Standard practices for disability in Canada include the many services and financial benefits the Canadian government offers to people in need. The Canadian social safety net covers a broad spectrum of programs, and because Canada is a federation, many provinces and territories run the programs. Both employers and employees make equal contributions to the Canadian Pension Plan (CPP). They do the same thing for the Employment Insurance (EI) program.
The Employment Insurance program provides temporary income support to unemployed workers. It also provides special benefits to workers who take time off from employment due to specific life events, such as illness, pregnancy, critical illness, or injury.
- EI provides a maximum of 17 weeks of benefits at 55% of weekly earnings, to a maximum benefit of $562 per week.
- CPP provides coverage for those with severe and prolonged mental or physical disabilities. The maximum benefit payment under CPP is currently $1,335.83 monthly.
Supplemental Disability Programs
Employers do not legally need to offer disability benefits. However, disability insurance is a requirement to remain competitive with talent recruitment. Eighty five percent of employers provide a group benefits plan. This generally includes life, accidental death and dismemberment, and disability insurance.
Short term disability – Less common than long-term disability, white collar (salaried) employees typically receive short term disability benefits. Coverage levels ranging from 60% to 100% of weekly earnings. A typical benefit period ranges from 17 to 26 weeks, and usually aligns with the long-term disability waiting period.
Long term disability – Employers typically offer long-term disability benefits to both white and blue collared employees. Benefit amounts range between 60% and 70% of an employee’s monthly earnings. It is also extremely common for disability benefits to contain an all-source maximum provision. This reduces the monthly payment by other income sources such as:
- Benefits payable from any workers’ compensation plan, including Workplace Safety Insurance payments.
- Disability benefits received under any other government programs, such as Canadian Pension Plan Disability, Provincial Disability Support Programs, Employment Insurance Sickness Benefits, etc.
Although it is common for employers to offer long-term disability insurance, it is becoming more commonplace for employees to pay the premium. This keeps employer costs reasonable and increases tax effectiveness for both the employee and the employer.