ADP Canada says most employers see mental health as their duty but fewer than half offer benefits
Pay, benefits, and mental health now sit at the centre of retention in Canada – but many employers still have clunky HR processes and patchy support just as AI and new rules tighten around how they manage people and data.
According to ADP Canada’s “Canada Workplace Trends for 2026” report, employers see employee experience as a core retention tool, yet fewer than half rate their onboarding and hiring as very efficient.
Those gaps matter when 41 percent of small businesses, 61 percent of mid‑sized firms and 72 percent of large employers reported turnover in the past year, with operations, administration and client services most affected.
High workloads, understaffing, dissatisfaction with pay and concerns about leadership drive a significant share of departures, especially in larger organisations.
ADP Canada reports that 61 percent of Canadian businesses view compensation as the top driver of employee satisfaction, far ahead of flexible hours at 39 percent.
Pay also ranks as the leading retention factor at 44 percent.
Employees in small, mid‑sized and large organisations consistently raise compensation as their dominant workplace concern, with job security, workload and work‑life balance trailing behind.
For employers funding retirement and benefit programs, that puts base pay and benefit value squarely in the retention spotlight.
Weak HR processes around hiring, onboarding and feedback collection compound the risk: when people feel underpaid and under‑supported, they leave, and they often leave from roles central to day‑to‑day operations.
On well‑being, ADP Canada finds that 87 percent of employers say they have a responsibility to support employees’ mental health, 83 percent say the same for physical health and 68 percent for financial well‑being.
Yet fewer than half (46 percent) currently offer mental health benefits, with cost as the primary barrier across business sizes. Even among those with coverage, only 35 percent express confidence that employees can access affordable, high‑quality mental health care.
For benefit sponsors, that gap between stated responsibility and actual access is the key signal.
Plan design that integrates mental, physical and financial supports into everyday work – rather than standalone programs no one uses – will likely matter more than ever to attraction and retention.
ADP Canada reports that employers prioritise a strong work ethic in new hires, followed by attention to detail, time management, problem‑solving and teamwork.
They also struggle most to find these exact skills, with 38 percent saying strong work ethic is hard to source and roughly a quarter pointing to gaps in detail‑orientation and time management.
At the same time, five generations now share the workplace, and employers cite differences in work ethic and commitment, recruitment and retention issues, intergenerational respect, work‑life balance expectations and technology literacy as key challenges.
On AI skills, ADP Canada finds a sharp mismatch between importance and hiring.
Seventy‑five per cent of large Canadian companies and 61 percent of mid‑sized firms say AI skills are essential for competitiveness, yet only 13 percent and 5 percent, respectively, actively hire for them.
Smaller organisations show even lower urgency.
That points to a need for internal upskilling – including how staff in HR, payroll and benefits use AI safely and effectively – rather than relying solely on external recruitment.
Employers see specific roles for AI in people management.
According to ADP Canada, 47 percent of businesses believe AI can enhance skills development, 40 percent say it can support onboarding and offboarding, and 38 percent see it helping attract and retain employees.
Yet 66 percent do not expect generative AI to replace traditional employee skills development and training, and 80 percent of small, mid‑sized and large organisations say keeping a human in the loop when using AI is important. Sixty‑four per cent stress the need to build trust around AI.
At the same time, 38 percent of organisations report that employees fear being displaced by AI.
Leaders who oversee retirement and benefit programs must factor that anxiety into workforce planning, communications and the credibility of any AI‑enabled tools that use member data or guide member choices.
ADP Canada reports that only 21 percent of Canadian businesses currently use AI for compliance tasks, and just over half of those (51 percent) strongly trust its accuracy.
Among organisations not using AI for compliance, only 10 percent plan to adopt it. Larger employers lead adoption, but trust overall remains limited.
Crucially, 88 percent say they still need a compliance expert, internal or external, alongside AI tools.
Regulatory demands continue to rise.
Several Canadian jurisdictions – including the federal government, Ontario, British Columbia, Prince Edward Island, Nova Scotia and Newfoundland and Labrador – have introduced pay transparency and pay equity laws that require salary ranges in job postings, restrict pay history questions and protect employees who discuss pay.
Beginning January 2026, Ontario employers must also disclose whether a role is new or an existing vacancy, state when AI is used in hiring or screening and notify candidates of hiring decisions within 45 days of the last interview.
When asked about their main compliance headaches, employers in ADP Canada’s survey point first to data privacy, paid leave, payroll tax requirements, pay transparency and overtime rules.
Many small and mid‑sized firms start with their own research, then turn to HR or payroll providers, government resources, lawyers and accountants.
Larger employers lean more on internal specialists and external partners.
ADP Canada finds that 77 percent of organisations prioritise ethical management of employee and company data, and 59 percent have policies or guidelines in place, with adoption highest among large employers.
By contrast, only 46 percent see ethical management of AI and AI systems as a priority and just 22 percent have an AI ethics policy, leaving 70 percent without one.
Information security concerns are widespread.
According to ADP Canada, 82 percent of companies express concern about threats such as data breaches, cyberattacks, malicious use of AI and unauthorised access to company and employee data, as well as compliance with privacy laws.
These pressures push HR and IT closer together, since both functions now share responsibility for safeguarding data, ensuring compliant use of AI and keeping systems that hold sensitive workforce and plan information secure.
