Canada PEO & Employer of Record Services
Capital
Ottawa
Official Language
English, French
Currency
Canadian Dollar
Payroll cycle
Bi-Monthly
Quick facts about Canada
Canada is one of the United States' most important economic partners. Home to one of the best public education systems in the world, Canada is a booming talent hub across all industries, including tech, financial services, healthcare, and agriculture. Despite being a relatively small country by population, Canada's GDP is approaching $2 trillion. Companies looking to expand globally can hire top Canadian talent by partnering with an EOR service like Via.
Businesses looking to hire in Canada need to establish an entity, enter into a global co-employment relationship with a PEO service, or partner with an employer-of-record (EOR) partner like Via.
Doing business in Canada is relatively straightforward. Canada’s strong economy and excellent higher education system make the country appealing for businesses looking for talent, especially in sectors like tech and finance.
To go global and establish an entity in Canada, you will need a local office registered as a subsidiary, as well as a business account with a Canadian bank. Plus, you will need to navigate complex federal and provincial labor regulations, payroll, taxes, holiday pay, and HR laws.
Canadian labor laws protect employers from facing discrimination based on age, sexual orientation, gender expression, and (in certain provinces) Canadian-specific work history.
Canada PEO vs. Canada employer-of-record (EOR) services
Sometimes, employer-of-record services are confused with PEOs. Many businesses use the terms interchangeably, but in Canada there is a key legal difference. A PEO is a co-employment relationship, which means that the people your business hires are still your employees. An employer-of-record service like Via, on the other hand, is a single legal employer.
With a PEO, you must still have a legal entity. Think about it like this: a PEO is a partner to which you outsource part of your administrative HR processes, while an EOR is a partner that handles all of the HR process and takes care of your legal and compliance obligations when hiring abroad in Canada.
Setting up an entity in Canada can take months, since it requires a nuanced understanding of Canadian labor laws and best hiring practices. For this reason, many companies choose to partner with an EOR service like Via to expedite the process of hiring talent in Canada.
Canada at a glance: Key facts about Canada
Capital city: Ottawa
Largest city by population: Toronto
Currency: Canadian dollar (CAD)
Population: 38.01 million
Languages: English, French
Canada GDP: 1.643 trillion
Payroll frequency: Bi-Monthly
Federal Minimum wage: $15.55
Paid leave in Canada
As an employer-of-record in Canada, you will be responsible for ensuring that your Canadian employees receive legally mandated time off for holidays, vacations, and illnesses.
Paid time off (PTO)
Paid time off policies in Canada vary from two weeks of PTO (mandated by federal law) to unlimited.
After one year of work, employers must offer two weeks of PTO to employees. At five years of employment, the minimum is three weeks, and at 10 years it is four weeks
Personal leave
Employees in Canada are able to take personal leave to deal with personal illness, family responsibilities, emergencies, and other purposes. Personal leave is different from paid time off (PTO).
After three months of continuous employment, employees are entitled to 3 paid days off. Employers are not required to pay for the fourth day and beyond.
Medical leave
Employees in Canada must receive at least 17 weeks of protected medical leave. Employers cannot terminate ill employees during this time. If an employee is out sick for longer than 3 days, employers may request documentation to verify their medical condition.
Critical illness leave
Critical illness leave is a form of protected leave that allows employees to take time off to care for sick family members. Canadian laws allow employees to take 17 weeks to care for sick adults (spouse or parent), and 37 weeks for children.
Holiday pay
Canada observes a number of federal and provincial holidays. Employees are eligible beginning on their first day of employment.
Per federal regulations, Canadian employers must pay for at least 10 holidays per year, including:
New Years
Good Friday
Victoria Day
Canada Day
Labour Day
National Day for Truth and Reconciliation
Thanksgiving
Remembrance Day
Christmas Day
Boxing Day
Maternity leave
Biological and surrogate mothers receive at least 15 weeks of maternity leave in most of Canada, and 18 weeks in Quebec.
Through social programs, the Canadian government pays for maternity leave so employers don’t have to.
Paternity leave
Canadian parents receive a total of 40 weeks of leave between the mother and the father. However, mothers can only take 35 weeks, so fathers are entitled to at least 5 weeks of paid leave.
Parental leave
Biological, adoptive, and legally recognized parents are entitled to up to 35 weeks individually. Together, legally recognized parents can take 40 hours of paid leave after becoming parents. They can take this leave at the same time or separately.
Like maternity leave, parental leave payments come from Canadian social programs, not employers.
Leave to serve on a jury or act as witness
Employees are guaranteed unpaid leave for legal proceedings, as long as they are not plaintiffs or defendants in a lawsuit. Leave for legal proceedings protects employees serving on juries and witnesses who have received subpoenas.
Leave for traditional aborginal practices
Employees who identify as aboriginal (Indian, Intuit, or Metis) qualify for 5 days of unpaid leave per calendar year after 3 months of continuous employment. During this unpaid leave, aboriginal employees can participate in traditional customs like fishing and hunting, as well as observe traditional events.
Employment Contracts in Canada for employers of record
Employment contracts in Canada need to be tailored according to provincial nuances, or the different laws in each province. Contracts must spell out the terms of the employee’s compensation, benefits, and termination requirements.
Payroll cycle
Like most employers in the country, Canadians employed by Via are paid bi-monthly, on the 15th and final day of the month.
Canadian working hours
In Canada, it is standard for employees to work 8 hours per day, 40 hours per week. Most employees work from Monday to Friday.
Canadian overtime pay
Many Canadian employees are eligible to work 8 hours maximum overtime each week. For each hour over 40, employees are paid time and a half, or 150% of their hourly rate. The work must be requested or authorized by the employer.
Some positions, however, are not entitled to overtime pay. This varies depending on the province. In Manitoba for instance, employees who have significant control over their work schedule and earn more than two times the Manitoba Industrial Average Wage do not qualify for overtime pay.
Minimum wage in Canada
Each Canadian province sets their own minimum wage, but the federal rate is $15.55 as of April 2022. You can check the minimum wage set by each province on the Retail Council of Canada’s website.
Bonus payments in Canada
In Canada, employees may provide a lump-sum cash payment quarterly or annually, in addition to your salary. Most bonuses are subject to a 22% bonus tax.
Probationary period in Canada
Most Canadian provinces allow for a probationary period in a new employee’s first three months with a new employer. In Ontario, for example, employers can terminate employees without notice or pay during the probation period.
Severance pay
In Canada, workers should receive at least 2 days’ worth of pay for each year that they worked for the employer as severance. If an employee has worked with a company for 6 years, for instance, they would receive at least 12 days worth of pay.
The minimum severance payment is 40 hours worth of wages.
Termination requirements
In Canada, employers must provide an employee with a written notice at least 2 weeks before the date they intend to terminate his/her employment. If employers do not offer a 2 weeks notice, they must pay 2 weeks worth of rages to the employees.
Health coverage in Canada
Canada’s universal healthcare system, Canadian Medicare, is funded by taxes paid to the federal government. However, the system is decentralized, since each province or territory offers its own insurance plan.
On top of the universal coverage, many Canadian employers offer private health insurance plans. With private coverage, employees have access to better healthcare infrastructure, shorter wait times, and better overall care.
Payroll taxes in Canada
Each pay period, employers must deduct income tax, employment insurance premiums, and contributions to the Canada Pension Plan (CCP) from their employees’ paychecks. Like their employees, employers also must pay into the CPP and Employment Insurance.
Onboarding Employees with a Third-party Employer-of-record or PEO
Many companies want to hire employees in foreign countries across the globe and begin to build strategic hubs. But the process of onboarding new employees without a third-party service in Canada can be expensive and time consuming.
To become the employer-of-record for your Canadian employees, you will need to establish a physical presence in Canada, file the necessary paperwork, navigate provincial and federal payroll laws, and ensure that your HR processes remain compliant. Otherwise, you risk paying fines and facing legal action. This process can take months and cost thousands of dollars.
For companies looking to hire hundreds–or even thousands–of employees in a foreign country, opening an entity and building out your HR and legal team with local experts makes sense.
In most cases, however, partnering with a third-party PEO or employer-of-record service that offers on-the-ground support in Canada is far more strategic.
Opening an entity and partnering with a PEO service
For companies looking to build relatively large teams in Canada and who wish to own their Canadian entities, partnering with a PEO service makes sense.
PEO services offer your company or business a co-employment model, which means that the third-party service manages your local HR processes. One potential drawback of the co-employment model, however, is that your company will keep the employment contracts. If a compliance issue arises, your company is responsible for solving it, even if you are based across the globe.
If you decide to pursue the PEO path, make sure that you complete all of the necessary steps to open an entity, which can take months.
Partnering with an employer of record (EOR) or employer-of-record service
While the PEO option makes sense for some larger companies, the costs of maintaining a local entity in Canada can be time consuming and cost prohibitive for SMBs, startups, and even major companies without any Canadian presence.
By partnering with an employer-of-record (EOR) service, your company or business does not need to open a local bank account, register with government institutions, or secure a Canadian address. Your EOR partner will take care of local HR processes so you can focus on building and recruiting your team.
If your company is looking to build a small but strategic team in Canada as soon as possible, partnering with an EOR service can expedite the process. EOR services like Via, for instance, allow your employees to get hired and onboarded compliantly in a few days, as opposed to months.
Why companies partner with Via as their Canadian employer-of-record
Companies of all sizes want to hire employees in Canada, but don’t know how to navigate the country’s local labor laws. Via makes hiring Canadian talent and building your global team seamless.
While some third-party EOR or PEO services outsource hiring to other organizations, Via owns its legal entity in Canada. We streamline HR processes for your employees by providing direct employment to your employees.
With our easy-to-use platform, Via helps you manage local HR processes for direct employment such as benefits, payroll, background checks, and more. Our team of local labor lawyers and on-the-ground experts ensure that your company remains compliant while expanding abroad. As your employer-or-record/entity in Canada, Via assumes full responsibility for employment liability, so that you can focus on what matters: recruiting and managing your team. Companies that partner with Via keep all of their employees’ intellectual property. We ensure that this is spelled out in the employment contracts.
Many PEO services and some EOR services require a minimum number of employees, which can make the process of building your team across borders cost prohibitive. With Via’s transparent pricing, you can pay full-time employees or contractors in Canada with no hidden set-up fees, no foreign exchange or transaction fees, and no minimums.
Whether you’re looking to start with 1 employee and scale up at your own pace, or begin with a whole team of engineers and grow quickly, Via has your back.
