Employee Compensation and Benefit Packages: Explained for Canadian Employers

Competitive pay and employee benefits are vital for keeping your staff happy, and attracting new talent.

In this article, you will learn about the different compensation structures and benefit packages that you can offer your employees.

Employee compensation structure

Choosing an appropriate compensation structure is fundamental to your business, and should be carefully planned out. Employers should be fair, consistent and reasonable when choosing how much to pay their employees.

Designing a pay framework

When designing your pay framework in your business, there are different variables to consider.

Job grades or bands

First, define levels or tiers of roles with their associated pay ranges. This is typically defined by job responsibilities, seniority or estimated value to the business.

You may wish to find the average compensation for this role in the area, and then apply a range under and above that you would be comfortable paying.

Skill or competency

You may also wish to take into account employees’ skill or competency, rather than solely by their job title and location. For example, employees may receive the upper range of the job grade compensation if they are highly skilled.

Pay methods

Next, you’ll need to define when and how employees will be compensated. This typically varies by the role, responsibilities and industry.

Salary

This is a fixed pay, indicating the annual amount that an employee would be compensated for their work.

Hourly wages

Employees would be compensated strictly on the amount of hours that they have worked in a pay period. Visit our helpful guide for more information on the difference between a salary and hourly wages.

Commission

This is typically pay based upon performance, often in sales roles. This is either standalone or combined with base salary.

Bonuses, overtime, premiums

This is additional compensation to base pay for performance, additional hours, or specific working conditions—such as working unsocial hours.

What are employee benefit packages?

Benefits packages are additional enhancements offered to employees that exceed their statutory entitlements. Offering additional benefits to your employees is a great way to incentivize your employees, improve productivity, wellness and happiness.

80% of employees who claim to be satisfied with their job benefits also rank their job happiness as extremely high (ERBI 2018). This surely isn’t a coincidence and something you must consider for your business.

While offering benefits packages is at the discretion of an employer, there are industry standards that need to be taken into consideration. If your workplace isn’t offering a similar level of benefits to competitors, you may struggle with hiring and retention.

Common benefits offered to employees

There are a variety of other benefits that you can offer to create an attractive package. Here are the most common types of benefits that employers offer in Canada.

Health and wellness benefits

Extended health coverage is a commonly offered benefit for most employees.

This would usually include:

• Prescriptions

• Dental care

• Vision coverage

• Paramedical services

Other health and wellness benefits would typically include:

• Employee Assistance Programs (EAPs)

• Counseling and mental health services

• Gym memberships

• Wellness allowances

Health and wellness benefits can lead to a healthier, happier workforce that have higher attendance and retention rates.

Financial and security benefits

Financial and security benefits help employees feel more stable and supported in the long term. They’re often viewed as a key part of a competitive package.

• Retirement savings programs

  • RRSP matching

  • Pension top-ups

• Life and disability insurance

• Health spending accounts

Financial and security benefits can improve peace of mind for your employees and help strengthen loyalty to your business.

Work-life balance benefits

Being able to offer your employees a level of flexibility will allow them to have a higher standard of living; and flexibility has become somewhat of an expectation in recent years.

Common work-life balance benefits include:

• Flexible remote work arrangements

• Additional paid time off beyond statutory minimums

• Family-friendly perks

  • Childcare subsidies

  • Parental top-ups

  • Additional flexibility to parents

Work-life balance benefits can help reduce burnout, improve employee satisfaction, and make your business more attractive to top talent.

How to offer benefits to employees

You should be clear with your staff regarding benefits and privileges, mishandling them or incorrectly applying them could open your business up to unnecessary risk.

Clearly outline any entitlements you have provided, ensure that they are accessible to the employees, and ensure that usage is monitored and being applied correctly. It is best practice to outline any benefit entitlements and eligibility requirements in an employment contract.

Disputes may arise if an employee feels that they are being unfairly restricted from their entitlements, or if an employer has violated the written agreement in some way.

Ensure that benefits are evenly distributed amongst your employees, and are clearly defined across roles, seniority and more. With fair classification of your employees, and evenly distributed benefits against the work they perform, you reduce risk from employee relations disputes or potential legal action.

Get help with your pay structure and employee benefits packages today with BrightHR

If you need any assistance with your pay and employee benefits, BrightHR has a range of tools which will help simplify your offerings.

We offer vacation and leave entitlement management software, expert 24/7 HR advice for any benefit, pay or employee relations questions, as well as a full suite of integrated HR software.

Book a demo today to find out how BrightHR can help your business.