-minute meal break must be completely free of work duties. If the employer cannot fully release the employee (for example, a sole operator at a remote site), the break must be paid. Most office and professional roles treat the break as unpaid.

The 96-hour advance notice rule for work schedules is a relatively recent addition to the Canada Labour Code. It gives employees the right to refuse a shift if the employer provides less than 4 days notice, unless emergency circumstances apply. This rule matters particularly for variable-schedule roles.

The Canada Labour Code uses a two-tier vacation scale:

• 2 weeks per year after 1 year of continuous service
• 3 weeks per year after 5 years of continuous service
• 4 weeks per year after 10 years of continuous service (effective as of the 2023 Code amendments)

Employees also earn vacation pay on top of the leave days themselves: 4 percent of gross earnings for the first two-week entitlement, 6 percent from year five, and 8 percent from year ten. Vacation pay must be paid before the employee takes vacation or, by written agreement, on each pay cheque.

How bank holidays interact

Unlike the UK model, Canadian general holidays sit entirely outside the vacation entitlement. An employee with 2 weeks of vacation is also entitled to 10 general holidays separately. The two pools do not share days.

Carry-over and payment

• Vacation must be taken within 10 months of the end of the year in which it was earned, unless a different schedule is agreed in writing.
• Unused vacation at termination must be paid out at the applicable vacation pay rate.
• Employers cannot substitute vacation pay for actual vacation time without a written averaging or deferral agreement.

Holiday pay calculation

Vacation pay is calculated as a percentage of gross wages earned during the year. It includes regular salary, commissions, bonuses, and shift premiums. It does not include amounts paid to reimburse expenses or tips not reported through payroll.

1. Confirm which law applies to your employee

   Determine whether the employee falls under the federal Canada Labour Code or provincial employment standards. The Code covers banking, telecoms, broadcasting, and interprovincial transport. Around 94 percent of the Canadian workforce falls under provincial law, which has similar but not identical rules.

2. Set the standard week and record overtime correctly

   The federal standard week is 40 hours. Overtime begins above that threshold and must be paid at one-and-a-half times the regular rate, or banked as paid time off at the same ratio by written agreement. There is no individual opt-out of the weekly limit.

3. Apply the correct vacation entitlement by service length

   Vacation entitlement starts at 2 weeks after one year of continuous service, rises to 3 weeks after five years, and to 4 weeks after ten years. Vacation pay is calculated as a percentage of gross earnings: 4 percent for the first tier, 6 percent from year five, and 8 percent from year ten.

4. Budget general holidays separately from vacation

   The Canada Labour Code names 10 general holidays for federally regulated employees. These sit entirely outside vacation entitlement and are not bundled into the vacation total. An employee with 2 weeks of vacation is also entitled to 10 general holidays on top.

5. Track paid medical leave from day one

   Federally regulated employees earn 10 days of paid medical leave per calendar year, accruing at one day per month of employment. Unused days carry over year to year up to the annual cap. For longer absences, Employment Insurance sickness benefits provide up to 26 weeks of income replacement.

6. Apply the 96-hour schedule notice rule for variable shifts

   Employers must give 96 hours (4 days) advance notice before a new or changed shift. Employees may refuse a shift if less notice is given, unless emergency circumstances apply. Meal breaks of 30 minutes after every 5 consecutive hours must be duty-free; if the employee cannot be fully released, the break must be paid.

Holiday pay rules

Employees who qualify are entitled to their regular day's pay for each general holiday. To qualify, an employee must have been employed for at least 30 days and must have worked on at least 15 of the 30 days before the holiday. An employee who is required to work on a general holiday is entitled to regular holiday pay plus one-and-a-half times their regular rate for the hours worked, or a substitute day off with pay.

If a general holiday falls on a day the employee does not normally work, a substitute holiday is given on the preceding or following working day.

Canada separates job-protected leave (under the Labour Code) from income replacement (under the Employment Insurance Act). Employers grant the leave; the federal EI system funds the benefit.

Maternity leave

The birth parent is entitled to 17 weeks of job-protected maternity leave under the Canada Labour Code. EI maternity benefits cover 15 weeks of income replacement at 55 percent of insured earnings, up to the annual maximum insurable amount.

Parental leave

Each parent is entitled to up to 63 weeks of job-protected parental leave. This pool is separate from maternity leave. Parents can choose between two EI benefit options:

• Standard parental benefits: up to 40 weeks total shareable between parents (35 weeks per parent), paid at 55 percent of insured earnings. 5 weeks are reserved for the second parent and cannot be transferred.
• Extended parental benefits: up to 69 weeks total shareable between parents (61 weeks per parent), paid at 33 percent of insured earnings.

The 5 weeks reserved for the second parent under standard benefits are use-it-or-lose-it. If the second parent does not take them, the family loses those weeks. This mirrors a similar policy in Quebec (which runs its own parental leave programme under the Quebec Parental Insurance Plan, separate from the federal EI system).

Adoption leave

Adoptive parents are entitled to the same parental leave job protection as biological parents. The same EI parental benefit rules apply. There is no EI adoption-specific benefit separate from parental benefits.

What competitive Canadian employers do

Many larger Canadian employers top up EI benefits during parental leave to bring total income replacement closer to 100 percent of salary for part or all of the leave period. Top-up programmes are contractual, not statutory. They are especially common in banking, technology, and the public sector.

Canada's paid sick leave for federally regulated workers came into effect on 1 December 2022 via an amendment to section 239 of the Canada Labour Code. It created a new entitlement to 10 days of paid medical leave per year, replacing the prior system of only 3 unpaid sick days.

How the entitlement works

• Leave accrues at one day per month of employment, up to 10 days per calendar year.
• Unused days carry over into the next year, subject to the annual cap.
• The leave can be taken in individual days or in longer periods.
• Employees can use it for their own illness, injury, or medical appointments.

Pay during sick leave

Paid medical leave is paid at the employee's regular wage rate for each day taken. There is no waiting period before pay begins. Canada does not have a statutory sick pay weekly rate equivalent to the UK's SSP. Instead, the entitlement is expressed as a fixed number of paid days per year.

EI sickness benefits

Beyond the 10-day paid entitlement, employees who are unable to work due to illness for longer periods can claim Employment Insurance sickness benefits. EI sickness benefits provide up to 26 weeks of income replacement at 55 percent of insured earnings, subject to a one-week waiting period and qualifying hours worked. EI sickness benefits are government-funded, not employer-funded.

Self-certification

Employers cannot require a medical certificate for the first 3 days of absence under the paid medical leave provisions. After that threshold, a certificate may be requested. Best practice is to have a clear written absence policy that sets out when documentation is required.

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Key sources: Canada Labour Code RSC 1985 c L-2, Canada Labour Code section 239 (medical leave), and Government of Canada EI maternity and parental benefits.