North America

Canada

Request Info
Employer of Record (EOR) in Canada

What you'll learn

  • Country Introduction
  • Employment Terms
  • Minimum Wage and Working Hours
  • Statutory Leave Laws
  • Termination Process
  • Additional Information
Canada Introduction

Canada is the 2nd-largest country in the world in terms of land mass and is bordered by the United States. It has a highly developed mixed-market economy with a GDP of around $2 trillion USD. Canada is one of the world's largest trading nations, with an average household disposable income above the OECD average.

Employment Terms

Types of Contracts

  • Full Time
  • Contractor

Job Title Restrictions

There are no restrictions on job titles except for when the title includes “Engineer”. Engineering is a regulated profession in many provinces in Canada, so:

(i) you cannot use “engineer” in your title if you not qualified as a professional engineer, and

(ii) employers of engineers are required to be registered with the BC governing body – see this link:  Firm Practice (egbc.ca)

Working Hours

There are no statutory rules governing the maximum number of working hours in Canada.

Ontario: After 44 hours is worked per week, overtime must be paid at 1.5 the hourly rate.

Minimum Wage

Minimum wage varies by province, city, and state, varying between CAD 13 and CAD 17 per hour: click here for the full details.

Wage Deductions

Employers are required to take wage garnishments (e.g. child support, back taxes) when instructed by the Canadian federal government.

Any other wage deductions must be agreed upon in the employment contract.

Probation Period

The Employment Standards Act (ESA) allows for no-notice termination within the first 3 months of employment thus probation periods are typically not used or recommended in Canada.

Taxes & Local Employment Costs

Employee Taxes

  • CPP (Canada Pension Plan): 5.95% of gross salary, capped at CAD 3,754/year
  • EI(Employment Insurance): 1.63%, capped at CAD 1002.45/year
  • Income Tax (mandatory): Variable according to income level and employee location: see here for more details.

Note: Employees can deduct certain expenses from their income, so actual taxation amounts vary by individual. The Canadian government website has a calculator that employees can use to estimate their taxes owed.

Employer Taxes & Contributions

  • CPP (Canada Pension Plan):  5.95% of gross salary, capped at CAD 3,754/year
  • EI (Employment Insurance): 2.282%, capped at CAD 1403.43/year
  • EHT (Employer Health Tax): 1.95% of gross wages
  • WSIB (Worker’s Compensation): this varies depending on the employer’s industry (0.30% to 3%, typically 1.4% for office workers)

Types of Leave

Annual Leave

Public holidays celebrated depends on the province, some are nationwide and some are province-specific. Employees are also entitled to 2 weeks of paid time off per year, receiving 4% of their earnings as vacation pay. After 5 years at the company this becomes 15 days with 6% as vacation pay, and after 10 years it becomes 20 days with 8% as vacation pay.

Some provinces also provide paid time off for bereavement, compassionate leave, jury duty, and military leave.

British Columbia: Employees earn vacation leave during the first year they're employed and receive 2 weeks of annual vacation. After 5 years of employment, employees receive 3 weeks of annual vacation.

Ontario: Statutory holidays include 9 days (for 2023) in addition to 1 day for the Civic Holiday (1st Monday in August).

*Note - The Civic Holiday isn’t a statutory holiday, but most employers treat this as a holiday.

Sick Leave

Employees in Canada who have worked at their companies for at least 90 days are able to take up to 16 weeks of unpaid sick leave without the risk of losing their job. If the sickness is long-term, the employee may be eligible for benefits from Employment Insurance.

British Columbia: The standard amount of sick leave is 5 days of paid leave and 3 days of unpaid leave.

Ontario:  There is no statutory paid sick leave.

Parental Leave

Canada guarantees maternity leave for their employees of at least 15 weeks (though some areas set a higher minimum). The standard amount of Parental Leave is 40 weeks, or 69 weeks for an extended duration of leave which is shared between both parents. A parent cannot exceed parental leave of 35 weeks or an extended duration of 61 weeks.

Employers do not need to pay for this leave as this is funded by the Government of Canada (via Employment Insurance). This leave is paid by the Canadian social programs that provide payments to new parents. New parents in Canada are also able to take at least 27 weeks of shared parental leave, no matter their gender.

Public Holidays

Public Holidays vary per Canadian province: see here for guidance.

Benefits

Private Pension

Canadian employees are able to contribute a portion of their income to a Registered Retirement Savings Plan (RRSP), up to a maximum each year. The employee does not pay tax on the income contributed to the RRSP in the year the income is earned, but will pay tax when the amount is later withdrawn from the RRSP (preferably after retirement). In 2023, the max contribution is 18% of the earned income reported for the previous year, up to a maximum of CAD 30,780.

An employee can direct his or her employer to pay a salary or bonus amount directly into his or her RRSP account, in which case the employer is not required to do the usual income tax deductions at source.

Some employers have a “group RRSP plan” where they match an employee’s contributions to their RRSP account in the group RRSP. The combined amount contributed by the employee and the employer together cannot exceed the above maximum. The employer’s contribution cannot exceed the employee’s contribution, or (for 2023) 3% of the employee’s earned income for the previous year.

Most Canadian employers (outside of government and large institutions) do not provide this, however; employees can set up a personal RRSP (Registered Retirement Savings Plan) and payments can be automatically directed from salary/bonus to this plan.

Termination Process

Notice Period

Statutory notice periods vary by province, however “common law notice” applies and varies according to industry/job level. Employees are entitled to notice of termination (or payment in lieu of notice), of which the periods vary based on tenure, cause, and more. The minimum notice is usually 2 weeks, or 1 month in Ontario and Quebec.

If the contract has a clear term outlining the agreed notice period between the parties, this will be considered sufficient in most cases. Pay in lieu of notice is possible.

British Columbia

  • 3 months to 1 year of service = 1 week of notice
  • 1 to 3 years of service = 2 weeks of notice
  • 3 to 4 years of service = 3 weeks of notice
  • 4 to 5 years of service = 4 weeks of notice
  • 5 to 6 years of service = 5 weeks of notice
  • 6 to 7 years of service = 6 weeks of notice
  • 7 to 8 years of service = 7 weeks of notice

Statutory Payments

Severance is paid when the contract has a mutual separation agreement, or when an employee has worked a minimum of 1 year at the company. Generally employees receive either 2 days of wages per year worked, or 5 days of wages (whichever is greater) — this varies by province.

Ontario

Severance pay is only paid if an employee has been employed for more than 5 years, afterwards an employee is entitled to 1 week’s pay for each year of service.  Severance is different from Termination.

Termination pay or notice is required for any employee that has been employed for 3 months or more. This notice can either be worked, or paid in lieu of notice.

By the Employment Standards Act (ESA), there is no requirement for an employee to provide notice of resignation. However, common law, states that an employee must give a reasonable amount of notice.

A reasonable notice would be dependent on the person’s position; for example, a senior executive would require more notice than an employee in a junior administration position.

Everybody must give some form of notice when they resign from work. The time frame of the notice depends on the seniority of the employee and the difficulty of replacing their job. Alternatively, if there is a notice period clause in the employment contract, the conditions of that agreement will determine how much notice is required.

Additional Information

Although Canada has a public health system, a lot of companies offer supplemental health insurance to employees with a wider range of options and shorter wait times.

OVERVIEW
Language(s):
English & French
Currency:
Canadian Dollar (CAD)
Capital City:
Ottawa
Population:
38.4 Million
Cost of Living Rank:
17th
VAT (Valued Added Tax):
5%
Employer TaxES
11.58% (varies by province)
(estimated)

★  5.95% - Canada Pension Plan

★  2.28% - Employment Insurance

★  1.95% - Employer Health Tax

★  1.4% - Worker’s Compensation (varies by industry)

Get Started in 3 Steps

1

Remote candidate

You've sourced a full-time employee or contractor located in a country where your company is not incorporated.

2

Cost Calculation

Pass us the details of your candidate and we will let you know exactly what it costs to employ your candidate in that country.

3

Onboarding & Admin

Sit back and relax as we onboard your new team member and take care of all the local compliances and admin work.

Same-day onboarding
Best Pricing
Available in 180+ countries
How Remofirst employs in Canada

It can be prohibitively expensive to establish an entity in every country you want to hire talent in, so Remofirst will hire and pay your employee on your behalf while you manage their daily duties. Remofirst will handle formal HR procedures and employment contracts that adhere to local laws, so that you can simply approve invoices via our platform. When you work with an Employer of Record (EOR) you can compliantly hire the best employees around the world.

How employees in Canada get paid
Your employee's hours, time off, holidays, bonuses, and commissions are automatically calculated into payroll. Remofirst will invoice you in either US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), or Singapore Dollars (SGD) around the 15th of each month to make sure your employees in Canada are paid on time in Canadian Dollar (CAD). To make it even easier, you can summarize your entire global team's salaries to aggregate them into one payment (instead of many individual payments).
Full-time Employees vs Global Contractors

Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off) as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.

Dependable support for employees
Whenever the employee or employer has a question about benefits, Visas, or anything else related to international employment in Canada, they can use our platform's chat function to get answers from our team of experts. Every client of Remofirst also receives a dedicated account manager that will serve as a point of contact for global HR support.