Experts explain how to design benefits that comply with the laws but also make sense both for employees and employers
Looking ahead to 2026, Canadian employers once again face a delicate balancing act as they design benefits packages: offering competitive programs that attract and retain talent, while protecting themselves from legal liability and following best practice.
“When we're thinking about benefits and value, you have the tension between recruitment and legal risk,” says Oren Barbalat, employment lawyer at Littler in Toronto.
“From a recruitment standpoint, if we have a rich benefits package, that's typically something an employer wants to advertise or to mention as a recruitment tool. They can have a lot of value, particularly when you have a family and you have kids or you have a health issue.”
However, from a legal risk perspective, employers must exercise caution about what they promise at the outset, he explains.
Framing benefits as opportunities, not guarantees
To mitigate this risk, Barbalat recommends careful language in how benefits are presented to prospective and new employees.
“It's much safer to talk about things like eligibility, or that you're going to have the ‘opportunity to enrol’,” he says, “as opposed to promising somebody that they will have a certain benefit.”
This distinction matters significantly when benefits have waiting periods, Barbalat highlights. For example, if a health condition influences a candidate's decision to join a company, discovering waiting periods or eligibility restrictions after hire can create conflict and legal exposure.
“Let's say they have a certain prescription that they need on day one, and that's influenced their decision to join the company,” he explains.
“You don't want them finding out once they've submitted their forms to the insurance company, that there's a waiting period or they might not be eligible based on a pre-existing health issue.”
On top of termination clauses and vacation policies, benefits package details should always be carefully stipulated in employment contracts, Barbalat says.
“If there's a waiting period to enroll, we want to stipulate that. We want to clarify that it's subject to eligibility requirements, and we want to make sure we deal with what happens when employees are let go.”
Employee terminations: a hidden liability
One of the most dangerous areas for employers involves what happens to benefits when employees are terminated, with Barbalat describing it as “a real risk for employers.”
While employers have clear obligations during notice periods, he explains how the situation becomes complex after statutory minimum periods expire.
“If an employer is contributing to health and dental benefits, or if there's a disability plan, the employer has to do its part to keep those benefits going throughout that notice period,” he says.
“But then the question is: what happens after that period??
At common law, terminated employees are typically entitled to notice periods that may extend well beyond what insurance companies will cover; Barbalat notes that employers who fail to heed this cap in insurance coverage can end up making up the difference, sometimes at great cost.
“If you have an employee who's notionally entitled to eight months of notice at common law, but your disability insurer will only continue the benefits for three weeks, what happens to those benefits afterwards?” he says.
“The employer effectively becomes the insurer, and they become responsible for the underlying payments … that's a major gap, and that's something that absolutely should be dealt with in the employment contract, as well as when you're at the termination.”
Employer benefits 2026: consolidation over proliferation
When it comes to best practice for benefits planning, an emerging challenge for employers is over-investment in too many third-party providers, creating a patchwork of health care options that don’t work together, says Edward Kuo, senior director of group benefits at Eckler. The result is redundant, ineffective spending.
“A lot of it has to do with execution,” he says.
“There's been a lot thrown at employers or plan sponsors in the last five years, and I think there's been a lot of technology that's been offered in this space.”
Particularly as mental health employer support has become standard, many employers have purchased multiple solutions – apps, platforms, services – without coordinating how they function together.
“A lot of it may have been implemented incrementally, in silos, or reactively to an urgent issue," Kuo explains.
"The last five years have seen some pretty significant world events."
Coordination also needs to be improved at the organizational level, he adds, as a lack of communication about benefit ownership at the leader level can lead to duplication of services.
“A lot of plan sponsors aren't set up to have one stakeholder,” he says, pointing to targeted mental health apps and EAPs as common overlaps. The goal moving forward should be not to add more benefits, but to rationalize existing offerings.
“These might be owned by various people within an employer that don't talk to each other … they might have somebody who's a director of wellness, and you might have a director of benefits, so who owns what? Why are we paying for ICBT [internet cognitive behavioural therapy] when we have EAPs and they might do the same thing?”
EAPs: low utilization despite broad value
According to Kuo, employers are systematically failing to communicate EAPs effectively, leaving utilization rates far below potential.
The scope of what EAPs can cover is broader than most employees understand, he notes; EAPs provide services with potential value for a significant percentage of any workforce, yet employers communicate these services rarely or generically, if at all.
He adds that many workers can’t easily take time during a shift to contact EAP services, such as manufacturing workers, truck drivers, retail staff, and field employees.
“It takes constant communication, because EAPs and these types of supports are very short-term in nature,” Kuo explains – for this reason, specific use reminders make strategic sense.
As an example, specific messaging around holiday-time support could be effective in increasing EAP usage.
“A lot of it is, how do you frame a communication that is relevant for your target?” he says. The balance lies between frequency and relevance.
“So you communicate once a year. Well guess what, there's 364 days that something could happen to someone, that they’re not being reminded of these services.”
