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How can employer and employee adjust salary to the market value (Canada)

An employee’s salary is usually agreed on and specified in the labour contract. However, economic and social situations are constantly changing. Therefore, salaries are usually adjusted on a yearly basis.



What challenges does it focus on?

Establishing a reasonable salary adjustment in line with the market value in Canada.

Short summary

When an employee is hired by his or her employer, they enter into a labour agreement. This agreement contains all main conditions of their cooperation, including the amount of the employee salary. However, since the economy is developing constantly, salaries are regularly adjusted to issues like inflation. Therefore, the parties may agree on:

  • adjustment of the salary with the same percentage as inflation
  • concrete amount the salary should be raised (or declined) to; or
  • special tools, mechanisms or indicators on the basis of which the calculation should be made.

In general, the average annual salary increase in Canada is 2.9 % of the basic salary.

Research evidence

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