Canada PEO Employment Services by Velocity Global

Canada PEO Employment Services

A Professional Employer Organization (PEO) is a services company that allows businesses to outsource specific HR tasks and other essential administrative responsibilities. This is especially useful when a business is expanding into foreign markets and needs assistance navigating and complying with their unique rules and regulations.

An international PEO, such as a Canada PEO, enables businesses to hire and manage employees in most foreign markets and becomes a company’s global Employer of Record.

Velocity Global’s Global Employer of Record solution, also referred to as International PEO, expedites and simplifies your business’s expansion into Canada. Whether you need to hire a single essential employee or build a new team from the ground up, you retain full employee management while our experts oversee all global payroll, compliance, and risk mitigation concerns.

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Business Enabled by a Canada PEO/EOR

Business is one of the top sectors in Canada, making it a common choice when it comes to foreign expansion. However, setting up an entity in a foreign market is complicated and time consuming. There are many bureaucratic hoops that your business needs to jump through in order to be fully compliant.

Without the need for entity establishment, a Canada PEO or EOR can streamline the expansion and employee onboarding process so that the business can prioritize its growth.

Why Should You Use a Canada PEO?

Doing business in Canada means navigating both the federal and provincial laws and regulations. This can be a hassle and if done incorrectly, and comes with serious repercussions for you and your business.

A Canada PEO can take on the responsibility of becoming a company’s global Employer of Record in Canada which enables them to compliantly hire and onboard your Canadian team members on your behalf.

Canada Fast Facts

Currency: Canadian Dollar (C$)
Population: 37.7 million
Economy: $1.7 trillion (10th-largest)
Top Sectors: Business, services, industrial production, real estate and rental and leasing, and manufacturing
National Holidays:

  • Good Friday
  • Victoria Day
  • Canada Day
  • Civic Holiday (except Quebec and Yukon)
  • Labour Day
  • Thanksgiving
  • Remembrance Day
  • Christmas Day
  • Boxing Day

Benefits of Hiring in Canada

  • American and European companies expanding into Canada find a market with similar business practices and cultural norms, albeit with some differences explored below.
  • Outside of Quebec, English is the language of business, simplifying communication in some foreign markets with language barriers.
  • Canada offers a lower corporate tax rate at 15% compared to the United States’ 21% rate, making it a more attractive market for many businesses with North American operations.
  • Although COVID-19 stunted Canada’s economic growth, the International Monetary Fund (IMF) projects the country will see strong recovery in the coming year. Canada’s resilient and diverse  national and provincial economies make it an attractive market for both testing a short-term project or establishing a long-term presence.
  • Tech companies find Ontario, the Canadian province containing its capital, Ottawa, and richest city, Toronto, a prime location for tech talent. Canada’s openness to global talent through its Global Talent Stream initiative furthered Toronto’s tech boom, attracting foreign talent and expediting immigration to the country. Employers expect a diverse and highly-skilled talent pool to drive their growth.
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Challenges When Expanding into Canada

  • Though Canada offers attractive tax rates, the time it takes to complete these taxes hovers around 131 hours annually, making paying taxes a cumbersome process. Additionally, provincial VAT (sales tax system) rates vary, while some provinces have no VAT.
  • Similar to the United States, Canadian laws vary between provinces. Some of these laws offer attractive environments to businesses; however, keeping up with varying employment, tax, and other laws can quickly compound and create confusion if operations extend beyond one province.
  • Small businesses must also anticipate potential challenges obtaining credit. Government initiatives exist, but are not prominent; small businesses may have difficulty with initial investments needed to begin operations.

Cultural Nuances and Must-Knows for Doing Business in Canada

  • Shake hands during introductions, like in most western markets. Handshakes are common with introductions between both men and women. It is not uncommon for men and women to kiss lightly on the cheek if close friends, though rarely between two men.
  • Introduce meeting members by rank, not gender. Authority revolves around a person’s position, not their name, status, sex, or class.
  • Maintain eye contact during meetings and speaking with people one-on-one and in a group. Lack of eye contact may come across as disinterest or boredom.
  • Be punctual. Timeliness applies to both work hours and meetings. After 10 to 15 minutes, meeting members will likely not wait for the host to arrive if they have not communicated their tardiness. Always reach out if you or your colleagues will not arrive on time.

Minimum Wages and Salaries in Canada

  • Minimum wages vary by province and increase yearly based on the Consumer Price Index (CPI).

Probation Periods in Canada

  • Employers including probation periods in employment contracts implement periods lasting between one and six months, though most last between three and six months.

Bonuses in Canada

  • Employers may pay discretionary or other bonuses, though should include the bonus type and stipulations in individual employment contracts. 13th-month pay is not mandatory in Canada.

Termination and Severance Conditions

  • Employers must provide termination notice to all employees, though minimum notice periods vary by province.
  • In some provinces, minimum severance pay must accompany a notice period. Some provinces do not require any severance pay with the notice period.
  • Quebec employers may not terminate employees with two or more years’ uninterrupted service without sufficient cause.

Maternity Leave

  • Canadian Labour Code offers up to 17 weeks of maternity leave. Additionally, an employee caring for a newborn or newly adopted may take up to 63 weeks of leave.
  • Both parents may take joint parental leave if working for an employer under the Labour Code’s jurisdiction, totaling an additional eight weeks of leave. Parents may split parental leave up to 71 weeks. Similarly, parents who take simultaneous leave or one after the other may take up to a combined 71 weeks of leave.
  • Cumulatively, parents combining maternity and parental leave may take a total of 86 weeks’ leave. Note that combined leave applies only to shared parental leave.

Vacation and Annual Leave in Canada

  • Employees receive a minimum of two weeks’ annual vacation for each completed year of employment. After five uninterrupted employment with the same employer, the employee receives three weeks’ vacation; after 10 years, leave increase to four weeks’ vacation.

Sick Leave in Canada

  • Employees with three consecutive months of employment with the same employer receive up to 17 weeks of sick leave.
  • All employees must provide a doctor’s note certifying illness within 15 days of returning to work if an employer requests documentation.
  • Sick leave can interrupt other types of leave. For example, an employee on maternity leave may pause maternity leave to take sick leave. Once the employee returns from sick leave, the original leave period continues.

Payroll

There are a few important considerations when it comes to payroll laws in Canada.

Average workweek hours:

  • Canada’s workweek is eight hours per day within a consecutive 24-hour period. The workweek runs between midnight on Saturday and midnight the following Saturday, and totals 40 hours.
  • Some provinces extend a 48-hour workweek.

Overtime considerations:

  • All work hours beyond 40 or 48 hours constitute overtime. These additional hours require pay at a minimum of 1.5 times the employee’s hourly wage. Exceptions include managers and professionals such as lawyers, doctors, engineers, dentists, and architects.

Employer Contributions

Contribution

Burden

Pension

5.25%*

Employment Insurance

2.27%**

Provincial Health

1.95%***

Workers’ Comp

0.38%^

Vacation Accrual

4.00%

Total

~13.85%

*Maximum contribution: 2,829.75 CAD/year
**Maximum contribution: 1,204.31 CAD/year
***not applicable in each state
^Max contribution varies by province
^^Contributions higher in Quebec: 12.81%
Burden for USD $100,000 salary: 7.07% – 9.10% depending on territory

Canada Work Visas

Obtaining a Canadian work visa is a complex process. Here are the Canada work permit requirements you should be aware of.

How to apply:

  • Companies sending an employee to Canada must apply for an employer-specific work permit. These permits allow your employee to work for your company, whereas an open work permit gives an employee the ability to work for any employer in Canada.
  • In most cases, companies or individuals can apply for a Canadian work visa online.

Eligibility requirements:

Individuals seeking a visa must able to meet a series of requirements, including proving they:

  • Will leave Canada when their visa expires
  •  Have sufficient money to provide for themselves and their family while in Canada
  •  Have no criminal record
  • Are in good health
  • Will not work for any employee deemed ineligible to hire visa workers

Timeline Considerations:

The time required to apply for and receive a Canadian visa varies, but applicants should be aware of the following considerations:

  • Canadian work permits are usually valid for six months. Canadian visa officers can change the length of the work permit due to factors such as the expected length of employment or the applicant’s ability to remain financially stable.
  • Some applicants are required to submit a medical examination, which can increase their application processing time by over three months.
  • Visa applicants can obtain a temporary permit to work in Canada while their full application is processed. Obtaining a temporary work permit can take up to 30 business days.

The visa application process in Canada can be time-consuming and tedious. Find out how a Global Employer of Record solution expedites the process of relocating employees to overseas markets.

Choose Velocity Global

Growing into any international market comes with many considerations. But an experienced global expansion partner like Velocity Global sets you up for a fast, compliant Canada expansion—without the financial and operational hurdles of entity setup.

Velocity Global’s Global Employer of Record solution provides the essential flexibility your business requires to pursue short-term projects, onboard one or more international employees, and grow your Canadian presence. This solution makes it all possible—up to 60% of the cost of setting up an entity and 90% faster.

Ready to take on the Canadian market and grow your global footprint? Let’s get started.

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