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How to Hire an Employee Through an EOR in Canada

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Are you looking to expand your business and hire employees in Canada? If so, consider using an Employer of Record (EOR) to ensure you are hiring legally and taking advantage of all the benefits Canada has to offer. An EOR can help with the challenges of hiring globally. Let’s get into it!

Top Reasons to Employ in Canada

Hiring from Canada can offer several advantages for businesses that want to expand internationally to North America. Here are some reasons why a company might consider hiring from Canada:

  1. Skilled Workforce: Canada has a highly educated and skilled workforce. Around 66% of Canadians aged 25 - 34 have a tertiary education, and the number keeps increasing! The country's robust education system, focus on research and innovation, and emphasis on technical and vocational training produce a talent pool with diverse skills and expertise.
  2. Bilingual Advantage: Canada is officially bilingual, with English and French as its official languages. This linguistic diversity can benefit companies looking to expand into global markets or cater to a broader customer base.
  3. Cultural Compatibility: Canada shares many cultural similarities with the United States and other Western countries. This similarity often results in a smooth transition for companies looking to hire Canadian employees, as they are familiar with Western business practices and work culture.

  4. Proximity to the United States: Canada's proximity to the United States makes it an attractive option for American companies. This geographical advantage allows for easier collaboration, travel, and time zone compatibility, making it convenient to manage operations across the border.

  5. Strong Economy and Stability: Canada has a stable and resilient economy. It has weathered economic downturns relatively well and offers a business-friendly environment with robust legal and regulatory frameworks.

  6. Diversity and Inclusion: Canada is known for its multiculturalism and commitment to diversity and inclusion. By hiring from Canada, companies can access a diverse talent pool, bringing different perspectives, experiences, and skills to their teams.

  7. Work-Life Balance: Canada places a strong emphasis on work-life balance and employee well-being. This focus often results in a motivated workforce, increased productivity, and reduced turnover rates.

How to Hire Legally from Canada

If you want to hire employees in Canada, it is vital to understand the legal requirements and the various ways of doing so. The most common option for hiring in Canada is through an Employer of Record (EOR). An EOR is a company or organization that acts as an employer on behalf of another company or organization. It handles all legal and administrative responsibilities associated with hiring in Canada, including payroll processing, tax filings, employment contracts, and other compliance-related matters.

The main benefit of using an EOR is that it allows employers to outsource many of their HR responsibilities and legally avoid the costly process of setting up a Canadian subsidiary or branch office. 

What Does an EOR Do, Exactly?

An EOR can help reduce administrative burden, improve compliance with local labor laws, and access comprehensive payroll services. This makes it an attractive option for international companies looking to access the Canadian labor market without having to make significant upfront investments. 

Saves Time & Paperwork

Using an EOR can help you save time and money by streamlining the recruitment process. By outsourcing payroll and other administrative tasks associated with hiring new employees, you'll be able to focus more on finding the right people for your organization without having to worry about paperwork or other HR-related tasks. 

Compliance 

Furthermore, working with an EOR can reduce your risk of non-compliance with Canadian labor laws since they are well-versed in all relevant regulations and will ensure that you remain compliant throughout the course of employment. They can advise on how much paid time off to offer and the standard public holidays. 

Payroll & Taxes

Additionally, you gain access to comprehensive payroll services, which include everything from setting up employee paychecks to filing taxes. This can help ensure that all payments are made on time while also minimizing any potential issues related to tax filing or deductions. It allows you to easily keep track of all payments made during the course of employment so that there's no confusion down the line when it comes time for bonuses or vacation payouts.

For example, in Canada, employers are responsible for deducting income tax from their remuneration or other income they pay. Furthermore, employers must contribute to Employment Insurance (EI) premiums and the Canada Pension Plan (CPP). As of 2023, the rates are 1.63% (1.58% in 2022) and 5.95% (5.70% in 2022) of total gross income.

Another important number to remember is the maximum pensionable earnings under the Canada Pension Plan (CPP) for 2023, which is $66,600 ($64,900 in 2022). Beyond this, contributors do not make additional contributions to the CPP. An EOR can help you keep track of these changes!

Benefits, Insurance, and Fairness

Finally, working with an EOR also provides greater protection for both employers and employees alike since it ensures that everyone involved is abiding by Canadian law when it comes to wages and benefits, as well as other workplace policies such as overtime pay, public holidays to observe, and safety. This helps create a safe working environment where everyone involved is fully aware of their rights at all times – which is especially important in today's increasingly litigious world.

In Canada, employers usually offer extensive benefits plans that cover physiotherapy, dental care, and a range of other services. Some employers also offer Tax-Free Savings Accounts (TFSA) or Registered Retirement Savings Plan (RRSP) matching programs, although this is rarer. Employers typically observe the following public holidays (these may vary between provinces, and dates may vary depending on the year too):

  • January 1: New Year’s Day
  • April 7: Good Friday
  • May 22: Victoria Day
  • July 1: Canada Day
  • September 4: Labor Day
  • September 30: National Day for Truth and Reconciliation
  • October 9: Thanksgiving Day
  • November 11: Remembrance Day
  • December 25: Christmas Day
  • December 26: Boxing Day

What Benefits Does an EOR Offer ‌Employers in Canada?

Low Upfront Costs 

The benefits of hiring in Canada through an Employer of Record (EOR) are numerous and can offer employers a cost-effective way to access the Canadian labor market. An EOR eliminates the need for employers to invest in costly infrastructure and resources that would otherwise be required to comply with Canadian employment laws. Additionally, the EOR assumes responsibility for any disputes between them and their employees, meaning that employers have less legal liability should any issues arise.

Access to Skilled Labor, Globally

Furthermore, hiring through an EOR offers employers access to skilled labor without having to incur high upfront costs or long-term commitments. This allows companies to take on new hires as needed without worrying about meeting certain requirements or having enough employees to justify setting up a permanent office in Canada.‍

Don’t Worry About Compliance

Finally, when working with an EOR, employers need to understand what services are included in the agreement so they can make sure they are compliant with Canadian employment laws. Working with a reputable EOR who is knowledgeable about local regulations will provide peace of mind that all legal requirements are being met and that potential pitfalls associated with international hiring are avoided.  ‍

What Are Your Responsibilities?

While an EOR is an HR extension in a foreign country, employers are still responsible for recruiting, onboarding, and training employees. Performance management, career development and growth, team management, retention, and communication will also fall on your plate. Employers must also take care of staff in Canada as they do at home. The relationship between you and your employees is all you need to focus on instead of hours of paperwork with an EOR like Borderless.

Choosing the Right Employer of Record

When choosing the right EOR in Canada, it is important to consider various factors. First, employers should look for an EOR that meets all legal requirements and has a good reputation. They should also consider the fees charged by the EOR and ensure they are reasonable for their needs. Additionally, employers should research the services offered by the EOR and verify that they are comprehensive enough to meet their needs. 

Overall, while there are numerous benefits associated with using an EOR in Canada, employers must be mindful when selecting one to ensure they have chosen the right partner for their needs and remain legally compliant throughout the process. Taking these considerations into account will help employers make an informed decision when choosing an EOR in Canada that meets their needs.

Borderless - Your EOR of Choice in Canada

When it comes to hiring in Canada, employers should use an EOR like Borderless. At Borderless, we offer a comprehensive suite of services and perform them with in-depth knowledge of Canada and its provinces. Our mission is to provide peace of mind for employers. We are committed to providing our clients with the best possible service while ensuring full compliance with Canadian employment laws. 

With Borderless as your EOR of choice when hiring from Canada, you can rest assured that your business will be able to hire quickly and efficiently while remaining compliant with all applicable laws. See Borderless in action; book a demo today!

Disclaimer

Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.

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