The IT Nerd

Gen Z now makes up 38% of the workforce at Canadian small businesses, nearly matching Millennials at 41%, while employers are seeing fewer workers leave than before the pandemic, according to new data from Wagepoint, a leading provider of payroll software for small businesses (SMBs) across Canada.

The 2026 Canadian Small Business Workforce Report, released today, compares aggregated payroll data from Wagepoint customers from 2019 to 2025. It finds that small businesses have grown their teams, reduced employee separations and increased hourly pay faster than inflation over the six-year period.

The annual separation rate fell from 38% in 2019 to 27% in 2025, while average headcount per business rose 44%, from 13.3 to 19.1 employees. At the same time, Gen Z’s share of the workforce more than doubled, from 18% to 38%, while millennials’ share fell from 55% to 41%.

The report uses aggregated de-identified payroll data of actual hires, departures and pay, giving a direct view of how small businesses are managing their people. Together, these findings point to a small business sector that has changed shape since the pandemic. Teams are bigger, more of the jobs are full-time, and workers are staying longer, even as more of them are early in their careers. For business owners, that means more people to onboard, pay correctly, and retain, along with labour costs that are rising as hourly pay climbs faster than salaries. For accountants and bookkeepers who support them, payroll is becoming a bigger part of the advice that clients need as they navigate the changes.

Key findings, 2019 vs. 2025

• Average headcount per business rose 44%, from 13.3 to 19.1 employees.
• Gen Z share of the workforce rose from 18% to 38%, while the share of millennials fell from 55% to 41%. Together, they accounted for 79% of the workforce in 2025. The annual separation rate fell 11 points, from 38% to 27%.
• Median hourly pay rose 27%, from $20.97 to $26.70, compared with an approximately 20% increase in consumer prices. Median full-time salaries rose about 14%.
• Small businesses also shifted toward full-time work as they grew, with part-time roles falling from 79% of headcount in 2019 to 69% in 2025.

Regional results

• In Western Canada, average headcount grew 53%, from 11.8 to 18.0, the largest increase of the three regions. The West also has the highest median hourly pay, at $27.58.
• Central Canada has the largest businesses on average, with 20.0 employees in 2025, up from 14.5. Its separation rate fell from 39% to 26%.
• In the Atlantic provinces, Gen Z’s share of the workforce rose from 14% to 37%, the biggest increase in the country, even though the region has Canada’s oldest population. Median hourly pay there rose 33%, from $18.95 to $25.19.

The full report is available at https://www.wagepoint.com/resources/report/wagepoint-small-business-workforce-report-2026/.

About the data
Figures are based on de-identified, aggregated payroll data from approximately 6,800 Canadian small and mid-sized businesses and 106,000 employees that used Wagepoint between 2019 and 2025. Partial-year 2026 data is not included. Dollar figures are in Canadian dollars. Results are shares, medians and ratios, and indicate trends among businesses that run formal payroll. They are not estimates of market share or of all Canadian businesses. Western Canada includes BC, AB, SK, MB and the territories; Central Canada includes ON and QC; Atlantic Canada includes NB, NS, PE and NL. Inflation figures are from Statistics Canada.

Wagepoint, a leading provider of payroll software for small businesses (SMBs) across Canada, today launched unified Québec payroll compliance with complete platform functionality in both French and English. Businesses with employees in Québec no longer need a second payroll system or a manual process. Québec-specific requirements can now run inside the same workflow used across the rest of Canada.

Québec is one of Canada’s largest small-business markets, with more than 228,000 small employer businesses with 1 to 99 employees, according to the latest ISED Canada Key Small Business Statistics report. For many small businesses, Québec payroll has meant extra work for a long time. Québec is the only province that administers its own income tax, so employers remit separately to Revenu Québec on top of Canada Revenue Agency. As a result, businesses with staff in Québec and elsewhere in Canada often face duplicative efforts in managing separate provincial programs and contributions, including the Québec Pension Plan (QPP), Québec Parental Insurance Plan (QPIP) and Health Services Fund, with remittances handled through Revenu Québec.

That complexity compounds an already common problem: 75% of Canadian employees experience a payroll error in a given year, according to Deloitte and the National Payroll Institute. Wagepoint is built to close that gap for small businesses and for the accounting and bookkeeping firms who support them.

Québec payroll, built into the same workflow

Key Québec payroll requirements are now handled inside the platform, in the same workflow used in every other province:

• Revenu Québec remittances
• CNESST, Health Services Fund, QPP and QPP2, and QPIP calculations and remittances
• RL-1 reporting
• Québec statutory holiday pay using the 1/20 rule
• Québec income, deduction and benefit codes, with the option to build custom codes
• A complete workflow in English or French set at the user level
• Simple, comprehensive pricing with no add-on fees for accounting software integrations, reporting, timesheets, or multi-province support

Wagepoint has worked with small businesses in Québec — and the accounting and bookkeeping firms that serve them — for years, handling payroll realities not found anywhere else in Canada. This launch brings that work fully into the same platform used across the country in the language of choice for employers and employees alike.

For owners in retail, food service, health services and professional services, who run payroll themselves alongside everything else in the day, that means one system and one process no matter where their employees are. For multi-province accounting and bookkeeping firms, it means Québec clients can move onto the same platform as the rest of their client base, while still getting the Québec-specific functionality they need.

Québec payroll is included in Wagepoint at no additional cost.

See how simple Québec payroll can be. Book a demo in French at https://www.wagepoint.com/fr/reserver-une-demo/

While a third of Canadian small businesses reported using AI in their operations by the end of 2025, many business owners and their accountants are still spending hours reviewing their payroll runs, trying to spot a mistake. Canadian business optimism may have grown in the last month, but the onset of new tariff threats puts time and money pressure back on the table.

The recent launch of Wagepoint’s latest feature, the AI Payroll Summary, built directly into its platform makes this workable for small business.

As making payroll errors can be costly, Canadian payroll software company Wagepoint has implemented AI’s capabilities to provide a summary of each payroll run, identifying any unusual patterns or changes. The final review is ultimately in the hands of the business owner or AB, but saves ample time and narrows the margin of error.

Wagepoint today announced the launch of Timesheets, a built-in time entry feature, and My Wagepoint, its next-generation mobile app for employees. The launches represent a significant step forward to provide small businesses, accountants, and bookkeepers with a unifying and accessible mobile-first solution for people on the go.

As business models increasingly prioritize AI usage and mobile-first structures, these products reflect a demand for payroll efficiency, automation, and unity. My Wagepoint marks critical progress toward end-to-end mobile payroll workflows in small business operations.

Timesheets
Built directly into Wagepoint, Timesheets allows employees, contractors, and administrators to submit time entries for approval, replacing the need to chase down hours or rely on separate tools. Once approved, hours flow straight into payroll for faster, simpler pay runs.

Key benefits include:

• Spend less time on payroll: Built-in time tracking eliminates manual hour collection, so business owners can spend less time on admin and more time running their business.
• Overtime done right, automatically: Wagepoint automatically calculates and applies overtime rates based on the standard daily and weekly rules for the employee’s province or territory.
• Technology that grows with you: One solution for time and pay that scales with your team, without unnecessary tech overhead or added complexity.

My Wagepoint
My Wagepoint marks Wagepoint’s next-generation mobile experience, purpose-built as part of the company’s core payroll platform. Available on the App Store and Google Play, the app gives employees and contractors seamless, on-the-go access to payroll — allowing them to manage time entries, access paystubs, and update profile information directly from their mobile device. This launch marks an important step toward a mobile-first payroll experience, supporting more businesses that operate on the go.

Since 2012, more than 30,000 small businesses, and over 1,800 accountants and bookkeepers have relied on Wagepoint for accurate, compliant payroll built specifically for Canadian businesses. Purpose-built for Canada, the platform features auto-calculated pay runs, automatic tax remittances to the CRA, an employee self-service portal, and integrations with QuickBooks Online, Xero, and FreshBooks.

To learn more, visit www.wagepoint.com.