Employer Of Record In Canada

There are fresh potential and hazards in a new market. Your journey is made simpler and easier by on-site staff who are knowledgeable and well-equipped. EOR’s solution has helped hundreds of businesses fulfil their global vision in an optimised manner. Use our in-house and local resources, infrastructure, and experience to seek and hire the top skills in Canada. Leave the micro-level HR core tasks to our ground-breaking solution while you concentrate on the bigger picture and core business operations. Learn more about how EOR solutions may help you establish a company entity in Canada.

Overview of Canada

• Estimated Population: 37.53 Million (2019)
• Currency: Canadian Dollar (CAD). The symbol used is $.
• Capital: Ottawa
• The number of officially recognized languages spoken: 196 languages, of which 2 are official languages, 128 are immigrant languages, and 66 are indigenous languages.
• Languages frequently used: English, French
• GDP: 5% (Real GDP Growth, Annual % change)

Employment Landscape In Canada

The Canadian Constitution limits the federal government’s ability to influence the country’s labour laws. Only the federal programs for public pension benefits and unemployment insurance are managed by the federal government. Otherwise, each province and territory in Canada is directly responsible for its own set of labour regulations. However, federal law has jurisdiction over sectors like aviation, telecommunications, and international shipping. For businesses looking to grow remotely, navigating the complex legal environment can be very difficult.  EOR Solution can provide tailored solutions to fit your particular HR needs.

Foreign workers as well as native Canadians are subject to Canadian labour laws. Some of the fundamental guidelines for employment in Canada include mandatory pay for work, workplace security, and the ban on employers taking a foreign worker’s passport or work permit.

Here are some important Canadian Employment Laws to be aware of:

Title	Explanation
Main Sources of Employment Laws	Nine Canadian provinces’ employment regulations are governed by the Common Law. Only in Quebec, the Civil Code of Quebec handles employment legislation. Contracts and laws are the other sources of Canadian employment law. The Canadian Constitution Act states that provincial governments are responsible for enforcing employment rules throughout the nation, with the exception of certain sectors including banking, telecommunications, and international shipping, which includes port, rail, and air cargo services.
Type of workers	In Canada, there are three different sorts of workers: independent contractors, dependent employees, and employees. Employees are free to make use of their Common Law entitlements, such as leave, paid time off, and overtime. Some common law benefits, such as the right to a notice period upon termination, are available to dependent contractors. Under the Common Law, independent contractors are not entitled to any rights or benefits.
Trade Union	Employers can recognize unions in the majority of Canadian areas. In Ontario, a trade union must get support from 40% or more of the workforce. The trade union can only negotiate terms and conditions on behalf of the workers once it has been recognized.
Employment contract law Canada	Both employers and workers should be aware of their responsibilities and rights under employment law. Although verbal or written employment contracts are acceptable, it is advised to have all terms and conditions in writing to prevent misunderstandings or disagreements. Employers are required by law to maintain a secure workplace, adhere to all statutory obligations, such as giving reasonable notice before terminating an employee and refraining from discrimination based on protected characteristics. Employees, on the other hand, are obligated to complete their obligations conscientiously and in good faith, preserve employer loyalty, and protect trade secrets and sensitive information even after the end of employment.  It is significant to highlight that employment legislation can be intricate; thus, it is advised to get legal counsel to guarantee compliance and prevent any potential legal problems.
Working hours	In Canada, a typical workweek is 40 hours long, with an eight-hour workday. Provincial rules, however, control how long employees can work. In a week of seven days, one day off is allowed.
Compensation & Bonus	Different industries have different salary compensation. Additionally, it varies depending on the province and work area. However, the average salary in Canada is about CA$54,630. Bonuses are not required as per Canadian rules. However, employers can cover the clause in individual employment contracts, often as a negotiation tool with senior candidates.
Leaves	Although benefits are available, maternity absences are not a paid entitlement in Canada. Maternity leave can last up to 17 weeks, at the employee’s discretion. Additionally, some jurisdictions, like Quebec, have more power since they have insurance that pays out a portion of wages to new parents. While in some other jurisdictions, an employee’s seniority is maintained while on leave, employers in Ontario are not allowed to take any action against new moms. Additionally, employees are entitled to up to 63 weeks of unpaid parental leave, or 71 weeks if both parents split the time. The leave may be used within 78 weeks of the child’s birth or adoption, whichever comes first.
Holidays	After a year of employment, most provinces provide two weeks of paid vacation once a year. Workers in federally regulated businesses are entitled to up to two weeks of paid vacation, followed by three weeks after five years and four weeks after 10.
Public Holidays	These are the public holidays in Canada on which employees get paid: Good Friday Victoria Day Saint-Jean-Baptiste Day (Quebec only) Canada Day Civic Holiday (Except in Quebec and Yukon) Labor Day Thanksgiving Remembrance Day Christmas Day Boxing Day New Years’ Day Different provinces have additional paid holidays. When employees work on a holiday, they get a day off and half-pay instead of the same pay.
Sick leave	The laws are different in each province. According to Canadian labor laws, 17 weeks of unpaid medical leave are often offered. Employees who have a chronic disease may be eligible for benefits under the Canadian Pension Plan or Employment Insurance.
Canadian human rights legislation	Legal discrimination against employees in Canada is severely forbidden.
Protecting business interests after termination	Non-solicitation and non-competition are restrictive covenants.
Data Protection laws in Canada	The Personal Information Protection and Electronic Documents Act regulates data protection and privacy in all other provinces and territories, with the exception of Alberta, Quebec, and British Columbia. The provincial privacy legislation is in effect in British Columbia, Alberta, and Quebec. Employers can gather employee data in accordance with Privacy Laws, utilise it correctly, and release it when authorised.
Employee health benefits in Canada	For the majority of employees, basic health care is covered by Canadian Social Security. Employers provide medical insurance to give other benefits like dental treatment and ambulance services in addition to this fundamental coverage.
Additional benefits	Employers in Canada also provide retirement benefits and Workers’ Compensation. But the advantages vary from region to province.

Contractors Vs. Full-time Employees

Employers in Canada have the choice between using workers and independent contractors. However, these two groups have different legal rights and protections. Under the Employment Standards Acts, employees are entitled to legislative protections and benefits, such as minimum wages, overtime compensation, payroll deductions, and notice of termination. Independent contractors, who must report their own tax and HST to the government and are paid through invoices for their services, are not eligible for these advantages.

The fact that employees work full-time for the business while contractors operate on a project-by-project basis for customers is a significant distinction between the two. Additionally, although contractors are responsible for organising these materials on their own, the corporation is responsible for supplying equipment, uniforms, and office space to workers.

Under its Parts II and III, the Canadian Labour Code protects workers by defining the distinctions between employees and independent contractors. In Canada, the employer agreement determines a person’s position as an employee or contractor, and Appendix A of the Code offers a visual depiction of the employee/independent contractor continuum.

Recruitment In Canada

You need to have a Payroll Deductions Account and Business Number (BN) in order to recruit employees in Canada. However, you may recruit local workers in Canada with an Employer of Record Solution without registering for a BN with CRA.

Employers often write job descriptions and promote open positions in Canada before shortlisting and interviewing potential hires. It is advised to describe terms and conditions like duties, hours, compensation, earnings, overtime, benefits, probation, and termination even though a formal employment contract is not legally needed under Canadian labour laws.

Online job search engines like Indeed Canada, Glassdoor, Monster Canada, CareerBuilder Canada, Eluta.ca, Jobbank, Jobillico, and Jobboom are reliable and well-liked choices when seeking for possible applicants. Numerous businesses have used these platforms to find outstanding talent in Canada.

However, working with an EOR accelerates the employment procedure and frees companies from additional legal obligations under Canadian labor laws. These include keeping separate employee files, completing up documents like the Personal Tax Credits Return, Federal TD1, and Source Deductions Return, and validating new hires’ Social Insurance Numbers (SIN). Our cutting-edge EOR Canada handles all HR requirements from beginning to finish, freeing you up to concentrate on other areas of growing your company in Canada. To find out more, contact us.

EOR Canada Onboarding

We work hard to make the recruiting procedure as easy for you and your new employee as we can. We handle all payroll and HR-related issues as your Employer of Record in Canada so you may concentrate on your main company activities.

After receiving all the required information from you, we arrange a call to go over the specifics of HR and employment and address any issues you might have. The employee is subsequently given a personalised employment agreement in English and French (or another local language) for signing and assessing.

In order to create payroll, our staff also obtains the employee’s tax and banking information. Additionally, they give them a local point of contact for any questions they may have about their position, local HR, or payment. We plan to finish the whole employee onboarding process in two weeks using our knowledge and resources. Let us take care of the paperwork so you can concentrate on expanding your business in Canada.

Probation & Termination

Probation

In Canada, the trial period lasts about three months. It varies from province to province, though, and in some areas it might last up to six months. The enforcement of employee rights in Canada has never been allowed under the probation regulations in the past. Nowadays, though, things are different because courts are aware of how susceptible new hires might be.

Termination of employment in Canada

According to the statutory Canadian Labor Laws, an employee must provide a notice period of one to eight weeks—or compensation in lieu of notice—before they may be fired in Canada. Only when the employee has worked a set amount of time consistently on the job is a notice given. According to the Canada Severance compensation Law, employees who are fired or laid off after serving a minimum of 12 months are entitled to severance compensation. For each year of service prior to termination, the severance compensation is equal to the wage for two days.

EOR Solution

Planning ahead and taking into account regional labour laws and regulations are essential when expanding a firm into Canada. Businesses wishing to grow worldwide in an economical way can reap major benefits from partnering with our Employer of Record (EOR) service. Because we handle everything for you, our flexible platform enables you to engage local workers without having to understand the intricate web of Canadian labour rules.

Recruiting employees in Canada can be difficult, but if you work with an EOR company as your partner, you can relax knowing that everything related to onboarding will be handled by a single centralised platform, including hiring employees on your behalf, ensuring compliance with federal and provincial labour laws, processing salaries, benefits, and handling taxation. All you have to do is let us know your precise demands, and we’ll tailor our solution to fit your company’s specifications.

In addition to comprehensive hire-to-retirement services, a globally enabled HR ecosystem, a flat rate with no additional fees, a user-friendly self-service platform with a variety of tools for easy accessibility, 24/7 support, and strict adherence to personal data regulations to protect your employees’ privacy, our EOR services also include legal coverage.

Types Of Visas In Canada

Foreign nationals who want to work in Canada must first get one of the two types of work permits available: employer-specific and open work permits. The applicant must provide proof of good health, guarantee they won’t work for companies that aren’t allowed to hire them or those engaged in sexual or striptease industries, and show they’ll depart Canada when their work permit expires in order to qualify for a Canada work visa. Additional paperwork can be required, in addition to the requirements of financial stability and a spotless criminal record. Depending on whether the candidate is applying from inside or outside of Canada, different criteria apply.

Work Permits

Types Of Work Permits

Openwork Permits	A foreign national may choose to work for any employer for the duration of the work permit with this sort of work visa. The applicant has three options when applying for this kind of visa: from within Canada, abroad, or from a Canadian port.
Employer-specific work Permits	During the period that the work permit is valid, the foreign national is only permitted to work for one employer.

In Canada, a work permit is necessary. In Canada, there is no such thing as a work visa without a job offer.

Payroll & Taxes In Canada

Canada Employer Payroll Taxes

Process	Detail
Confirm if payroll deductions are required or not	It is necessary to define the employer, payers, and trustees.
A new employee has to be set up	Form TD1 must be completed, and the employee’s Social Insurance Number (SIN) must be requested for the Personal Tax Credits Return.
Opening of Payroll Program accounts	Sending deductions requires the payroll number.
Deductions and contributions calculations	Canada Employer country.
Remit source deductions	Canada Determining the employer’s payroll taxes and contributions is necessary. The Canadian employer tax rate was lowered by the government in 2020 from 1.62% to 1.58% in an effort to improve the country’s working conditions.
Filing returns on Canadian payroll and tax services	An annual overview of salary and deductions must be submitted.

Canada payroll tax rates

The tax rates in each Canadian province vary. The T4032 Payroll Deduction Table lists the deduction tables for employment insurance, payments to the Canada Pension Plan, and federal and provincial tax deductions. For further information, see Canada.ca, the nation’s official website. To make things simpler and quicker for you, you may also choose payroll outsourcing in Canada with an EOR system.

Employer Taxation

Tax	Explanation
Federal Tax	38% 28% after a federal tax abatement *Individual provinces and territories – lower rate (usually around 2%-3%) and a higher rate (between 11.5%-16%).
Canada Pension Plan	5.25%

Employee Taxation

Tax	Explanation
Income Tax Rates	Taxable Income (PHP) Tax Rate (%) 0 – 48,535 15% 48, 535 – 97,069 20.5% 97,069 – 150,473 26% 150,473 – 214,368 29% 214,368 and above 33%
Canada Pension Plan	5.25%

Bonuses

In Canada, bonuses are a typical occurrence. If an employee quits before the bonus is due, is the company still required to pay the incentive? The circumstances of the separation, such as whether the employee resigned or was dismissed by the company, will be taken into account when making the decision. What occurs will probably depend on the contract’s conditions.

Expanding your business in Canada is a smart decision due to the vast opportunities available. One of the ways to set up a business in Canada is by incorporating a holding company or taking the EOR route. The Canadian legal system permits the establishment of a holding company in Canada.

To incorporate a holding company or subsidiary in Canada, you need to follow these steps:

• Register the company under the Company Act. You can choose from the three options mentioned above: Corporation, Extra-Provincial Corporation, or Partnership.
• Confirm that the business is for non-commercial operations.
• There is no share capital requirement, which makes the process less complicated.