Employer of Record in Canada - Simplify Hiring

Canada is a central hub for international business, with a diverse economy and a highly skilled workforce, making it an attractive location for companies looking to expand their operations. In this article, we will explore how an employer of record Canada service can simplify the process of hiring and why it is a popular choice for businesses around the world.

Snapshot of Canada

Canada is the second-largest country in the world, covering a vast and diverse landmass. It has ten provinces and three territories, each with its unique culture, laws, and regulations. The country's population is just over 38 million people, with the majority residing in urban areas such as Toronto, Montreal, and Vancouver.

Economically, Canada is a powerhouse with a GDP of USD $2139.84 billion in 2022. It has a strong and stable economy driven by various industries such as manufacturing, natural resources, technology, and services.

Below are some of the key statistics that highlight Canada's economic strength and make it an attractive location for businesses looking to expand:

Canada At A Glance

Things you should know before hiring an EOR in Canada?

Before diving into the benefits of using an employer of record service in Canada, let's first understand what it is and what you should consider before hiring one.

What is an Employer of Record?

An employer of record (EOR) is a third-party service that acts as the legal employer for your hired Canadian employees. These legal entities handle all employment-related tasks, such as payroll, taxes, employee benefits, and compliance with local laws and regulations.

Unlike a PEO (professional employer organization), an EOR does not co-employ the workers with your business, making it a more straightforward and more flexible option for global employers. As the business owner, you retain full control over your employees' day-to-day tasks and responsibilities.

What to Consider Before Hiring an EOR in Canada

Before choosing an EOR in Canada, here are some of the key criteria you should consider to ensure a smooth and successful hiring process:

Employment standards

Canada has strict employment standards that all employers must follow, such as minimum wage, working hours, and overtime pay. It is essential to choose an EOR service that is well-versed in these standards to ensure compliance. Failure to comply with these regulations can result in costly penalties and damage your company's reputation.

Some of the more essential aspects of employment standards in Canada include:

• Minimum wage - Varies by province but typically ranges from CAD $11.45 to CAD $16 per hour.
• Working hours - The standard working week is 40 hours, with a maximum of 48 hours in most provinces.
• Overtime pay - Employees are entitled to overtime pay for any hours worked beyond their regular schedule, typically 1.5 times the regular hourly rate.
• Paid leave entitlements - Employees are entitled to various paid leave, such as vacation, sick, and maternity/paternity leave.

Ensuring your partner with an EOR service knowledgeable about these standards will mitigate potential risks and ensure a smooth employment process for your hired employees.

Employment contracts

As you might expect, employment contracts are an essential aspect of hiring employees in Canada. These contracts outline the terms and conditions of employment, including salary, benefits, termination clauses, probationary periods, confidentiality agreements, and more. It is crucial to have a thorough understanding of Canadian employment laws when drafting these contracts to ensure they comply with all relevant regulations.

Canada does not have at-will employment, meaning a contract is required for all employee-employer relationships. An EOR service can assist with the drafting and executing these contracts, ensuring that they align with Canadian employment laws.

Tax compliance

Like most countries, Canada has a complex tax system that employers must comply with when hiring employees. Employers must deduct income tax, employment insurance, and Canada Pension Plan contributions from their employees' salaries and remit them to the Canada Revenue Agency (CRA).

An EOR service can handle all tax compliance matters, ensuring that your business complies with all relevant laws and regulations. They will also ensure your employees receive the correct payroll taxes deducted from their paycheques.

Healthcare and benefits

Unlike the US, Canada has a publicly funded healthcare system that covers all Canadians. However, there are still benefits that employers can offer their employees to attract top talent and improve employee satisfaction. These may include private health insurance, dental care, life insurance, and more.

An EOR service can help you create a competitive benefit package for your employees, helping you to attract and retain top talent.

Vacations

Under Canadian employment laws, employees are entitled to a minimum of two weeks paid vacation each year after one year, three weeks after five years, and four weeks after ten years of continuous employment. However, most provinces have additional statutory public holidays and vacation entitlements that must be adhered to.

An EOR service can assist in managing these paid leaves, ensuring your Canadian workers receive the appropriate time off and maintaining compliance with all relevant laws.

Working Hours and Time Off

Canada has strict federal and provincial regulations regarding working hours, overtime pay, and paid leave entitlements. These include:

• The standard working week in Canada is 40 hours, with a maximum of 48 hours per day in most provinces.
• Employees are entitled to overtime pay for any hours worked beyond their regular schedule, typically 1.5 times the regular hourly rate.
• Paid leave entitlements include vacation time, sick leave, and maternity/paternity leave. Employers are required to provide these leaves and pay employees during their time off.
• Additional time off may be granted for bereavement leave, jury duty, and reservist leave.

An EOR service can help you manage and comply with these regulations, ensuring your employees' rights are protected while also maintaining productivity in the workplace.

Termination laws

As mentioned, Canada does not have at-will employment, meaning employers must have just cause or provide adequate notice period when terminating an employee's contract. The required notice of termination amount depends on the length of employment and jurisdiction but can range from one to eight weeks.

Failure to comply with termination laws can result in costly legal battles for employers. An EOR service can help you navigate these regulations and ensure a smooth and fair termination process if it becomes necessary.

Onboarding and offboarding services are some of the most critical aspects for employers looking to hire in Canada through an EOR service.

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Why use an EOR in Canada?

A Canadian employer of record service can help businesses navigate the complex employment laws and regulations in Canada. EORs provide essential services such as payroll, tax compliance, benefits administration, and more. They also have a thorough understanding of Canadian employment laws, ensuring that your business stays compliant and avoids potential penalties or damage to its reputation.

Additionally, using an EOR service can save businesses time and resources by handling administrative tasks related to hiring and managing employees in Canada. This allows businesses to focus on their core operations and growth strategies.

What are the benefits of using an EOR in Canada?

There are a wide range of benefits to using an EOR service in Canada, including:

Compliance

As mentioned, Canadian employment and labor laws can be complex and ever-changing. Using an EOR service ensures that your business stays compliant with all relevant laws and regulations, reducing the risk of penalties and legal battles.

Tax compliance is another critical aspect that an EOR can assist with, ensuring that your business remits the correct amounts to the CRA and avoids potential issues with the government.

Cost savings

Hiring employees in a new country can be costly, especially if you are unfamiliar with their employment laws and regulations. Using an EOR service eliminates the need for businesses to navigate these complexities independently, saving time and resources that can be better allocated toward their core operations.

Access to local expertise

Partnering with an EOR service in Canada gives businesses access to local expertise and knowledge. This is especially beneficial for businesses looking to expand into the Canadian market without having a physical presence there. An EOR can help navigate cultural differences, understand local employment laws, and assist in finding top talent for your business.

Flexibility and scalability

Using an EOR service allows businesses to quickly scale their operations in Canada without requiring extensive administrative tasks. This flexibility is especially beneficial for short-term or project-based hires, as well as businesses looking to test the Canadian market before committing to a permanent presence.

Streamlining hiring and onboarding processes

Partnering with an EOR service in Canada can streamline the hiring and onboarding processes for businesses. This can include services such as job postings, candidate screening, background checks, and more.

Additionally, EORs can handle the administrative tasks related to onboarding new employees, such as setting up payroll and benefits accounts, saving businesses time and resources.

No need for physical presence in the country

Since EORs act as the legal employer of record for your employees in Canada, businesses do not need to have a physical presence in the country. This can save on costs associated with establishing a physical office and hiring local HR staff.

This can be a major boon to businesses looking to expand their global footprint without the resources or infrastructure required to establish a physical presence in a new country.

Access to top talent and a vast talent pool

Partnering with an EOR service in Canada can give businesses access to a vast pool of talented and skilled workers. This is especially beneficial for companies looking to fill niche roles that may be difficult to find locally.

Additionally, using an EOR allows businesses to tap into the Canadian talent market without going through the lengthy process of obtaining visas and work permits for foreign employees.

Cost transparency and ease of budgeting

Using an EOR service in Canada provides businesses with cost transparency and ease of budgeting. Instead of dealing with multiple service providers for various HR tasks, businesses can have all their employment-related costs consolidated into one monthly invoice from the EOR.

This allows for more straightforward budget planning and eliminates surprises or hidden costs associated with hiring and managing employees in a new country.

The Canadian work visa and global immigration

Annual immigration to Canada amounts to around 500,000 new immigrants, one of the highest rates per population of any country in the world. As of 2022, there were more than eight million immigrants with permanent residence living in Canada, which means that migrants make up around 20% of the total Canadian population.

To facilitate the entry of skilled workers into Canada, the country offers various work visas and permits for foreign nationals. The two primary categories of work permits in Canada include:

1. Open work permit: This type allows an individual to work for any employer in Canada and is not tied to a specific job or employer.
2. Employer-specific work permit: This type of permit is tied to a specific job and employer, and the individual must follow all conditions set out by their employer.

Using an EOR service in Canada can help businesses navigate the complexities of obtaining work permits for their foreign employees, ensuring that all necessary paperwork and requirements are met.

Conclusion

In conclusion, using an EOR service in Canada can provide numerous benefits for businesses looking to hire and manage employees there.

From ensuring compliance with employment laws and regulations to cost savings and access to top talent, partnering with an EOR can streamline expanding into the Canadian market and help businesses achieve their global growth goals.

As a leading EOR provider in Canada, Knit offers comprehensive services to support businesses with their expansion plans.

From expert advice on employment laws and regulations to handling all administrative tasks related to hiring and managing employees, Knit can help businesses navigate the complexities of global expansion.

Contact us today to learn more about our EOR services in Canada and how we can support your business's growth

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‍Disclaimer: This article provides general information and should not be construed as financial or tax advice. Since tax rules may change over time and vary by location and industry, please consult a CPA or tax advisor for advice specific to your business.