Research indicates that establishing a distributed team can lead to substantial long-term benefits, such as increased productivity, better employee engagement, and improved retention rates—factors that are crucial for your business’s growth and success.
Canada is an ideal destination for hiring remote employees, given its robust economy, highly skilled workforce, and favorable business environment. If you’re contemplating expanding your remote team into Canada but don’t know where to start, you’re in the right place.
Initiating the Hiring Process in Canada
Hiring in Canada typically requires setting up a legal entity, a process that can be both time-consuming and resource-heavy. Additionally, each Canadian province has unique employment and labor laws that must be adhered to. However, by partnering with an Employer of Record (EOR), you can simplify this process. An EOR serves as the legal employer, allowing you to hire Canadian employees without needing to establish a local entity. The EOR manages payroll, compliance, and HR responsibilities, freeing you to focus on team management, making it a cost-efficient solution for global expansion.
5 Steps to Hiring in Canada with an EOR
- Explore EOR Providers: Assess various EOR options, ensuring they offer compliance management and global employee handling aligned with local labor laws.
- Choose the Best EOR for Your Business: Ask critical questions like: Does the EOR own its Canadian entity? Do they provide payroll services, compliance expertise, and attractive employee benefits?
- Check Client Reviews: Look at customer testimonials, online reviews, and forums to assess the EOR’s reputation.
- Ensure a Smooth Employee Experience: Ensure that the EOR offers a seamless onboarding process, timely payroll, and responsive support for employee inquiries.
- Work Together on Compensation: Collaborate with the EOR to create a competitive compensation and benefits package while ensuring strong protection for your intellectual property and employee data.
Why Use an EOR in Canada?
International expansion can be complex and costly. An EOR simplifies this journey by enabling you to legally hire Canadian employees without setting up a local entity. They navigate the intricacies of Canadian employment law, compensation models, and payroll taxes, allowing you to concentrate on growing your remote team.
Costs Involved with an EOR in Canada
The cost of using an EOR in Canada can vary depending on the worker’s location, the complexity of the business environment, and the number of employees. Generally, prices range from $599 to $2,000 per employee per month. It’s vital to thoroughly assess the services included and avoid lower-cost providers that may lack robust security and compliance measures.
Understanding Canadian Employment Laws
When hiring in Canada, you must adhere to both provincial and federal labor laws. Unions are common, especially in trades and manufacturing, and employees are often required to join if a union exists. The interview process must respect legal restrictions, such as avoiding questions about gender, religion, or criminal history. Moreover, random drug testing is generally not permitted.
Employment Contracts in Canada
Employment contracts in Canada should clearly outline terms such as compensation, benefits, and termination clauses and must comply with minimum employment standards and safety requirements. While fixed-term contracts are legal, they are less common due to potential legal liabilities.
Ensuring Labor Law Compliance
Labor laws differ across provinces but typically include regulations on work schedules, workers’ compensation, and mandatory paid leave. An EOR can assist in navigating these regulations and ensuring compliance throughout Canada.
Payroll and Tax Obligations in Canada
Canadian employees generally expect to be paid biweekly. Employers are responsible for contributing to the Canadian Pension Plan and paying employment insurance taxes. Tax rates differ by province, with additional taxes applicable in Quebec. Employers must keep payroll records for three years and ensure the protection of employee data.
Employee Benefits and Compensation
Benefits in Canada vary by province, with mandatory paid leave increasing with employee tenure. Canada also requires maternity, parental, and bereavement leave, among others. Many employers provide additional healthcare benefits beyond those covered by the government.
Risks of Employee Misclassification
Incorrectly classifying employees as contractors can result in severe penalties, back pay, and potential legal battles. An EOR reduces these risks by ensuring that employees are classified correctly according to Canadian laws.