Without establishing a branch office or a subsidiary in Canada, clients that use Globalization Partners' employer of record services may recruit workers and process payroll. To comply with Canadian labor regulations, your applicant may be recruited via Globalization Partners' Canada PEO and onboarded in a matter of days. The person is tasked with fulfilling your in-country needs and will operate alongside your team as if they were an employee of your business.

Our all-encompassing service allows our Canadian clients to handle payroll without worrying about HR services, taxes, or compliance management. We oversee best practices in employment contracts, statutory and market norm benefits, employee costs, and severance and termination if necessary in our role as a Global PEO specialist. We also update you on any changes that may occur in Canadian labor legislation.

New hires have a shorter learning curve, more positive impressions of the recruiting process, and are more likely to commit fully to your team. You may relax knowing that skilled employment professionals are helping you with every hiring. Through Globalization Partners, you can easily and efficiently tap into the expertise of the best and brightest from over 185 nations.
Possibility of Employment in Canada

While Canada's economy is ripe for foreign direct investment and rapid expansion, direct hires may be a hassle due to red tape. Many businesses make the mistake of assuming that recruiting new employees and establishing a payroll system won't be too complicated, only to be met with a slew of obstacles thanks to the many regulations imposed by labor law.

Canada has strict labor laws. In Canada, there is no such thing as a "at will" workplace. It might be difficult to determine whether specific criteria must be met due to the overlap between federal and provincial laws. There is a widespread misconception in the United States that businesses may avoid labor laws by classifying workers as independent contractors. In Canada, the term "independent contractor" is strictly regulated by the government, and it is possible for a person to be reclassified as an employee.

In Canada, "provincial" is an operative term for the employment process. Withholding, access to social assistance, and notice periods are only a few examples of the many employment-related matters that vary by province. When it comes to labor laws, Canada's many provinces and territories all have their unique requirements. The majority of workers in Canada (about 80%) are covered by provincial or territorial employment regulations, while the other workers are protected by federal law.

Workers in Canada anticipate a Group Benefit Plan that extends beyond the universal free healthcare provided by the government. In most cases, a U.S.-based firm will need either a Canadian headquarters or a Canadian signature in order to use such privileges. If a U.S. firm pays Canadian workers directly, it will be on the hook for Worker's Compensation and must oversee the health and safety of its employees on a daily basis, both of which are challenging to monitor from afar.

Consider the following Canadian norms for perks when discussing a Canadian employee's compensation and stipulations in a job offer letter and employment contract:
Canadian Employment Agreements

Consider how much time each new recruit will need to learn the intricacies of the province. An employment contract is not needed by law in Canada, although it is widely recommended. The vast majority of businesses nowadays choose to have their workers sign formal written contracts outlining the conditions of their employment. The basic requirements specified in employment standards are the fundamental limitation on the conditions included in an employment contract.

Both French and English are widely spoken in Canada. There are no regulations concerning the language of employment contracts outside of the province of Québec. Employment contracts are typically written in English in all jurisdictions except Québec.

We advise drawing up a solid employment contract in the native tongue that details the employee's remuneration, perks, and termination stipulations. Always use Canadian dollars when referencing remuneration or salary in a Canadian offer letter or job contract. No need to create your own employment contract template if you utilize Globalization Partners as your employer of record and PEO in Canada since one is included with the service.
Hours on the Job in Canada

Working hours are governed by local, provincial, and federal employment law. The standard workweek is 40 hours in the majority of countries. The maximum number of hours an employee may work per week varies by occupation and jurisdiction.

While work hours and overtime restrictions vary greatly from province to province in Canada, most provinces and territories have mandated a premium payment of at least 1.5 times a worker's usual rate of pay for time worked above 40 hours per week. For Ontario, the number is 44; for Québec, it's 40. If an employee refuses or complains about overtime work, their employer is not allowed to dismiss them or deport them. Neither are they allowed to refuse to pay overtime rates or compel them to work excessive hours.
Canada celebrates a variety of holidays

Canadians take time off to honor both national and regional holidays. There are a total of 5 national public holidays for which workers get paid time off, 4 of which are observed solely at the Federal level and 2 at the Provincial level.

Sunday, January 1st, 2019 (National)
Independence Day in the Islands (PEI)
Celebration of the life of Louis Riel (MB)
Observance of the Family's History on Nova Scotia's Annual Heritage Day (BC, AB, SK, ON, NB)
This is a Good Friday (National except QC)
Holy Monday (QC)
A Celebration of Queen Victoria (National except NB, NS, NL)
Aboriginal Occasion (NWT)
The Feast of St. Jean Baptiste (QC)
July 1st, Canada (National)
Civic Holiday (AB, BC, SK, ON, NB, NU) Labour Day (National)
Thanksgiving (National excluding NB, NS, NL) (National except NB, NS, NL)
Memorial Day (National except MB, ON, QC, NS)
On this, Christmas Day (National)
Today is Boxing Day (ON)

Canadian Vacation Days

Most companies provide their workers with at least one paid week off every year. After an employee has been with the company for a year in the provinces of British Columbia, Alberta, Manitoba, Ontario, and Québec, they are entitled to two weeks of paid vacation. Access to benefits and requirements for participation vary from one region of the nation to the next. Depending on the organization and the employee's tenure, most companies provide between two and four weeks of paid vacation every year. Most professional-level jobs should provide between three and four weeks of vacation time each year (in addition to paid holidays). Vacation days cannot be carried over from year to year in Canada. It's possible to roll over unused vacation days into the next year if both the employee and the company agree to do so in advance. Unlimited or untracked vacation time in Canada is an anomaly that comes with major difficulties.
Canada Sick Time

In the majority of Canadian provinces, working adults have no access to paid sick days. Employment Insurance, Canada's national social insurance, does include long-term, paid sick leave for eligible workers.
Canada's Paid Parental Leave Policy

Paternity leave, which is granted solely to dads in the province of Quebec, is only one example of Canada's generous unpaid parental leave policies. Maternity leaves in Canada average about 17 weeks, whereas parental leaves last between 61 or 63 weeks. If they meet the requirements, parents on leave may apply for employment insurance payments provided by the government.
Canadian Health Care Insurance

Most people's access to medical treatment is facilitated by the social security system. A Medicare card grants its holder access to free medical treatment and other benefits offered by the government, such as subsidies for child care. Some states collect an additional fee for this service, while others rely on tax revenue or other donations to cover the cost.

All Canadians are guaranteed access to "medically required and hospital physician services" under the country's universal health care system. Ten provinces and three territories in Canada fund and administer their own health care systems. For the federally mandated medical treatment, no out-of-pocket expenses are required. Patients in Canada are assured access to medical care, but "supplementary" benefits like dental and pharmaceutical insurance are left to the discretion of individual provinces.

Sixty-three percent of Canadians have private, supplementary insurance (or access to an employer-sponsored plan) to pay for these costs. In Canada, medical professionals often get reimbursement from the government at a fee-for-service basis. In today's job market, many applicants assume that the employer would provide them with supplementary benefits such as private medical insurance, dental and vision plans, income protection (disability), and life insurance.
Supplemental Benefits in Canada

Group savings plans and supplementary health and dental insurance are common perks offered by employers.
The Canadian Severance Process

Probationary periods are widespread in employment contracts in Canada. The average trial period lasts for three months. The maximum length of a probationary term ranges from 3 to 6 months, depending on the jurisdiction. An employee may be entitled to notice compensation if they are terminated by their employer during the probationary period.

In Canada, both the employee and the employer might agree to a certain length of employment. If, however, the parties renew the same fixed-term contract more than once or the employee continues working until the termination date stipulated in the contract, a court or other adjudicator may rule that the contract is now for an endless duration.

In Canada, companies must give workers enough notice of termination or pay them in place of notice if they can't be bothered. The minimum notice durations that employers are obliged to offer workers depend on the employee's length of service, and are set by the employment standards law in each jurisdiction. Yet, workers have rights that go beyond the bare minimum of notice under common law and Québec civil law.

When determining what constitutes "fair" notice, employers must take into account not just the employee's length of service, but also the employee's age, position within the organization, and the employee's capacity to find other work. While notice requirements (or remuneration in lieu of notice) in circumstances of dismissal may be specified in employment contracts (or collective agreements), the parties may not negotiate for less than the required statutory minimum.

Employees who are terminated without reason may be eligible for severance compensation in both Federal and provincial jurisdictions (or pay in lieu of notice). The following are provisions of the Canada Labour Code (Federal Jurisdiction):

With 12 months of service, an employee is entitled to either 2% of their base salary every year worked, up to a maximum of 5% of their base salary, or five days of pay.

The Employment Standards Act of Ontario states that:

If an employer has a payroll of Can$2.5 million or more in the province, or if 50 or more workers are let go within six months owing to the permanent discontinuation of all or part of the firm, those employees with five years of service or more are eligible for severance compensation.
In Ontario, an employee's severance compensation is determined by multiplying their normal salary for a standard workweek by either their total number of years employed or their total number of months employed (divided by 12 in the case of an incomplete year of service) (partial year).
According to Ontario's Employment Standards, the maximum amount of severance pay that must be paid is 26 weeks.

Canadian Taxes to Be Paid

Federal legislation on welfare concerns like unemployment insurance and old age security are included into the Canadian social security system alongside provincial policies, programs, and social services. The cost of and eligibility for social security benefits vary by province. A portion of every Canadian worker's paycheck goes toward funding the country's social security system.

A progressive tax structure is in place in Canada.

For individuals, the highest rate of federal taxation in 2021 is 33%.
In addition to the federal rate, each province has its own, often much higher, tax rate.
The highest rate in Ontario is 13.16 percent in 2021.
Québec's is 25.75 percent
In Alberta, it is 15.00%.

Payroll taxes in Canada fund government programs like CPP and EI.

For 2021, the cap on "pensionable earnings" under the Canada Pension Plan is $61,600.
In 2021, both employees and employers may put up to $3,166.45 (CDN).
In 2021, a worker's "insurable earnings" are limited at $56,300 CDN (the employer will pay $1.58 for every $100 in income up to that cap, and the employee will contribute $1.58 for every $100 in salary beyond that cap).
To be specific, $1.18 per $100 of income is the rate in Quebec.

Many perks are offered to families with children via the Social Security system. They include the Universal Child Care Benefit, the Child Tax Benefit, and the Child Fitness Tax Credit.

A handicapped individual may be qualified for a variety of assistance programs. Some are geared toward those who have sustained permanent impairments, while others are meant to aid individuals who have suffered temporary injuries that are preventing them from doing daily tasks.

One of the most important features of our social safety net is unemployment insurance. These payments are made temporarily and cover a wide range of situations in which an individual may be out of work and in need of financial support, such as unemployment, pregnancy, illness, and compassionate leave.

Social Security recipients aged 65 and above are eligible for the Old Age Social Security (OAS) stipend. To qualify for this pension, one must meet a number of criteria, such as being a Canadian citizen or permanent resident at the time their OAS pension application is granted, having lived in Canada for at least 10 years after the age of 18, and having paid into the system. The recipient need not have given up working before receiving this pension. There is also the Canada Pension Plan, which is a separate contributing program, to consider. Disability and survivor benefits might be collected from this source as well.
How Collaboration in Globalization Benefits Everyone

To hire a small staff in Canada would need a lengthy, costly, and complicated process of setting up a branch office or subsidiary in the country. Canadian labor law provides substantial safeguards for employees, requiring careful compliance and familiarity with regional norms and practices. Incorporating in Canada is a breeze with the help of Globalization Partners. Without the hassle of establishing a foreign branch office or subsidiary, we can assist you in finding and hiring your ideal individual, managing human resources and payroll, and ensuring compliance with local legislation. You can rest easy knowing that your Canadian PEO and global employer of record model is being handled by the experts thanks to our cutting-edge SaaS platform and app.

If you are looking for a turnkey employee leasing or PEO solution for staffing in Canada, Globalization Partners is here to help.