Types of Employee Benefits (Mandatory vs Voluntary)

December 16, 2025

George Yang

In Canada, offering a strong benefits package is more than just a perk – it’s a must-have to stay competitive, compliant and attractive to top talent. But not all benefits are created equal. Some are mandatory employee benefits required by law, while others are voluntary employee benefits offered at an employer’s discretion to enhance workplace culture, improve retention and support overall well-being.

Here’s how mandatory and voluntary benefits in Canada compare – and why understanding the distinction is key to building a balanced benefits strategy.

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What are mandatory employee benefits in Canada?

Mandatory employee benefits (sometimes called statutory or legislated benefits) are those Canadian employers are legally required to provide or contribute toward. Failing to comply can lead to fines or legal risk. The exact requirements vary by province, industry and employment type, but several core benefits are common across Canada.

Canada Pension Plan / Quebec Pension Plan (CPP/QPP)

Across Canada, both employers and employees are required to contribute to the Canada Pension Plan (CPP), or to the Quebec Pension Plan (QPP) for those working in Quebec. These mandatory contributions help fund a public program that provides steady income in retirement, along with disability and survivor benefits. Contributions are shared equally between employers and employees, ensuring that most Canadian workers have a baseline layer of retirement protection.

Employment Insurance (EI)

Employment Insurance in Canada offers temporary income support when employees can’t work – whether due to job loss, illness, parental leave or caregiving responsibilities. Employers deduct EI premiums from employee pay and contribute their share, which is typically 1.4 times the employee’s amount in most provinces.

Statutory leave & job-protected time off

Canadian employment laws guarantee certain types of job-protected leave so employees can take time off for major life events without losing their positions. Depending on the province, this can include maternity, parental or adoption leave, medical or sickness leave, compassionate care leave and other protected absences like bereavement or critical illness leave. While these periods are usually unpaid, employees may qualify for Employment Insurance benefits during their time away.

Vacation, paid time off benefits and public holidays

All Canadian provinces set minimum standards for paid vacation and statutory holidays. Most employees earn at least two weeks of vacation after their first year of work, with additional time granted based on tenure. Employers must also recognize a set number of paid public holidays each year, though the exact days vary by province and territory.

Workers’ compensation insurance

Most employers in Canada must register for workers’ compensation coverage through their provincial or territorial board. Workers’ compensation helps employees recover financially if they’re hurt or become ill on the job and also protects employers from potential lawsuits related to workplace injuries.

” Voluntary employee benefits go beyond what’s required by law. They’re the extras that help employers stand out, attract top talent and keep employees engaged over the long term. ”

Voluntary employee benefits: why they matter

Voluntary employee benefits go beyond what’s required by law. They’re the extras that help employers stand out, attract top talent and keep employees engaged over the long term. In a competitive job market, workplace benefits aren’t just extras – they’re something employees actively look for when deciding where to work.

Common voluntary benefits in Canadian workplaces

While these offerings aren’t mandatory, most Canadian employers include a mix of voluntary benefits to build a well-rounded employee benefits package. Common examples include:

Health insurance benefits such as extended health coverage, prescription drug plans and access to mental health services;
Dental coverage for preventive and restorative care;
Vision care benefits for exams, lenses and eyewear;
Life insurance benefits providing financial protection for employees’ families;
Disability benefits including short and long-term coverage;
Employee wellness programs like gym memberships, mindfulness apps and employee assistance programs (EAPs);
Retirement benefits such as employer-matched RRSP contributions or group pension plans;
Specialty coverages like critical illness insurance or accidental death and dismemberment (AD&D); and
Health spending accounts (HSAs) that give employees flexibility to allocate funds toward their personal health needs.

These voluntary benefits help create a better employee experience and show that a company genuinely cares about its team members’ well-being.

Employee benefits trends in Canada for 2025

Employee benefits in Canada are adapting to match the changing needs of today’s workforce, with employers shifting from one-size-fits-all plans toward more personalized, flexible options. Key trends include:

Flexible or “cafeteria-style” benefits that let employees choose what fits their lifestyle;
A stronger focus on mental health and wellness support;
The expansion of telehealth and virtual care services;
Life-stage benefits such as fertility support or elder care assistance; and
Higher retirement contributions to attract talent.

In 2025, voluntary benefits are less about nice-to-have perks and more about strategy. They’re a way to support employees’ physical, financial and emotional health while strengthening retention and workplace culture.

How to design a comprehensive employee benefits package

Building a balanced employee benefits package in Canada means combining what’s required by law with what makes your workplace stand out. It’s part compliance, part strategy.

Start by ensuring you’re meeting all federal and provincial requirements like CPP or QPP contributions, Employment Insurance, job-protected leave policies and workers’ compensation coverage. Once those essentials are covered, focus on what will make your plan competitive.

Look at what similar employers in your industry and region offer, then ask your own team which benefits matter most to them – whether that’s mental health support, better dental coverage or better retirement matching. Offering flexible or tiered options can also help employees choose what fits their needs best.

You’ll also need to figure out how to communicate employee benefits to your team. Even the most generous voluntary benefits only make an impact if employees understand and use them. Clear summaries and guides, training webinars, enrollment assistance and regular reminders all help boost participation.

Finally, review your plan regularly. Benefit needs change as your workforce and the economy evolve, so check in often to make sure your offerings still align with your people and your business.

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