EOR Service in Canada

Despite Canada being a business-friendly nation, it can still be challenging for foreign employers to set up a business and hire talent. Labor laws are similar to the USA, and even experienced employers can make compliance mistakes.

For smaller businesses that can't invest heavily in market research, entering Canada can be risky.

A Canadian PEO helps manage these risks and hires employees without compliance worries. It simplifies onboarding, payroll, and benefits so you can focus on business growth and strategy in the Canadian market.

Canada is a talent haven for foreign employers. The country ranks high for labor-employee cooperation (23rd) and the ease of finding skilled employees (26th) implying to employers that the Canadian workers are a must-have for high-tech and high impact business roles. 

However, to tap into this powerful workforce, employers need to overcome two hurdles: 

1) Setting up a local entity to onboard and pay talent 2) Stay compliant with local labor laws. 

Firstly, setting up a local entity can cost you up to several thousand dollars which includes incorporation costs, acquiring business licenses and permits, legal consultation fees, rent, taxes and other miscellaneous expenses. Secondly, Canadian labor laws are extremely employee-friendly. According to the Global Talent Competitiveness report, Canada ranks no.1 for pension contributions, 26th  for social protection, 12th for labor law enforcement. 

Despite the highly -regulated environment, Canadian labor laws vary with each province. Laws around minimum wages, employment contracts, and social security contributions are different in each state.

Partnering with a Canada EOR and PEO helps you skip all these hurdles. With a Canada EOR, you can employ Canadian talent onto the EOR’s local entity and payroll. By acting as the primary employer for your local talent, the EOR will free you up from all onboarding and payroll activities. The EOR also helps you stay compliant with local labor laws as well.

Canada  EOR/PEO Pricing

Professional Employer Organizations (PEOs) use two pricing methods: fixed and variable.

Gloroots is a PEO that follows the fixed pricing approach. Our prices are consistent no matter how many employees you hire. 1

Employees hired through Gloroots receive HR support, benefits management, and access to a real-time expense tracking dashboard.

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Key Metrics For Foreign Employers

Canada ranks 15th in the global talent competitiveness index. Being one of the world’s highly-developed countries, the country is a haven for high-impact, skilled talent. 

The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from Canada.

Source: The Global Talent Competitiveness Index 2022

Through the Gloroots’ Recrew platform, you can discover amazing talent in Canada.

Growing your team means hiring the right people for the right roles. In Canada, setting up a local entity is crucial for effectively handling compliance, payroll, taxes, and benefits. The intricate labor regulations in the country underline the challenge of adhering to employment laws.

Gloroots offers a comprehensive global Employer of Record (EoR) service, enabling you to entrust payroll, taxes, benefits, and compliance complexities to Gloroots. This empowers you to focus on what truly matters: supporting your employees and advancing your company's growth in Canada.

"Employee misclassification" refers to when employers mistakenly categorize their contractors as full-time employees. This happens when an employer labels someone as an independent contractor or doesn't give them the benefits and rights they should have as an employee.

Using Gloroots in Canada helps lower the risks of employee misclassification. Gloroots ensures that everyone follows labor laws, correctly classifies workers, manages payroll accurately, and provides full benefits. This allows companies to focus on their core tasks while experts handle employment-related responsibilities.

For employees and employers under federal jurisdiction (which covers industries like banking, telecommunications, inter-provincial transportation, and some parts of the energy sector), the primary source of labor laws is the Canada Labour Code. 

Employees who fall under the provincial or territorial jurisdiction are governed by the labor laws set by the province. For instance:

• In Ontario, it's the Employment Standards Act.
• In British Columbia, it's the Employment Standards Act.
• In Quebec, it's the Act respecting labor standards 

Despite these differences, here are some things to remember while hiring in Canada.

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Employment Contract

While not a legal requirement, it's considered a good practice to have a written employment contract when hiring an employee in Canada. This helps both the employer and the employee have a clear understanding.

By default, employment contracts in Canada are considered ongoing, but they can be for a fixed term if specified. Regardless of the contract's length, it should include these basic terms:

1. Identifying both parties
2. Start date (and end date for temporary contracts)
3. Workplace location
4. Job title, duties, and responsibilities
5. Base salary and other benefits
6. Working hours
7. Total annual leave days
8. Notice periods for ending employment
9. Non-compete clause

In Quebec, employment contracts must be in French, but for the rest of Canada, they should be in English and use Canadian Dollars for salary and compensation figures.

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Working time

A standard full-time workweek consists of 40 hours, which breaks down to 8 hours per day, over 5 days a week.

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Overtime

An employer is required to compensate employees for overtime work in specific ways. When an employee works more than 44 hours in a week, they should be paid at least 150% of their regular pay rate for those extra hours, or they can receive one hour of time off instead.

In exceptional cases, when an employee is called in to work during their rest time, they should be paid for at least 3 hours at the minimum wage, even if they work less than 3 hours. After working 12 hours of overtime, the payment rate increases to 200% of their regular pay rate.

Certain job positions, like many managerial and supervisory roles, are exempt from these overtime regulations.

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Public Holidays

All provinces in Canada observes 5 public holidays. However, each province has its own list of public holidays. For example, in British Columbia, there are 10 public holidays. When these holidays occur on a weekend, it's a common practice to provide a compensatory day off on either the preceding workday or the following workday.

You can find the full ist of public holidays by province here.

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Minimum Wage

The Canadian Government implemented a nationwide minimum wage of $16.65 per hour, indexed to inflation, starting from April 1, 2023. Nevertheless, minimum hourly wage rates vary with individual provinces.

You can find further information about the rates in different provinces here.

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Annual Leave

Once employees have completed a year with an employer, they are entitled to two weeks of paid vacation. After five years, the leave increases to three weeks; after ten years, employees get four weeks of paid vacation.

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Maternity Leave and Paternity Leave

Maternity and paternity leave vary with province. Employees must be offered 17 weeks of paid leave if they've worked for at least a year before the expected date of childbirth. Employees can avail of maternity leave from 17 weeks before the expected delivery. The leave must end no later than 18 weeks after childbirth. 

If there are any delays in pregnancy, the employee gets an extra two weeks of maternity leave.

If there’s any risk to the mother or baby, employers must offer special maternity leave, which starts four weeks before the expected delivery date. To do this, you must give two weeks' notice and provide a medical certificate.

Employment insurance covers maternity and parental benefits for:

•  People who are off work because they're pregnant or recently had a baby.
•  Parents who are off work to care for their newborn or newly adopted child.

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Sick Pay

Full-time employees with a work week of 37.5 hours, earn sick leaves at the rate of 9.375 hours each month. Employees also receive 75 hours of pay. Sick leave is prorated if you are a part-time employee. 

On the other hand, employees who work in the federally regulated private sector are eligible for 10 days of paid sick leave. To be eligible, employees must have worked for at least 30 days with the same employer.

Income tax 

Other Taxes and Social Security contribution

Employer Payroll Contributions

Employee Payroll Contributions

Termination Process

An employer has two methods for ending an employment contract:

1. Notifying the employee in writing.
2. Termination based on valid reasons.

It's crucial to remember that the employee's final payment must be:

1. Issued within 48 hours after the employer terminates the employment agreement.
2. Disbursed within 6 days after the employee concludes the employment agreement.

Notice Period

Typically, there's no mandatory notice period in British Columbia, Canada, although it's customary to provide one month's notice.

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Severance Pay

An employee is eligible to receive severance pay upon having served a minimum of 12 uninterrupted months of continuous employment prior to being laid off or dismissed, leading to the termination of their employment.

For every complete year of service to the employer before their employment was terminated, they are entitled to receive an equivalent of 2 days' regular pay. The least amount payable as severance is equivalent to 5 days' wages.

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Probation Periods

Laws on probation periods vary with each province. For example, in British Columbia, a permanent employee's probation period lasts at least three months.

When hiring globally, ensuring compliance comes with its own set of battles. Employers must ensure all hiring and onboarding activities adhere to employment laws, payroll procedures, DE&I compliance, GDPR and similar data protection, etc. If you think it is hard to set up local entities and start hiring, keeping up with a dynamic compliance landscape is far harder. 

Gloroots helps you minimize all these efforts by providing a single window to manage all these tasks. Our in-house experts fully shield you from cross-border employment and payroll compliance risks. We do this by helping you with generating employment contracts, on-time payments, compliant benefits, while you focus only on screening talent. 

Our promise is a stress-free global employment experience for both you and your employee.

Contact our experts today to kickstart your global hiring campaign.