Everything You Need to Know About Salaried Employees

In 2024, the average hourly wage for Canadian employees reached $35.20, a 5% rise compared with pre-pandemic levels. For many businesses—from small operations to growing enterprises—understanding what “salary” means can shape pay policies, hiring decisions, and compliance with labour standards legislation. Without clarity around terms like salaried pay or how it compares with hourly wages, employers risk miscommunication, errors in pay structure, and even regulatory issues.

This guide will define what “salary” means, explain how salaried pay works (vs. hourly pay), cover when overtime or hourly-wage norms may still apply, and help you decide whether salaried or hourly compensation better suits your workforce.

What is a salary?

A salary is the fixed amount of compensation a salaried employee receives from their employer in exchange for their work. This is most often expressed as an annual amount—for example, “$60,000 per year”, rather than a monthly or weekly sum. Even when paycheques come bi-weekly, semi-monthly, or monthly, the total annual amount remains fixed.

When someone says they earn “$60,000 per year,” that typically refers to the full salaried amount—not a monthly or hourly wage. In short, salaried pay provides predictability and consistency for both employers and employees across the year.

How does salary pay work?

When an employee is on a salary, their compensation works differently from hourly pay. Key features of salaried pay include:

• Fixed annual pay: A salaried employee receives a predetermined amount of compensation for the year (e.g., “$70,000 per year”). That total is typically divided into regular paycheques—monthly, semi-monthly, bi-weekly, or weekly—depending on the employer’s payroll schedule.
• Predictable paycheques: Because the amount is fixed, paycheques tend to be the same value each pay period. This makes budgeting easier for employees and simplifies payroll for employers.
• Not strictly tied to hours worked: Salaried pay does not strictly depend on the number of hours worked in each week. Whether the employee works more or fewer hours than “standard,” their salary remains the same (unless otherwise specified in contract or company policy).
• More likely to include benefits and paid time off: Many salaried roles come with broader compensation packages beyond base pay: paid vacation, sick or personal days, holiday pay, and often benefits such as health/dental coverage and retirement plan contributions.
• Often used for professional, managerial, or stable full-time roles: Salaried positions tend to correspond with ongoing, full-time employment in stable roles (e.g., administrative staff, managers, professionals, office/knowledge-work roles), rather than more variable or shift-based work.
• Employment stability and clarity: Because the pay and (often) benefits are fixed and predictable, salaried employees may enjoy greater job security, clearer expectations, and more stable income compared to hourly workers whose earnings fluctuate with worked hours.

In short, salaried pay gives employers and employees a consistent, reliable compensation structure that’s well-suited to stable, full-time roles, while offering the predictability and benefits many professionals expect.

What is an exempt employee?

In Canada, “exempt” is not a universal classification that applies across all provinces—unlike in the US, there’s no single federal “exempt vs. non-exempt” standard with fixed thresholds.

Instead, whether a salaried or salaried-type employee is entitled to overtime, minimum wage protections, or other statutory rights depends on job duties, provincial/territorial employment standards legislation, and whether the employer is federally or provincially regulated.

• For many salaried employees, being paid a salary doesn’t automatically strip away protections such as overtime pay or statutory minimum wage—those protections survive unless a specific exemption applies under local laws.
• Exemptions—i.e., roles that may be excluded from overtime or hour-of-work rules—typically apply to certain groups: professionals (e.g., doctors, engineers), managers and supervisors, certain IT or computer-related roles, or jobs with defined exemption under applicable labour legislation.
• Whether overtime pay applies also depends on the relevant provincial/territorial threshold (for example, in many provinces overtime begins after 44 hours per week, though this varies).

An “exempt employee” typically refers to someone whose job duties or role place them outside certain statutory protections—but “salary” alone does not guarantee exemption.

Salaried vs. hourly employee: what’s the difference?

The key difference between salaried and hourly employees comes down to how pay is calculated and how employment standards protections apply.

An employee on a salary receives a fixed amount of pay each year, divided into regular paycheques. Their income does not fluctuate based on the number of hours worked in each week, and their employment contract typically outlines expected or standard weekly hours.

Many salaried roles also come with broader compensation packages—such as paid vacation, personal days, or health and dental benefits—especially in full-time professional or administrative positions.

An hourly employee, by contrast, is paid for each hour worked. Their earnings can vary from one pay period to the next depending on scheduling, shift availability, and overtime. Hourly employees are covered by provincial or territorial employment-standards legislation, which typically guarantees minimum wage protections, overtime pay after a certain number of hours, and rules governing meal breaks, public holidays, and scheduling.

While some salaried employees may also qualify for overtime (depending on their job duties and local legislation), hourly employees are much more likely to receive overtime pay because their compensation is directly tied to hours worked.

In short, salaried pay offers income stability and predictability, whereas hourly pay offers flexibility and clear hour-to-hour compensation. Both models are common—the right choice depends on the role, industry norms, and how consistently hours are expected to be worked.

Do salaried employees have to clock in?

Most salaried employees are not required to clock in or track their hours in the same way as hourly employees. Because their pay is based on a fixed annual amount—rather than the exact number of hours worked—employers typically focus on results, deadlines, and overall job performance rather than minute-by-minute time tracking.

That said, some organisations still use time-tracking systems for project management, workload planning, billing, or to ensure compliance with provincial overtime rules (since certain salaried employees may still qualify for overtime depending on their role).

Generally, salaried employees have more flexibility in when and where they complete their work, especially in roles that involve hybrid schedules, travel, or irregular hours.

What are the labour laws for salaried employees?

Labour laws and employee protections vary depending on whether a worker is federally or provincially regulated. Federal employees—such as those in banking, telecommunications, or interprovincial transportation—are covered by the Canada Labour Code, which sets minimum standards for hours of work, overtime, vacation, leave, and termination.

Most employees, however, fall under provincial or territorial employment standards legislation, which outlines protections for both salaried and hourly workers. These laws typically cover:

• Minimum wage
• Overtime and hours-of-work regulations
• Paid vacation and statutory holidays
• Leaves of absence (such as parental, sick, or family responsibility leave)
• Termination notice and severance requirements
• Health and safety protections

While salary workers often have more predictable pay and benefits, many are still entitled to these protections depending on their duties and the applicable provincial or federal legislation. Employers must ensure compliance with the relevant legislation to avoid legal or financial penalties.

How many hours can a salaried employee be made to work?

In Canada, the number of hours a salaried employee can be expected to work depends on whether they are federally or provincially regulated and the nature of their role. For federally regulated employees, the standard workweek is 40 hours, with any hours beyond that considered overtime unless the employee is exempt under specific provisions.

Many salaried roles, particularly in professional or managerial positions, may require flexibility in working hours to meet deadlines or manage projects. Employers should clearly communicate expectations around hours and workloads to avoid confusion and maintain compliance with local labour laws.

Do salaried employees get overtime?

Whether a salaried employee is eligible for overtime pay depends on their job duties, salary level, and applicable legislation. Federally regulated salaried employees are entitled to overtime pay for hours worked beyond the standard weekly threshold (usually 40 hours), unless they fall under a specific exemption. Provinces and territories set their own overtime rules—for example, in Ontario, most employees are entitled to overtime pay after 44 hours per week.

Employers must ensure salaried employees who are eligible for overtime are compensated appropriately and clearly outline any exemptions or expectations in employment contracts.

Do salaried employees get paid if they don’t work?

Salaried employees are generally paid a fixed amount for their work, but there are situations where pay continues even if the employee is not actively working. Common examples include:

• Paid vacation and statutory holidays: Employees are entitled to be paid during vacation days and public holidays, regardless of whether work is performed.
• Sick leave or disability leave: Many employers provide paid sick leave or short-term disability benefits. Federally regulated employees may also be eligible for certain paid leave under the Canada Labour Code.
• Other paid leaves: Certain provincial or federal regulations provide paid leave for personal or family responsibilities, bereavement, jury duty, or other protected absences.

Employers cannot arbitrarily deduct pay from a salaried employee’s regular wages unless the absence falls outside these protected categories, or as outlined in an employment contract or company policy. This ensures that salaried employees continue to receive consistent income while still respecting statutory protections.

Can salaried employees be forced to work weekends?

There is no blanket law preventing employers from scheduling salaried employees to work on weekends. Whether a salaried employee is expected to work weekends typically depends on the employment contract, job duties, and the nature of the role.

Employers should clearly communicate expectations around weekend or irregular hours at the time of hire to avoid misunderstandings. Even if weekend work is required, employees may still be entitled to overtime or other protections under provincial, territorial, or federal employment standards if their role is not exempt.

Clear agreements and transparent scheduling help both employers and salaried employees balance workload expectations while remaining compliant with applicable labour laws.

Can you deduct pay from a salaried employee?

Employers cannot arbitrarily deduct pay from a salary employee’s wages. Deductions must comply with federal or provincial employment standards legislation and should be clearly outlined in employment contracts or company policies. Typical scenarios where deductions may be allowed include:

• Authorized leave without pay: If an employee takes unpaid personal, vacation, or other leave beyond their accrued entitlements, an employer may deduct pay for those hours or days.
• Statutory overpayments or errors: Employers may adjust payroll to correct a previously overpaid amount, provided proper notice is given.
• Benefit contributions: Deductions for benefits (e.g., health, dental, retirement plans) are allowed if the employee has agreed in writing.
• Court-ordered or legislated deductions: These include garnishments, tax remittances, or other legal obligations.

Employers should avoid deductions for minor infractions, safety violations, or disciplinary suspensions, as these may violate employment standards and risk legal challenges. Clear policies and transparent communication help ensure compliance and maintain trust between employer and employee.

Manage employee compensation with BambooHR

Understanding the definition of salaried, the differences between salaried versus hourly employees, overtime eligibility, and pay protections is essential for HR professionals and small business owners. Clear policies around salaries, hours, and deductions help ensure compliance with federal and provincial employment standards while supporting a fair and predictable workplace.

BambooHR^® makes it easy to manage employee compensation, track hours, handle leave, and maintain accurate payroll records—all in one central system.