5 Things you Need to Know When Hiring Employees in Canada
You’re ready to start hiring employees in Canada, now you need to consider the different taxation laws, benefit plans, termination factors, and much more to ensure you are fully compliant and minimize your risk. Here are 5 things you should need to need to know before you begin hiring employees in Canada.
1. Canada’s Tax Rules Vary by Province
Canada’s tax system varies by province, which you should keep in mind when hiring employees in Canada. You need to deduct federal and provincial income tax from your employee’s wages. This means you need to be knowledgeable of the tax laws in the province you are operating in to ensure you remain compliant.
With remote work being more common than ever in Canada, you might have remote employees operating in different provinces. For cases like this, the Canada Revenue Agency advises using the provincial tax bracket where employees live and work.
2. Wage Rates and Employment Laws Vary Per Province in Canada
There is no national minimum wage in Canada. Therefore, if you are hiring employees in Canada their wage rates will depend on the province your employee is operating from. Similar to the US, Canadian employment laws differ per province. Therefore, you need to research the jurisdictions in the province where you plan to hire employees.
Employment laws to research in Canadian provinces and territories
When hiring employees in Canada some areas you should research include depending on the province or territory include:
Hours of work
Holiday pay
Minimum wage
Leaves of absence laws.
Let's take Canadian employment termination rules as an example. “At-Will” employment does not exist in Canada. In most cases, an employee who is terminated without cause is entitled to notice of termination or pay in lieu of notice. For example, if you are hiring employees in Québec, they will have special protections against terminations without cause, of which employers in those jurisdictions need to be aware.
3. You Need a Subsidiary to Payroll Employees in Canada
If you are hiring employees in Canada, you will either have to set up a Canadian corporate entity or engage a third party to run the payroll. If you decide to payroll your Canadian employees alone, you will have to set up a Canadian subsidiary. You can either incorporate at the federal or provincial level.
When hiring employees in Canada if you decide set up a Canadian corporate entity to payroll them, it requires a substantial amount of time and money to understand and adhere to Canada’s taxation and payroll laws. If this all seems a little too much, in addition to the numerous Canadian employment laws you have to be keep up to date on when hiring employees n Canada, you can use an employer of record in Canada to do the hard work for you.
4. Employee Paid and Unpaid Leave in Canada
If you are hiring employees in Canada, they are entitled to more paid and unpaid leave when you compare it to the US. Some reasons for employee leave in Canada include:
Vacation time
Public holidays
Family Caregiver leave
Critical illness leave
Domestic or sexual violence leave
Infectious disease emergency leave
Citizenship
Bereavement
Compassionate care
Jury duty
Maternity, paternal, adoption, and child care needs
Sick leave
Voting leave
Wedding leave
For more detail on the entitlements, Canadian employees have when it comes to leaves of absence and differences, check out our Q&A session with a Canadian employment lawyer here.
5. Consider Using an Employer of Record in Canada
The varied employment laws in Canada can seem a little daunting, we get it. It can be difficult hiring employees in Canada alone. This is why it is recommended to use in-country experts to make sure you stay compliant. If you use an employer of record to compliantly hire employees on your behalf in Canada, this will not only save you time trying to get your head around the complex Canadian employment landscape but also the expense of setting up an entity.
A Candian employer of record will take on your back-office tasks such as the payrolling, onboarding, and offboarding of your workers. They take on the risks and responsibilities of hiring a worker in Canada by becoming your worker’s legal employer. There is no need to worry about setting up a Canadian entity, as an employer of record will already be registered in all provinces.
Instead of worrying about the processes of hiring employees in Canada, place your energy into growing your business and work with an employer of record such as PGC. We treat your employees like our own and take the stress out of compliance headaches. Get in touch today to see how we can help you!
Disclaimer: The information provided here does not, and is not intended to, constitute legal advice. Instead, the information and content available are for general informational purposes only.