Employer of Record in Canada

In April 2024, Ontario experienced a notable increase in employment, adding 25,000 jobs to the market. While the employment rate remained steady at 60.6%, this stability suggests a growing labor force keeping pace with job creation. This trend, partly fueled by global talent, could be influencing companies to enter new markets like Canada.

Canada, with nearly 678,475 open positions across the nation, has a strong demand for skilled workers. Giant tech titans are now among those eyeing Canadian talent for hiring. However, navigating the complexities of setting up a business and managing payroll in Canada can be a significant hurdle. This is where the EOR in Canada plays a crucial role

Key factors to consider if you are hiring from Canada by setting up your own entity

If your organization is planning to hire professionals in Canada, you must read the policies associated with the employment. Canadian EOR has lots of policies

The following information is a must-follow note for your organization.

• Canadian Human Rights Act
• Canada Labour Code
• Canada Occupational Health and Safety Regulations

90% of Canadian businesses follow province-specific regulations. Following are the province-specific regulations.

• Employment Standards Act
• Ontario Human Rights Code
• Labour Relations Act
• Workplace Safety and Insurance Act
• Workplace Safety and Insurance Board
• Occupational Health and Safety Act

Standard working hours and overtime

When you hire an employee from Canada, it is essential to understand the standard working hours and overtime hours. Any eight consecutive hours in a day and 40 hours in a week with a day off (usually Sunday) is a standard working week.

When an employee works more than the above defined hours in a standard work week, those additional hours qualify as overtime. During overtime, employees have the right to:

• Receive compensation of at least 1.5 times your regular hourly wage
• Receive time off with pay, equivalent to 1.5 hours off for every hour worked overtime

Recent amendments in April 2024 include more stringent requirements for documenting and compensating overtime work, ensuring that employees are fairly compensated for additional hours worked beyond the standard workweek.

It is necessary for an employer to understand Canadian pay and deduction policies. Since April 1, 2024, the minimum wage mandated by the federal government is CAD 17.30 per hour.

Related read: Work Culture in Canada

Understanding the deductions

As an employer, you can make certain deductions if there are any associated with:

• Deductions for taxes and employment insurance premiums
• Court-ordered deductions, such as garnishments for child support
• Deductions specified in a collective agreement, such as union dues
• Recovery of overpaid wages

Understanding the benefits

These are statutory benefits required by law for all eligible employees in Canada.

Employment Insurance (EI): You must provide employment insurance (EI) according to Canada’s labor laws. The following insurance payment can be deducted from the compensation.

Mandatory contributions from employers and employees fund this insurance, which provides temporary financial assistance to unemployed workers. The contribution rates were revised in April 2024 to ensure the program’s sustainability.

Canada Pension Plan (CPP): Your organization must provide a basic retirement pension for eligible employees. Both employers and employees contribute to this program.

Workers’ compensation: You must cover the medical expenses and wages for injured employees. Employers are responsible for workers’ compensation insurance premiums.

The updated regulations in April 2024 now include provisions for mental health claims related to workplace stress.

Public holidays: Employees are entitled to paid time off for statutory holidays, although the specific days can vary by province or territory. Recent changes in April 2024 have standardized certain holiday entitlements across provinces to ensure fairness.

Employment termination & layoffs or dismissal policies

It is necessary to understand certain policies for terminating, laying off, or dismissing any employee from your organization. In the event of individual termination, as an employer, you are required to:

Written notice of termination: Employers must provide a written notice of termination, with a minimum of 2 weeks’ notice. For employees with three or more years of service, the notice period increases by one week for each completed year of service, up to a maximum of 8 weeks.

Severance pay: Employers may also be required to provide severance pay in addition to the notice period. The May 2024 updates include clearer guidelines on calculating severance pay based on tenure and salary.

Enhanced focus on compliance and risk management

Compliance with local labor laws is a critical aspect of operating in any foreign market. In Canada, this includes understanding and adhering to the Canada Labour Code, which provides the basic standards for all federally regulated employees, including those working in industries such as transportation, telecommunications, and banking. As of April 2024, amendments to the Canada Labour Code have introduced stricter penalties for non-compliance, emphasizing the importance of adhering to these regulations.

Workplace safety: Canada Occupational Health and Safety Regulations (OSHA) mandates that employers provide a safe working environment, which includes measures for preventing workplace injuries and illnesses. Updated regulations as of March 2024 now include specific guidelines for managing remote work safety, reflecting the growing trend of remote and hybrid work arrangements.

Comprehensive Understanding of Provincial Regulations

Employment Standards Act: This act ensures that employees are treated fairly in terms of wages, working hours, and working conditions. As of May 2024, the act has been updated to include additional leave entitlements and protections for gig economy workers.

Ontario Human Rights Code: Provides protection against discrimination and harassment in the workplace. The March 2024 update includes extended protections for gender identity and expression.

Labour Relations Act: Governs the relationship between employers, employees, and unions. Updates in April 2024 include new provisions for unionization in the digital economy sector.

Occupational Health and Safety Act: Requires employers to take every reasonable precaution to protect workers. The recent updates include new standards for ergonomics and remote work environments.

Additional policies to consider

Anti-discrimination and harassment policy: This policy outlines the employer’s commitment to a workplace free from discrimination and harassment based on race, religion, gender, sexual orientation, or disability. It should detail procedures for reporting and investigating complaints.

Social media policy: It establishes guidelines for employee conduct on social media platforms, protecting your organization’s reputation while respecting employee rights.

Performance management policy: This policy sets a framework for regular performance evaluations, outlining goals, feedback mechanisms, and potential consequences for performance issues.

Confidentiality policy: It protects sensitive company information and intellectual property, outlining what employees can and cannot share with unauthorized individuals.

Internet and technology usage policy: This policy establishes guidelines for an employee’s use of company computers, phones, and internet access, promoting responsible use and data security.

Who is an EOR in Canada?

An Employer of Record in Canada (EOR) serves as a representative entity for an organization, ensuring compliance with labor policies, regulations, laws, and payroll regulations in alignment with the specific country’s policies from which you are hiring.

An EOR in Canada handles all the administrative tasks, such as

• Compliance with Canadian laws
• Payrolling
• Onboarding and offboarding process
• Benefits and taxation

The Employer of Record in Canada allows an organization to focus on progress and productivity by taking care of all employer-related administrative tasks and employer liabilities.

What are the risks of not incorporating Employer of Record services in Canada?

An Employer of Record in Canada plays a key role in a company’s progress. Let’s say you are hiring Canadian talent, and if your organization doesn’t align with Canadian labor policies, it is 95% sure that you will land in trouble. Here is a detailed list of what will happen if you do not follow Canadian labor policies and how Employer of Record services in Canada can help you mitigate them:

Legal and Financial Penalties
Any non-compliance or tax irregularities can lead your company to pay hefty fines. Your organization may also face lawsuits if you are not aligned with Canadian labor laws.

Operational Setbacks
Operating with legal issues can surely impact business operations, the employment hiring process, and management.

Reputational Damage
Non-compliance will cause a lot of legal issues, and this will impact the organization and business partnerships.

Impact on Growth Potential
If your organization does not operate in Canada, the chances of growing your business will be low, and you will not have access to the Canadian talent pool.

And many more negative impacts on your organization’s development. This makes an Employer of Record in Canada an ideal choice to hire talent from Canada and grow globally in competition with tech titans.

What are the benefits of incorporating EOR in Canada?

Faster market entry: By eliminating the need to set up a legal entity, EOR in Canada can significantly speed up your time to market in Canada.

Reduced costs: You can avoid the overhead expenses of setting up a local office and managing HR functions.

Compliance expertise: An Employer of Record in Canada undertakes all the employer risks and ensures all Canadian employment laws and regulations are followed so that there is zero risk to you.

Simplified HR processes: You can focus on managing your team’s performance while the EOR in Canada handles payroll, benefits, and all HR administrative tasks.

Hire talent with Global Squirrels: An Employer of Record in Canada

Global Squirrels is an easy-to-use HR platform that simplifies hiring global employees. We help companies locate top candidates worldwide and manage everything from recruitment to payroll as an Employer of Record services in Canada so you can focus on what matters most – running your business.

With Global Squirrels, you gain access to an experienced team of professionals who understand the intricacies of Canadian labor laws and regulations.

Expertise in Canadian Employment Laws: Our team stays updated with the latest changes in Canadian labor laws, ensuring full compliance and minimizing the risk of legal issues.

Comprehensive HR Solutions: From recruitment to payroll management, we offer end-to-end HR solutions, allowing you to focus on your core business operations.

Customizable Services: We provide EOR services to meet the specific needs of your organization, whether you are a startup or a large enterprise.

Our goal?

Making global hiring fast, affordable, and stress-free.

To learn more about our software platform, request a free demo today!