FAQ: What Is an Employer?

Updated March 21, 2023

Every industry has employers and employees. As an employee, it's important for you to know exactly what an employer is and what their obligations are to you. It will help you find an employer that respects and values you, not just as an employee, but as a person. In this article, we look at what an employer is, how they compensate employees, define employment agreements and termination, and discuss the different types of employers.

What is an employer?

An employer is a person, company, or organization that compensates an employee for their labour. Employers hire people to perform certain tasks for their business based on their skills, knowledge, and experience. Employers must follow Canadian Employment Law and the Human Rights Act to keep employees safe in the workplace. The laws also ensure employees are treated fairly and workplaces are free from discrimination. Employers must ensure that employees understand their rights and that they are treating everyone with respect.

How do employers compensate employees?

In exchange for the labour employees provide, employers must compensate them with wages and/or benefits. This compensation can be in the form of:

Salaries
Hourly wages
Healthcare benefits
Paid time off

While employers must pay their employees a minimum wage, this wage varies by industry and province or territory. Similarly, healthcare benefits and paid time off vary as well. For example, employees in Ontario get two weeks of paid vacation while employees in Saskatchewan get three. Any additional perks employers give, such as discounts or wellness offerings, are optional.

What are employment agreements?

Employment agreements, also known as job offer letters or job contracts, are a written document or verbal agreement that describes the employee's job. It should include the employee's duties, compensation, benefits package, and resignation or termination guidance. While employment agreements can start verbally, your employer will likely create a written document for everyone to agree to and sign.

If you're unhappy with parts of your employment agreement, negotiate these items with your employer before signing. Here is some information that should be included in your employment agreement:

Job title
Position details
Job duties and responsibilities
Compensation and benefits
Resignation or termination guide
Dress code
Role- or industry-specific information, such as confidentiality agreements

What benefits do employers need to pay?

Benefits packages do vary depending on the location, company, and role. However, there are mandatory benefits employers must pay called legislated employee benefits. Knowing what benefits you're eligible for is important to ensure your employer is respecting your rights. Here are the benefits you should keep track of:

Employment insurance: a portion of every pay cheque will go towards employment insurance, allowing you to apply for unemployment support if you unexpectedly lose your job.
Canada Pension Plan: another portion of your pay cheque will go towards your pension. Your employer will usually match your contribution to help set you up for retirement.
Legislated leave: if the employee needs to leave for a reasonable occurrence, such as due to an illness, the employer must maintain their position until they return.
Paid time off: this includes your vacation days (usually ten per year), sick days, and additional leave, such as parental leave.

How do employers and employees terminate employment?

Most job contracts or employment agreements will include unique requirements or steps for resignation or termination. Generally, employees need to give two weeks' notice to employers when they want to leave. Some employers may not require any notice or some might require more than two weeks. This gives employers time to find a new employee to fill the role. The same goes for employers as they must give their employees notice (the exact amount of notice depends on the location and length of employment) or pay in lieu of notice if they plan to terminate you.

A lot of roles also have a probation period of three months or more where employees are still training and learning their roles. In this period, employers can terminate you without any notice or pay in lieu of notice. If you pass your probation period or there is no mention of one in your employment agreement, employers will have to give notice or pay in lieu of notice to terminate you. It's also important to know that employers can terminate you for fair reasons, such as poor performance or position elimination, but not for discriminatory reasons.

What are the different types of employers?

There are many different types of employers, here are a few of the most common ones:

Corporations

A corporation is an entity consisting of one or more shareholders, either to earn a profit or offer charitable services. A corporation operates as an individual person with many of the same legal and tax benefits. But instead of having one person lead the operation, shareholders appoint a board of directors that work together and vote on major decisions.

Corporations tend to be large, so it's a good place for employees that want to work towards promotions and pay raises. Similarly, due to the size, corporations require strong teamwork, structure, and organization. Employees who enjoy this type of structure will thrive with a corporation.

Small businesses

Different industries define small businesses differently. Some agree that a small business is a company that has less than 250 employees or earns less than $1 million a year. Other industries may say a small business has less than 1,500 employees or earns less than $5 million annually. Ultimately, small businesses differ from corporations as one or two people run them rather than a board of directors.

Working for a small business is a great way to have more independence and freedom in your work. Small business owners are also more likely to offer individualized support and assist you with your professional goals. Since many small businesses are customer-focused, these employers can be a good fit for employees who enjoy connecting with customers and their team members.

Non-profit organizations

Another type of employer is a non-profit organization. Non-profit organizations offer charitable services for free, such as food banks or animal shelters. They hire employees and offer their services using donations from the public. People that donate to the non-profit and the organization itself don't have to pay taxes on their donations.

Working for a non-profit organization can be a good choice for employees that want to help their community. Many non-profit roles don't earn a salary, so you may want to consider doing it in conjunction with another job.

Government agencies

The Canadian government hires many people to work for the provincial, territorial, municipal or federal government. There are a variety of roles in almost every industry, such as the following:

Healthcare: Nurse, doctor, dentist, pharmacist, medical evaluator, mental health professional, occupational health therapist
Social services: Social worker, psychologist, family services coordinator, correctional officer, deployment counsellor, veterans affairs counsellor
Department of National Defence: Aircraft technician, machinist, HVAC technician, sheet metal worker, welder, artillery officer, naval communicator, aerospace officer
Research: Doctoral researcher, project manager, writer, editor, research assistant, field interviewer, laboratory researcher
Finance: Accountant, payroll clerk, financial advisor, financial manager, benefits advisor, Canada Revenue Agency auditor
Law enforcement: RCMP, police officer, firearm technologist, toxicologist, logistics officer, detachment clerk
Engineering: Civil engineer, aerospace engineer, electronic engineer, power engineer, mechanical engineer
Science: Aquatic scientist, biologist, criminal intelligence analyst, hydrologist, inspector, environmental health officer
Skilled labour and trades: Cook, carpenter, automotive mechanic, cleaner, construction labourer, heavy-duty equipment officer, pipe fitter

Working for the Canadian government is a great long-term option as roles tend to be stable and fulfilling. Government work also has predictable schedules so you can have a good work-life balance, generous paid time off, and great benefits.

Individual employers

If you don't want to work for an employer in the traditional sense, you can become your own employer. Becoming self-employed is a great way to have full control over your work and schedule. You can offer your services to companies looking for independent contractors or freelancers either for a short period or long-term. You set your salary or hourly wage and negotiate it with potential clients. As an independent contractor, you are responsible for taxes, benefits, and any documentation required by federal and local agencies.

Working for yourself can benefit people who want to set their own hours and work anywhere in the world. Freelancing can also be cost effective for contractors working from home who avoid commuting to an office every day.