CanadaDiscover an employer’s guide to employment laws and Employer of Record (EOR) solutions in Canada.
Want to hire in Canada? An EOR can help
If you’re expanding into Canada and don’t want to set up a local entity, Employer of Record services could play a crucial role in your hiring process.
An EOR will shoulder the responsibility of hiring and onboarding local employees in Canada. You don’t have to worry about onboarding employees, ensuring compliance, administering payroll, and managing benefits, taxes, and more.
Using an EOR gives you the ability to focus on core business operations while the EOR navigates the intricacies of local employment laws. You’ll retain complete control over your employees’ day-to-day activities and business operations.
How to hire in Canada
Step 1: Choose between an entity and an EOR
Two main options are available when considering expansion into Canada: setting up a local entity or employing an EOR.
A local entity gives you more control over your operations, but it can be time-consuming, expensive, and complicated due to varying local regulations. You have to handle everything from registering your business with the government to understanding complex tax regulations.
An EOR is a more streamlined alternative that sidesteps the need to understand every subtlety of Canada’s employment laws. You can onboard new talent in minutes then automate core HR functions.
If your headcount exceeds a certain threshold or if you plan on having a substantial physical presence in Canada, creating a local entity might be more beneficial. However, if you’re looking for the easiest way to hire in Canada, an EOR makes the most sense.
Step 2: Finding an EOR
Choosing the wrong EOR service can result in compliance issues, unnecessary costs, and a poor experience for your new hires. So be sure to consider these key factors during your search:
- Legal compliance: Can they ensure your operations are compliant with Canada’s complex labor laws and tax regulations?
- Customer service: Do they provide round-the-clock human support and offer dedicated account managers for every customer? Multiplier offers 24/7 support (no bots!) and dedicated managers for every account.
- Transparent Pricing: Are there hidden costs or ambiguous charges in their pricing structure?
- Cost-effectiveness: Does their service offer a lower total cost of ownership without compromising on quality?
Step 3: Employing and onboarding in Canada
- Contracts: The first step of hiring is crafting a locally compliant employment contract outlining the terms of employment, including job responsibilities, working hours, remuneration, and termination conditions. Multiplier’s experts are able to produce one that’s customized according to Canada’s labor laws in minutes.
- Benefits & compensation: If you want to add a competitive benefits package, an EOR like Multiplier can provide local options so you don’t have to spend hours sifting through vendors yourself. We can also send employees the IT assets they need to get up and running.
- Documentation: Next, you need to collect the new hire’s tax and banking information to set up payroll. All required documentation will be handled by Multiplier, ensuring a smooth process with no paperwork hassles.
Step 4: Run payroll for employees based in Canada
Running payroll for employees based in Canada involves understanding specific tax rates and contributions. The country has a progressive income tax system with rates ranging from 15% to 33%, based on different income brackets. Within this range, rates also vary across the country’s provinces.
Employers are also required to contribute to the Canada Pension Plan (CPP) alongside employees. Meanwhile, employers must also oversee Employment Insurance (EI), which provides benefits and support services such as parental leave.
Understanding such complex regulations can be daunting and time-consuming for companies expanding their workforce in Canada. However, with an international payroll management service like Multiplier’s global payroll solution, you can ensure accurate and timely salary payments while outsourcing the management of all local taxes, contributions, and withholdings.
Employment laws and regulations in Canada
The main labor law in Canada is the Canada Labour Code (CLC), which regulates labor relations, occupational health and safety, and employment standards.
Among other requirements, the Code stipulates that you provide employees with a written employment statement, comply with minimum wage and pay equity requirements, and ensure employees have the right amount of leave.
Certain industries, such as provincial government services, municipal services, and private sector employers in provinces with their own labor laws, are excluded from the Code.
Employers in Canada are bound by various compliance requirements to maintain a legal and fair working environment. One example is obtaining a Labour Market Impact Assessment (LMIA), a document issued by Employment and Social Development Canada (ESDC) that assesses the impact of hiring a foreign national in Canada.
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Employee benefits and compensation
The current minimum wage in Canada is CA$16.65 per hour. From there, rates vary widely across different provinces and territories.
Canadian law also mandates certain standard benefits for employees. These include pension, legislated and parental leaves, paid time off (PTO), and employment insurance.
Among the most common optional employee benefits in Canada are retirement, healthcare, voluntary and flexible benefits, healthcare spending accounts, gyms, and corporate wellness programs.
Multiplier’s EOR service provides an added advantage by offering customizable benefits to meet the specific needs of your employees in Canada. Our global benefits administration makes it easy for you to provide locally compliant and competitive benefits to your international employees.
Termination and offboarding procedures
When terminating employment in Canada, employers need to know the regulations governing dynamics such as notice periods and severance pay.
The CLC requires a minimum two-week written notice for an employee. Employees who have completed at least three years of service are entitled to a minimum equivalent to 1 week per completed year of employment. An employee who has completed at least 12 months’ worth of continuous employment is entitled to severance pay.
For international employers who are unfamiliar with its labor regulations, the process of terminating employees in Canada can be complicated. This is where an EOR, like Multiplier, can play a pivotal role. By managing the offboarding process, Multiplier ensures compliance with local laws and provides a smooth transition for both employers and employees.
Visa and work permit assistance
Along with a visa, most foreign nationals need to obtain a work permit to become employed in Canada. There are two main types: open work permits which allow employees to move jobs and employer-specific work permits which tie them to one employer.
Considering the complexities involved, it is beneficial to have expert assistance. Multiplier provides such support as part of their Employer of Record (EOR) services. For further insights into how we handle global immigration issues, you can visit our Global Immigration page.
Get started with Multiplier’s EOR Services
Multiplier simplifies international hiring for businesses expanding into Canada. Our Employer of Record (EOR) services offer a comprehensive solution for onboarding, hiring, and managing staff in a compliant way.
We provide locally compliant contracts, manage payroll and taxes, and offer a range of customizable benefits tailored to local standards. Book a demo to learn more.
