Employer of Record in Canada

An Employer of Record in Canada acts as the legal employer for your Canadian workers, managing payroll, tax, benefits, and compliance with federal and provincial law. There are no federal or provincial restrictions on using an EOR in Canada, and no statutory time limit on how long an EOR employment arrangement can continue.

The primary compliance challenge is multi-province employer registration. Companies hiring across Ontario, British Columbia, Alberta, and Quebec must register separately in each province. Quebec adds a distinct layer: it operates under civil law, not common law, and requires French-language employment contracts under Bill 96, effective June 2023.

• No time limit: Canadian federal and provincial law imposes no maximum duration on EOR employment arrangements.
• Hiring speed: Hire in 2 to 4 weeks through an EOR, compared to 2 to 6 months for entity setup and provincial registrations.
• CPP employer rate: 5.95% of insurable earnings up to the YMPE (CAD 68,500 in 2024).
• Quebec requirement: French-language employment contracts are mandatory under Bill 96.
• Compliance areas: CPP/QPP, EI/QPIP, provincial health levies, workers' compensation, and federal and provincial income tax withholding.

What Is an Employer of Record in Canada?

An EOR becomes the legal employer on record under Canadian federal and provincial law, assuming all payroll, tax, and compliance obligations on behalf of the client company. US companies with no Canadian entity, no CRA registration, and no Canadian bank account can hire Canadian workers compliantly through an EOR without establishing any local presence.

The workflow runs as follows: the client selects a candidate; the EOR issues a compliant contract in English or French; the EOR registers the employee for CPP or QPP, EI or QPIP, and applicable provincial levies; payroll is processed; and benefits are administered. The client retains day-to-day work direction. For a full explanation of the mechanics, see how does EOR work.

Your Hiring Options in Canada: EOR vs. Entity vs. PEO vs. Contractor

Companies hiring in Canada have four main paths: an Employer of Record, a direct Canadian entity, a Professional Employer Organization, or independent contractor engagement. Each path carries different setup timelines, compliance ownership, and cost structures. For companies without a Canadian entity, an EOR is the only compliant option for employing full-time workers.

A staffing agency recruits and places workers for temporary assignments. It does not assume legal employer obligations for ongoing employment and does not manage payroll tax compliance or statutory benefits. An EOR does all of these. Explore Gloroots' EOR services for Canada.

Path	Setup Time	Compliance Ownership	Cost Structure	Best For
EOR	2 to 4 weeks	EOR owns all employer compliance	Monthly per-employee fee	Companies without a Canadian entity; market testing; distributed teams
Direct Entity	2 to 6 months	Client owns all compliance	High upfront; ongoing admin cost	15+ employees; long-term Canadian commitment
PEO	Requires existing entity	Shared under co-employment	Per-employee fee plus client entity costs	Companies already incorporated in Canada
Contractor	Immediate	Client bears misclassification risk	Project or hourly rate	Short-term, genuinely independent project work
Staffing Agency	Varies	Agency manages placement only	Placement or markup fee	Temporary assignments; recruitment without ongoing employer obligations

Contractor misclassification in Canada triggers retroactive CPP, EI, vacation pay, and workers' compensation obligations. Entity dissolution can take months and adds legal cost.

How to Hire in Canada Through an EOR: Step by Step

The following sequence covers the practical steps for hiring a Canadian employee through an EOR, from the initial decision through to offboarding. Each step maps to a specific compliance or operational action.

The six steps below apply whether you are hiring in Ontario, British Columbia, Alberta, or Quebec. Quebec adds French-language contract requirements and QPP/QPIP enrollment in place of CPP/EI.

Step 1: Decide Between EOR and Direct Entity

Assess headcount, market commitment, and timeline. Companies with fewer than 5 to 15 employees or an uncertain Canadian commitment are better served by an EOR.

At 5 to 15 employees, entity setup economics typically become favorable for companies with a confirmed long-term presence. Below that threshold, the cost and time of provincial registrations outweigh the benefits of direct incorporation.

Step 2: Vet and Select a Canadian EOR Provider

Check whether the provider owns a Canadian legal entity or uses a partner network. Confirm CRA registration and provincial employer account coverage. Verify the support model, Quebec-specific capability, and pricing transparency before signing.

Confirm provider stability before committing. If an EOR is acquired or rebrands, ask in advance how employee records, payroll history, and statutory filings will be transferred or preserved. This protects your employees and your compliance record.

Review the best employer of record guide for a structured comparison framework.

Step 3: Issue Compliant Employment Contracts

Contracts must be written in English or French depending on the province where the employee works. Quebec requires French-language contracts under Bill 96, effective June 2023.

Each contract must define wages, hours, probation period, benefits, and a termination clause. Probation periods typically run 3 to 6 months depending on the province.

• US-style at-will termination clauses are unenforceable in Canada and must not be included.
• Termination clauses must reference statutory minimums and, where applicable, common law notice obligations.
• Wage rates must meet or exceed the applicable provincial minimum wage.

The EOR issues the contract as the legal employer. The client reviews and approves the terms before the contract is sent to the candidate.

Step 4: Register Statutory Requirements and Onboard the Employee

The EOR registers the employee for the correct statutory programs based on the province of employment. CPP applies in all provinces except Quebec, where QPP applies. EI applies federally; QPIP replaces the parental component in Quebec.

• Ontario: WSIB covers workers' compensation.
• British Columbia: WorkSafeBC covers workers' compensation.
• Quebec: CNESST administers workers' compensation and labor standards.
• Ontario employers with payroll above CAD 1.2 million pay the Employer Health Tax (EHT).

The employee provides their Social Insurance Number (SIN) and proof of work eligibility at onboarding. The EOR confirms eligibility and completes all CRA and provincial registrations before the first payroll run.

Step 5: Run Compliant Payroll and Administer Benefits

The EOR processes payroll in CAD and withholds federal and provincial income tax, CPP or QPP, EI or QPIP, and applicable provincial levies on each pay cycle.

CPP employer contribution rate is 5.95% of insurable earnings up to the Year's Maximum Pensionable Earnings (YMPE), set at CAD 68,500 in 2024. EI employer premium rate is 1.4 times the employee rate.

• Supplemental benefits including dental, vision, and prescription drug coverage are market-standard for professional roles in Canada.
• Group benefits are typically sourced through insurers such as Manulife or Canada Life.
• Quebec's Workforce Skills Development and Recognition Fund (WSDRF) applies a 1% levy on Quebec payroll for payrolls exceeding CAD 2 million.

The EOR manages benefit enrollment, premium remittance, and annual T4 slip generation. Clients receive consolidated payroll reporting across all Canadian employees.

Step 6: Manage Offboarding and Exit

The EOR calculates statutory notice or pay in lieu, severance where applicable, and accrued vacation pay at termination. A Record of Employment (ROE) must be issued within 5 days of the employee's last day for EI eligibility.

Common law reasonable notice routinely exceeds statutory minimums. Courts assess the employee's age, seniority, and role. Termination clauses that attempt to limit notice to statutory floors are frequently found unenforceable by Canadian courts.

• Ontario statutory notice: 1 week after 3 months of service, scaling to a maximum of 8 weeks.
• Severance pay applies in Ontario when the employer has a payroll of CAD 2.5 million or more and the employee has 5 or more years of service.
• Quebec requires 2 weeks' notice after 3 months of uninterrupted service under the Act respecting labour standards.

When a client establishes its own Canadian entity and transitions employees off the EOR, a good EOR supports that process. This includes providing employment documentation, facilitating contract novation to the new entity, and transferring CRA employer account records. Clients should confirm this transition support is included in the service agreement before signing.

How to Choose the Right EOR in Canada

Selecting a Canadian EOR requires assessing legal structure, provincial coverage, support quality, pricing, data privacy, and platform capability. The criteria below apply to any provider. For a broader comparison framework, see the best employer of record guide.

Provider stability is a criterion that companies frequently overlook. Ask whether the EOR owns a Canadian legal entity or operates through a partner network. Confirm which party holds the CRA employer account. If the EOR is acquired, rebrands, or ceases operations, the client needs contractual protections that specify how employer account ownership and employee records transfer. Get this in writing before signing.

The criteria that matter most for Canadian hiring are listed below.

• Legal structure: own entity vs. partner network, and who holds the CRA employer account.
• Provincial coverage: confirmed registration in every province where you plan to hire.
• Quebec capability: French-language contracts, QPP, QPIP, WSDRF, and CNESST compliance.
• Support model: dedicated account management vs. shared queue, and response-time commitments across time zones.
• Pricing transparency: all-inclusive fee vs. separately billed levies and benefits premiums.
• Data privacy: PIPEDA compliance and Quebec Law 25 obligations.
• Platform capability: automated T4 generation, ROE issuance, and HRIS integration.

Local Legal Knowledge Across Provinces

The provider must demonstrate working knowledge of both the federal Canada Labour Code and each province's employment standards legislation. Approximately 90% of Canadian employees fall under provincial standards.

The remaining 10% fall under the federal Canada Labour Code, which covers banking, telecoms, interprovincial transport, broadcasting, and federal Crown corporations. Federal and provincial rules differ on overtime thresholds, leave entitlements, and termination obligations.

• Ontario: Employment Standards Act, 2000 governs minimum wage, overtime, and termination.
• British Columbia: Employment Standards Act sets distinct overtime and statutory holiday rules.
• Alberta: Employment Standards Code applies, with no general requirement for cause on termination.
• Quebec: Act respecting labour standards applies under civil law, not common law. Bill 96 requires French-language employment contracts.

A provider that covers only the most common provinces creates compliance gaps for companies hiring in Saskatchewan, Manitoba, Nova Scotia, or New Brunswick. Confirm province-by-province registration before signing.

Own Entity vs. Partner Network

An EOR with its own Canadian legal entity is directly registered with the CRA and holds provincial employer accounts in each province where it employs workers. This structure means the EOR assumes compliance accountability without a third party in the chain.

A partner-network model introduces an intermediary. Liability may sit with the local partner rather than the EOR you contracted with, and transparency on where that liability sits is often limited.

Ask any provider the following before signing:

• Does the EOR hold its own CRA employer account, or does a local partner hold it?
• What happens to CRA employer accounts and employee records if the EOR is acquired or changes ownership?
• Who is the named employer on the employment contract and the T4 slip?
• Which entity holds provincial workers' compensation accounts in Ontario, British Columbia, and Quebec?

These questions matter because a change in EOR ownership can disrupt payroll registration, CRA remittance accounts, and employee records mid-engagement. Confirm in writing how continuity is protected before you commit.

Support Model and Response Time

Assess whether the provider assigns a dedicated account manager or routes requests through a shared support queue. A shared queue works for simple payroll queries but creates delays when a termination or a CRA audit requires fast, informed responses.

Canada spans six time zones, from Newfoundland Standard Time to Pacific Time. A team in Toronto operating on Eastern Time may not cover a Vancouver employee's urgent query without an explicit service level agreement covering Pacific hours.

Confirm the following before signing:

• Is there a named account owner for your account, or is support ticket-based?
• What is the committed response time for urgent employment matters such as terminations and ROE issuance?
• Does the provider offer French-language support for Quebec employees?
• Are payroll queries handled by the same team that manages compliance, or by a separate operations team?

Gloroots operates on a human-led support model with account ownership assigned at onboarding. Response time commitments are documented in the service agreement.

Pricing Transparency

EOR pricing in Canada varies significantly depending on what the monthly per-employee fee includes. Some providers quote a base fee and bill statutory levies, benefits administration, and Quebec-specific costs separately.

Confirm whether the following are included or excluded before signing:

• Ontario Employer Health Tax (EHT), which applies to Ontario payrolls above CAD 1 million
• Quebec Workforce Skills Development and Recognition Fund (WSDRF), set at 1% of Quebec payroll for payrolls above CAD 2 million
• Workers' compensation premiums, which vary by province and industry classification
• Benefits administration fees for dental, vision, and prescription drug plans
• T4 slip generation and Record of Employment issuance

Gloroots publishes country-specific pricing so you can confirm what is included for Canada before you plan headcount. Predictable, country-specific pricing reduces the risk of cost surprises at invoice.

Security and Data Privacy Compliance

Canadian employment data is governed by two overlapping frameworks: the federal Personal Information Protection and Electronic Documents Act (PIPEDA) and Quebec's Act respecting the protection of personal information in the private sector, known as Law 25.

Law 25 imposes stricter obligations than federal PIPEDA. It has been in phased effect since September 2022 and requires organizations to appoint a privacy officer, conduct privacy impact assessments for new systems, and report breaches to the Commission d'accès à l'information within 72 hours.

US companies hiring in Canada frequently flag PIPEDA compliance as a key concern. The more material obligation for Quebec employees is Law 25, which applies to any organization processing personal information about Quebec residents, regardless of where the organization is incorporated.

Confirm the following from any EOR provider:

• Where is employee payroll and personal data stored, and is it stored in Canada?
• Does the provider hold a SOC 2 Type II certification or equivalent?
• How does the provider handle Law 25 privacy impact assessments for its platform?
• What is the breach notification process and timeline?

Integration Capability

An EOR platform that does not connect to your existing HRIS, expense management, or equity administration tools creates manual reconciliation work at every payroll cycle. Confirm integration capability before you commit to a provider.

For Canadian employment specifically, confirm that the following are automated platform outputs rather than manual processes:

• T4 slip generation at year-end
• Record of Employment (ROE) issuance within 5 days of termination, as required by Service Canada
• Provincial tax remittance reporting for each province where employees are hired
• CPP or QPP and EI or QPIP contribution tracking per employee

Manual T4 and ROE processes introduce filing errors and delay EI eligibility for departing employees. Automated outputs reduce compliance risk and give your finance team a clean audit trail.

Gloroots integrates with standard HRIS and finance tools and generates T4 slips and ROEs as automated platform outputs. See how employer of record software capabilities vary across providers.

Workforce and Talent Pool in Canada

Canada has approximately 22.4 million active workers as of 2024, a median age of around 41, and the highest post-secondary attainment rate in the G7, with over 60% of adults holding post-secondary credentials.

Key talent hubs include Toronto for finance and AI, Vancouver for gaming and clean technology, Montreal for AI and biotech, Calgary for energy and engineering, and Ottawa for government technology and public sector roles. Ottawa's concentration of federal government agencies and Crown corporations makes it a consistent source of technology, policy, and security-cleared talent.

Canada's workforce is bilingual in English (76%) and French (22%), with bilingual concentration in Quebec and the National Capital Region. The average annual wage is approximately CAD 69,417 (OECD 2024). There is no mandatory 13th-month salary or statutory annual bonus.

Canada's immigration pipeline sustains talent supply across technology and STEM sectors. The 2025 immigration plan targets approximately 395,000 new permanent residents. Programs including the Global Talent Stream and Express Entry prioritize technology and engineering roles, which means the available talent pool in these sectors extends beyond the domestic-born workforce.

Category	Key Facts
Workforce Size	~22.4 million active workers (2024)
Median Age	~41 years
Language	English (76%), French (22%)
Top Talent Hubs	Toronto, Vancouver, Montreal, Calgary, Ottawa
Key Industries	Technology, financial services, AI, gaming, clean energy, biotech, government tech
Average Annual Wage	~CAD 69,417 (OECD 2024)

Companies comparing North American hiring markets can also review the employer of record USA page for a direct comparison of employment costs and compliance obligations.

Employment Law Essentials in Canada

Approximately 90% of Canadian employees fall under provincial employment standards. The remaining 10% fall under the federal Canada Labour Code, which covers banking, telecoms, interprovincial transport, broadcasting, and federal Crown corporations.

Provincial employment standards govern minimum wage, working hours, overtime, leave entitlements, and termination rules. Because these rules differ by province, employers hiring across multiple provinces must track each jurisdiction separately.

Common law reasonable notice is a critical concept in Canada. Courts award notice based on the employee's age, seniority, and role. These awards routinely exceed statutory minimums. US-style termination clauses that attempt to limit notice to statutory floors are frequently found unenforceable by Canadian courts.

• Federal Canada Labour Code: covers banking, telecoms, interprovincial transport, broadcasting, and federal Crown corporations (approximately 10% of workers)
• Provincial employment standards: govern the remaining 90% of workers, with rules varying by province
• Quebec civil law: operates under a distinct civil law system, not common law, with French-language contract requirements under Bill 96
• Common law notice: courts assess age, seniority, and role; awards regularly exceed statutory minimums
• Termination clauses: must be carefully drafted; US-style at-will clauses are unenforceable

An EOR operating across multiple Canadian provinces must maintain separate employer registrations and apply the correct provincial standards for each employee. This is a core compliance obligation, not an optional administrative step.

Employment Contracts

Written contracts are strongly recommended and must define wages, hours, probation period, benefits, and a termination clause. Quebec requires French-language contracts under Bill 96. US-style at-will termination clauses are unenforceable in Canada.

Working Hours and Overtime

Standard hours and overtime thresholds vary by province. Ontario sets the standard workweek at 44 hours, with overtime paid at 1.5 times the regular rate above that threshold.

Minimum Wage

Minimum wage is set provincially and varies across Canada. Ontario's general minimum wage is CAD 17.20 per hour as of October 2024. British Columbia's is CAD 17.40 per hour. Quebec's is CAD 15.75 per hour. Federal minimum wage is CAD 17.30 per hour and applies to federally regulated workers.

Leave and Statutory Benefits in Canada

Canadian leave entitlements are set by provincial employment standards, with federal Employment Insurance (EI) funding several leave types including maternity, parental, and compassionate care leave.

Maternity leave is up to 15 weeks under EI. Parental leave extends to 35 weeks standard or 61 weeks extended, shared between parents. EI replaces 55% of insurable earnings up to the maximum insurable amount, which was CAD 63,200 in 2024.

• Vacation leave: minimum 2 weeks after 1 year of service in most provinces; increases with tenure
• Maternity leave: up to 15 weeks, funded through EI at 55% of insurable earnings
• Parental leave: up to 35 weeks standard or 61 weeks extended, shared between parents
• Sick leave: varies by province; Ontario provides 3 days of paid sick leave per year
• Public holidays: 9 federal statutory holidays; provinces add their own, bringing totals to 10 to 13 days depending on the province
• Bereavement leave: typically 3 to 5 days; varies by province

Quebec employees access the Quebec Parental Insurance Plan (QPIP) instead of federal EI for maternity and parental benefits. QPIP provides higher replacement rates than the federal EI program.

Supplemental benefits including dental, vision, and prescription drug coverage are market-standard for professional roles. These are not statutory but are expected by candidates in most sectors. An EOR sources these through Canadian group insurers such as Manulife or Canada Life.

Annual Leave

Most provinces require a minimum of 2 weeks of paid vacation after 1 year of service. Entitlement increases with tenure. Ontario and British Columbia move to 3 weeks after 5 years of service.

Sick Leave

Sick leave entitlements vary by province. Ontario provides 3 unpaid sick days per year under the Employment Standards Act. British Columbia provides 5 paid sick days annually. Federal employees receive 15 days of paid sick leave per year under the Canada Labour Code.

Maternity and Paternity Leave

Canada provides up to 17 weeks of maternity leave and up to 63 weeks of parental leave under federal EI. Quebec employees access QPIP instead, which provides higher income replacement rates and includes a dedicated paternity benefit of 5 weeks reserved for the second parent. Combined leave can extend to 18 months under the extended parental benefit option, at a reduced weekly rate.

Public Holidays

Canada has 9 federal statutory holidays. Provincial holidays vary: Ontario observes 9 public holidays; British Columbia observes 10; Quebec observes 13, including provincial-specific dates such as National Patriots Day.

Payroll, Tax and Statutory Contributions in Canada

Canadian payroll requires withholding federal and provincial income tax, CPP or QPP contributions, and EI or QPIP premiums on each pay cycle. The Canada Revenue Agency (CRA) sets employer remittance frequency based on average monthly withholding amounts (AMWA).

Remittance tiers are as follows. Employers with a monthly withholding amount (MWA) under CAD 1,000 remit quarterly. Employers with an AMWA under CAD 25,000 remit monthly, due by the 15th of the following month. Employers with an AMWA between CAD 25,000 and CAD 99,999 fall under Accelerated Threshold 1: first-half pay period remittances are due by the 25th of the same month, and second-half remittances are due by the 10th of the following month. Employers with an AMWA of CAD 100,000 or more fall under Accelerated Threshold 2 and must remit within 3 working days of each weekly pay period.

The standard employer EI premium rate is 1.4 times the employee premium. Employers with qualifying short-term disability plans can apply to Service Canada under the EI Premium Reduction Program to reduce the employer multiplier below 1.4x. Applications are submitted to ESDC and require a copy of the disability plan for review.

Quebec employers also pay the Workforce Skills Development and Recognition Fund (WSDRF) levy of 1% of Quebec payroll for payrolls exceeding CAD 2 million. Ontario employers with payrolls above CAD 1 million pay the Employer Health Tax (EHT). Both levies should be confirmed as included or excluded in any EOR fee agreement before signing.

Work Visas and Permits in Canada

Foreign nationals working in Canada generally require a work permit. The two main pathways for employer-sponsored workers are the Temporary Foreign Worker Program (TFWP), which requires a Labour Market Impact Assessment (LMIA), and the International Mobility Program (IMP), which includes LMIA-exempt categories such as intracompany transfers and CUSMA (formerly NAFTA) professionals.

The Global Talent Stream (GTS) is a fast-track pathway under the IMP with a target processing time of 2 weeks. GTS has two categories. Category A covers unique and specialized talent referred by a designated GTS partner organization. Category B covers specific in-demand tech occupations listed by Employment and Social Development Canada (ESDC). The category determines eligibility and the processing path, so employers must confirm which applies before filing.

An EOR cannot sponsor work permits directly. The client company or a designated representative must hold the employer of record relationship for permit purposes. Gloroots can support permit tracking and onboarding coordination once authorization is confirmed.

Equity and ESOP Consulting in Canada

Equity compensation in Canada is governed by the Income Tax Act. Stock options granted to employees are taxed at the time of exercise, not grant. The employee includes the benefit in income in the year of exercise, calculated as the difference between the fair market value at exercise and the exercise price.

Canada provides a stock option deduction equal to 50% of the taxable benefit for qualifying options, subject to an annual vesting limit of CAD 200,000 per employee. Options exceeding this threshold are taxed as ordinary employment income with no deduction available.

Employers administering ESOPs for Canadian employees must track vesting schedules, exercise events, and T4 reporting obligations. Gloroots supports equity plan coordination for Canadian employees, including benefit calculation inputs and payroll integration for tax withholding at exercise.

Misclassification Risk in Canada

Misclassification in Canada triggers retroactive CPP, EI, vacation pay, and workers' compensation obligations, plus interest and penalties assessed by the CRA.

Canadian courts and the CRA assess the true nature of the working relationship, not the label on the contract. Factors include control over work, ownership of tools, chance of profit, and risk of loss.

Employers or workers can request a formal determination of employment status through the CRA's My Business Account portal using the Request a CPP/EI Ruling function, or by mailing Form CPT1 to the CPP Rulings Division. The ruling is binding and determines whether statutory deductions apply retroactively.

Key misclassification exposure areas include:

• Retroactive CPP and EI remittances with interest
• Accrued vacation pay obligations
• Workers' compensation premiums
• Provincial employment standards entitlements including notice and severance

Companies using contractors for ongoing, integrated work should request a CRA ruling before the relationship extends beyond a defined project scope.

Hiring, Onboarding, Termination and Offboarding in Canada

Hiring in Canada through an EOR follows a defined sequence: contract issuance, statutory registration, payroll setup, and benefits enrollment. Each step carries specific compliance requirements that vary by province.

Employment contracts must be written in English or French. Quebec requires French-language contracts under Bill 96. Each contract must define wages, hours, probation period, benefits, and a termination clause. US-style at-will termination language is unenforceable in Canada and must not be included.

Probation periods are typically three to six months. During probation, reduced notice obligations may apply depending on the province, but statutory minimums still govern once the probation period ends.

Onboarding

The EOR registers the employee for CPP or QPP, EI or QPIP, provincial health levies, and workers' compensation in the relevant province before the first payroll run.

The employee provides their Social Insurance Number and proof of work eligibility at onboarding. WSIB covers Ontario employees; WorkSafeBC covers British Columbia employees. Quebec employees are enrolled in QPP and QPIP instead of CPP and EI.

Supplemental benefits including dental, vision, and prescription drug coverage are market-standard for professional roles in Canada. These are typically sourced through insurers such as Manulife or Canada Life and administered by the EOR from day one of employment.

Termination

Statutory notice in Canada scales from one week after three months of service to a maximum of eight weeks in Ontario. Common law reasonable notice routinely exceeds statutory floors based on the employee's age, seniority, and role.

Offboarding

The EOR calculates statutory notice or pay in lieu, severance where applicable, and accrued vacation pay at the point of termination.

A Record of Employment must be issued within five days of the employee's last day. The ROE is required for the employee to access EI benefits and is filed electronically through Service Canada. Late or incorrect ROE issuance is a common compliance failure and can trigger CRA review.

What's New: Recent Regulatory Changes in Canada

Canadian employer compliance obligations change frequently at both the federal and provincial level. Employers should review their obligations quarterly, given ongoing provincial minimum wage updates and CRA remittance threshold changes.

Key changes effective in 2024 include:

• British Columbia minimum wage increased to CAD 17.40 per hour, effective June 1, 2024
• The federal CPP employer contribution rate remains at 5.95% of insurable earnings up to the YMPE of CAD 68,500 for 2024
• Quebec's Law 25 personal information protection obligations continued phased enforcement through 2024

Provincial minimum wages are updated on different schedules across Canada. Ontario, Alberta, and British Columbia each set their own rates and effective dates. A quarterly compliance review cycle is the minimum standard for employers with workers in multiple provinces.

Costs and Financial Planning for Hiring in Canada

Total employer cost in Canada runs materially above base salary once statutory contributions, provincial levies, and supplemental benefits are added. Planning for these line items before hiring prevents budget overruns.

Core statutory employer costs include CPP contributions at 5.95% of insurable earnings up to the YMPE (CAD 68,500 in 2024), EI premiums at 1.4 times the employee rate, Ontario Employer Health Tax, and Quebec's Workforce Skills Development and Recognition Fund (WSDRF) levy of 1% on Quebec payrolls above CAD 2 million.

When building a cost model, calculate each of the following as separate line items:

• CPP or QPP employer contribution
• EI or QPIP employer premium
• Provincial health levies (Ontario EHT, Quebec WSDRF)
• Workers' compensation premiums by province
• Supplemental benefits: dental, vision, and prescription drug coverage

One cost-saving mechanism worth reviewing is the EI Premium Reduction Program. Employers who maintain a qualifying short-term disability plan can reduce the employer EI multiplier below the standard 1.4 times the employee rate. The reduction requires CRA approval and annual reporting.

Common Challenges and How Gloroots Solves Them in Canada

Hiring in Canada through an EOR introduces specific compliance and operational risks. The table below maps common challenges to how Gloroots addresses each one.

Challenge	How Gloroots Addresses It
Quebec French-language contract requirement under Bill 96	Gloroots issues French-language employment contracts for all Quebec employees as a standard output.
Multi-province payroll registration	Gloroots holds employer accounts in each province where employees are hired, covering CPP/QPP, EI/QPIP, and provincial levies.
EOR provider acquisition or ownership change risk	Gloroots holds its own CRA employer account. Client contracts include provisions for employee record continuity and notice obligations in the event of an ownership change.
EOR-to-entity transition	Gloroots supports documentation, contract novation, and CRA account transfer guidance when a client establishes its own Canadian entity.
CRA CPP/EI employment status ruling requests	Gloroots can assist clients in requesting formal employment status rulings via My Business Account or Form CPT1 to manage misclassification risk before it becomes a liability.
Common law termination exposure	Gloroots drafts termination clauses reviewed against Canadian common law standards and calculates notice and severance at offboarding.

Why Gloroots Is a Strong EOR Partner in Canada

Gloroots employs workers in Canada through its own Canadian legal entity, registered directly with the CRA. This means compliance accountability sits with Gloroots, not a third-party partner network.

Gloroots manages payroll in CAD, issues T4 slips, files Records of Employment, and administers statutory and supplemental benefits across provinces. Quebec-specific obligations, including QPP, QPIP, WSDRF, and French-language contracts under Bill 96, are handled as standard coverage.

Before signing with any EOR, companies should confirm two things: first, that the provider holds its own CRA employer account rather than routing through a partner; second, that the provider can demonstrate a track record of Quebec-specific compliance, including Bill 96 contract issuance and WSDRF levy management. These are the two areas where provider gaps most commonly create client liability.

Companies expanding beyond Canada can also review the employer of record UK page for coverage in another major market.

Conclusion

Canada is one of the more accessible markets for long-term EOR use. No Canadian federal statute or provincial employment standards act imposes a time limit on EOR employment, which means companies can run employment through an EOR indefinitely without a mandatory transition to a direct entity.

The compliance obligations are real: multi-province registration, Quebec's distinct requirements, and common law termination exposure all require active management. An EOR with its own CRA employer account and demonstrated provincial coverage handles these obligations directly. Gloroots provides that structure for companies hiring in Canada.

Frequently Asked Questions About Employer of Record in Canada

Is using an EOR legal in Canada?

Yes. No Canadian federal statute or provincial employment standards act prohibits EOR use. There is no time limit on how long a company may employ workers through an EOR in Canada. EOR employment is a recognized and compliant hiring structure under Canadian law.

Can a US company hire employees in Canada through an EOR?

Yes. A US company with no Canadian entity, no CRA registration, and no Canadian bank account can hire Canadian employees through an EOR. The EOR handles all CRA registration, payroll deductions, and provincial compliance on the US company's behalf. No Canadian entity is required.

What does an EOR cost in Canada?

EOR fees in Canada typically include a monthly per-employee fee plus statutory employer contributions: CPP at 5.95% of insurable earnings, EI premiums at 1.4 times the employee rate, provincial health levies, workers' compensation premiums, and supplemental benefits. Confirm whether Quebec-specific levies such as the WSDRF are included before signing. See the employer of record cost guide for a detailed breakdown.

What is the difference between an EOR and a PEO in Canada?

A PEO operates under a co-employment model and requires the client to hold a Canadian legal entity. An EOR does not require the client to hold any Canadian entity. For companies without a Canadian entity, an EOR is the only compliant option for employing full-time workers.

How does Quebec differ from other provinces for EOR purposes?

Quebec employees are enrolled in QPP and QPIP instead of CPP and EI. Employment contracts must be issued in French under Bill 96. Employers with Quebec payrolls above CAD 2 million pay the WSDRF levy of 1%. Quebec operates under civil law, not common law, which affects contract interpretation and termination obligations.

What happens to employees if the EOR provider changes ownership?

If the EOR holds its own CRA employer account, employee records and payroll continuity are maintained through an ownership change. Client contracts should include provisions for employee record continuity and notice obligations in the event of a change of control. Confirm this before signing with any provider.

Can a company transition from an EOR to its own Canadian entity?

Yes. When a company establishes its own Canadian entity, the EOR can support documentation, contract novation, and CRA account transfer guidance to move employees to the new entity. The transition timeline depends on provincial registration requirements and the number of employees involved.