Employer rules
Workplace Benefits in Ontario: Required vs Optional
Owners ask it two ways: what do I have to give my staff, and what is a choice? The law requires less than most people think, and a few rules change the day you offer a plan.
Direct answer
No Ontario law requires an employer to offer a group health, dental, life or disability plan; the province's employment standards guide says so plainly. What the law does require: Canada Pension Plan and Employment Insurance contributions on every paycheque, WSIB coverage in most industries, vacation time with vacation pay, nine public holidays with holiday pay, unpaid job-protected leaves, and Employer Health Tax on Ontario payroll above the $1 million exemption for most private employers. Once you offer a plan, a few rules follow it: you keep paying your share during pregnancy, parental and most other statutory leaves, and through the termination notice period. AEC Benefits, a Burlington group benefits brokerage, quotes the optional part, group plans for Ontario employers with 5 to 100 employees, at aecbenefits.ca/get-quote or (905) 320-4123.
5.95%
employer CPP contribution in 2026
Matched to the employee on earnings from $3,500 to $74,600, up to $4,230.45 each. CPP2 adds 4% each from $74,600 to $85,000.
1.4×
the employee EI premium, paid by the employer
The 2026 employee rate is 1.63% on insurable earnings up to $68,900, so the employer pays up to $1,572.30 per employee.
$1 million
Employer Health Tax exemption
Eligible employers pay no EHT on the first $1 million of Ontario payroll. Above it, the rate runs from 0.98% to 1.95%.
4%
minimum vacation pay
With two weeks of vacation a year. After five years with the employer it is 6% and three weeks.
Required or optional, at a glance
For provincially regulated Ontario employers, with 2026 figures. Federally regulated employers, such as banks, airlines and interprovincial trucking, follow the Canada Labour Code for time off and leaves instead. Every figure has its government source listed below.
| Required by law? | The rule in 2026 | Who pays | |
|---|---|---|---|
| Canada Pension Plan (CPP) | Yes | 5.95% each on earnings from $3,500 to $74,600; CPP2 adds 4% each up to $85,000 | Employer and employee, matched |
| Employment Insurance (EI) | Yes | Employee rate 1.63% on insurable earnings up to $68,900 | Employer pays 1.4 times the employee premium |
| WSIB coverage | Yes, in most industries | Register within 10 days of hiring your first worker | Employer only; it cannot come off wages |
| Vacation and vacation pay | Yes | Two weeks and 4%; three weeks and 6% after five years | Employer |
| Public holidays | Yes | Nine a year, with public holiday pay | Employer |
| Job-protected leaves | Yes | Sick leave 3 days a year, pregnancy up to 17 weeks, parental up to 61 or 63 weeks | Unpaid; your benefit plan contributions continue |
| Employer Health Tax (EHT) | Yes, above the exemption | No EHT on the first $1 million of Ontario payroll for eligible employers | Employer |
| Health, drug and dental coverage | No | Insured premiums carry Ontario's 8% retail sales tax | Employer, often with an employee share |
| Group life and AD&D | No | Employer-paid premiums are a taxable benefit | Employer or employee |
| Short and long-term disability | No | EI sickness benefits run up to 26 weeks | Employer or employee |
| Employee assistance program (EAP) | No | Not a taxable benefit | Employer |
| Group RRSP or DPSP | No | Employer RRSP contributions are taxable to the employee | Employer match is a choice |
What you will get from this resource
- •What the law requires: CPP, EI, WSIB, vacation, public holidays and leaves
- •Employer Health Tax: who pays it and the $1 million exemption
- •What is optional: health, dental, life, disability, EAP and a group RRSP
- •The rules that start the day you offer a plan
- •2026 rates, each with its government source
Benefits plans are optional in Ontario
Start with the short answer. Ontario's employment standards guide says it plainly: employers are not required to provide employee benefit plans. No law makes you offer health, dental, drug, life or disability coverage. What the law does is set a floor (pension and EI contributions, WSIB, vacation, public holidays and leaves) and then put rules on any plan you choose to offer. One applies from day one: a plan cannot treat employees differently because of age (for workers 18 to 64), sex or marital status, with some exceptions.
Related: Benefit plans, in the guide to the Employment Standards Act — Government of Ontario.
CPP and EI: on every paycheque
Every employer deducts Canada Pension Plan contributions and Employment Insurance premiums from pay and adds its own share. For CPP in 2026, you match the employee: 5.95% each on earnings between $3,500 and $74,600, up to $4,230.45 each for the year. A second tier, CPP2, adds 4% each on earnings between $74,600 and $85,000, up to $416 each. For EI, the employee pays 1.63% on insurable earnings up to $68,900, and you pay 1.4 times that, up to $1,572.30 per employee. These figures change every January.
Related: CPP contribution rates, maximums and exemptions — Canada Revenue Agency. The EI and CPP2 pages are in the sources below.
WSIB: required in most industries
Most Ontario businesses with employees must register with the WSIB within 10 days of hiring their first worker, manufacturing and construction included. Coverage is not mandatory in every industry; the province's list decides it, and a business outside it can still apply. The premium is the employer's alone: deducting it from a worker's pay is an offence. Premiums cover employees, not owners, except in most construction businesses. WSIB is strong when someone is hurt on the job. It does not follow the worker on the drive home, on the drive in, or Saturday afternoon cutting the grass, which is the gap a group plan fills.
Related: How to register your business — WSIB. Who must register, and the 10-day deadline.
Vacation, public holidays and leaves
The Employment Standards Act sets the time-off floor. Employees earn two weeks of vacation a year with vacation pay of at least 4% of gross wages, rising to three weeks and 6% after five years with you. Ontario has nine public holidays: New Year's Day, Family Day, Good Friday, Victoria Day, Canada Day, Labour Day, Thanksgiving, Christmas and Boxing Day. Leaves are job-protected but unpaid under the Act, including 3 days of sick leave a year, pregnancy leave of up to 17 weeks and parental leave of up to 61 or 63 weeks. Some jobs have special rules, so check yours.
Related: Your guide to the Employment Standards Act — Government of Ontario. The vacation, holiday and leave pages are in the sources below.
Employer Health Tax: once payroll passes $1 million
Employer Health Tax (EHT) is an Ontario payroll tax the employer pays. Eligible employers, which generally means private employers with total Ontario payroll under $5 million, pay nothing on the first $1 million of Ontario payroll a year. Above that, the rate runs from 0.98% to 1.95%, set by total Ontario payroll before the exemption. Associated companies share one exemption. Employers under government control, or with payroll over $5 million, pay from the first dollar.
Related: Employer Health Tax (EHT) — Ontario Ministry of Finance.
What is optional: the group benefits plan
Everything a group plan covers is your choice: extended health and prescription drugs, dental, vision, paramedical care, group life and AD&D, short and long-term disability, an employee assistance program, and a group RRSP or DPSP. We build plans around four pillars (income protection, health, dental and wellness) and ask first which parts matter to your team. OHIP covers hospital care and the doctor. Much of what comes after, the prescriptions, the dental work and the physio, is often on the employee unless a plan pays for it.
Related: What OHIP does not cover — The gaps a group plan is built to fill.
Rules that start the day you offer a plan
A plan is optional. Once you have one, these rules come with it:
- During pregnancy, parental, sick and most other ESA leaves, you keep paying your share of pension, life, AD&D, extended health and dental premiums, unless the employee tells you in writing they will stop paying theirs. Reservist leave is the exception.
- Through the statutory notice period on termination (1 to 8 weeks), or alongside pay in lieu of notice, you keep the benefit contributions going.
- After a work injury, you keep contributing to the worker's benefits for up to 12 months from the injury, or until they return (WSIB).
- Insured premiums carry Ontario's 8% retail sales tax.
- Employer-paid group life, AD&D and critical illness premiums are taxable benefits on the T4; health and dental are not.
- Benefit payments kept up for a whole temporary layoff let it run past 13 weeks under the ESA, to under 35 weeks in any 52.
Related: Which employee benefits are taxable — Line by line, from health and dental to group life.
Federally regulated? Different rules
Everything above is for provincially regulated employers. Banks, airlines, interprovincial trucking, telecoms, postal and courier services and other federally regulated businesses follow the Canada Labour Code for vacation, holidays and leaves, not Ontario's Employment Standards Act. CPP and EI apply either way.
Related: Federally regulated industries and workplaces — Government of Canada.
Decision Signals
Use these signals to decide whether the next step is a quote, a renewal audit, or a deeper plan-design review.
| Situation | Signal | Next Move |
|---|---|---|
| You have one to three employees and want coverage | A custom group plan is hard to price at that size | A pooled plan, such as a chamber plan, is usually the better fit. We say so rather than take the plan. |
| Your Ontario payroll is getting close to $1 million | Employer Health Tax starts above the exemption | Budget for EHT on payroll above $1 million, and check whether you share the exemption with an associated company. |
| An employee starts pregnancy or parental leave | They want to keep their health and dental | Keep paying your share for the whole leave. They keep paying theirs unless they tell you in writing they will stop. |
| You are ending someone's employment | They are owed statutory notice or pay in lieu | Keep their benefit contributions going through the notice period, and ask your insurer how coverage continues. |
| You are adding a plan for the first time | Nothing in the law tells you what to include | Start from what your people use (income protection, health, dental and wellness), then price it on your census. |
Content pillar
Read this alongside
This page is one piece of a larger cluster. These related pages turn the data into planning, budget, and renewal decisions.
Which employee benefits are taxable
Line by line, from health and dental to group life.
What group benefits cost per employee in Ontario
Planning ranges and a calculator for the optional part.
What OHIP does not cover
The gaps a group plan is built to fill.
Small business benefits guide
How a plan for 5 to 100 people is put together.
Sources & References
Sources are the CRA, WSIB, Government of Ontario and Government of Canada pages behind each rule, checked on October 28, 2026. Rates and thresholds change every January. This page explains the rules for provincially regulated Ontario employers; it is not legal or tax advice, so confirm your own situation with the province's employment standards office, the CRA or your accountant.
Employer Contributions to Worker Benefits (policy 18-01-12) (2023)
WSIB Operational Policy Manual
View sourcePregnancy and parental leave (Your guide to the Employment Standards Act) (2026)
Government of Ontario
View sourceTermination of employment, including temporary layoff (Your guide to the Employment Standards Act) (2026)
Government of Ontario
View sourceRelated Pages
Frequently Asked Questions
Are employers required to provide health benefits in Ontario?
No. Ontario's employment standards guide says employers are not required to provide employee benefit plans, so health, dental, drug, life and disability coverage are the employer's choice. If you do offer a plan, it cannot treat employees differently because of age (18 to 64), sex or marital status, and you keep paying your share during most statutory leaves.
What benefits are employers required to provide in Ontario?
Provincially regulated Ontario employers must make Canada Pension Plan and Employment Insurance contributions, register with the WSIB if their industry is covered (most are), give vacation time with vacation pay of at least 4%, give nine public holidays with holiday pay, allow job-protected leaves such as sick, pregnancy and parental leave, and pay Employer Health Tax on Ontario payroll above the exemption.
How much does an employer pay for CPP and EI in 2026?
For CPP, the employer matches the employee: 5.95% each on earnings between $3,500 and $74,600, up to $4,230.45 each, plus CPP2 of 4% each on earnings between $74,600 and $85,000, up to $416 each. For EI, the employer pays 1.4 times the employee's 1.63% premium on insurable earnings up to $68,900, so up to $1,572.30 per employee.
Do I have to pay Employer Health Tax as a small business?
Not on the first $1 million of Ontario payroll, if you are an eligible employer. Most private employers with Ontario payroll under $5 million qualify, and associated companies share one exemption. Above the exemption, the rate is 0.98% to 1.95%, depending on total Ontario payroll.
Do I have to keep paying benefits while an employee is on maternity or parental leave?
Yes. During pregnancy and parental leave, and most other leaves under the Employment Standards Act, the employer keeps paying its share of pension, life, accidental death, extended health and dental premiums for plans offered before the leave. That stops only if the employee tells the employer in writing that they will not keep paying their own share.
Is WSIB mandatory for every Ontario business?
No, but it is for most. Most Ontario businesses with employees must register with the WSIB within 10 days of hiring their first worker, including manufacturing and construction. The province's list of industries decides who must have coverage, and a business outside it can still apply. Premiums are paid by the employer and cannot be deducted from workers' pay.
Does a small business have to offer group benefits in Ontario?
No. Benefits plans are optional at any size. A one- to three-person business that wants coverage is usually better served by a pooled plan, such as a chamber plan. AEC Benefits builds custom plans for Ontario employers with about 5 to 100 employees, best fit 5 to 50.
Reviewed by Steffen deGraaf
Steffen brings 20+ years in insurance and group benefits, construction job-site roots, and architectural technology training at Mohawk College. FSRA-regulated insurance broker specializing in Ontario group benefits.
Ontario Insurance
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