Employer of Record in Canada

Simplify hiring employees in Canada by partnering with Velocity Global. Our global Employer of Record (EoR) solution handles hiring, onboarding, payroll, taxes, immigration, and benefits administration while you maintain control of day-to-day tasks and responsibilities.

With our unique expertise and ongoing support, we make it easy for you to compliantly hire distributed talent in Canada and beyond.

Benefits of hiring in Canada

• According to the World Bank, Canada is one of the top countries in the world for ease of doing business. Canada’s innovative business ecosystem and abundant natural resources contribute to the country’s international appeal. Canada is the only G7 country to provide preferential access to more than 50 markets around the globe.
• Canada has a welcoming business climate and a competitive corporate tax rate of 15%. It has the lowest business costs in digital, research and development, manufacturing, and corporate services.
• With six time zones, three oceans, 550 ports, and 18 airports, Canada is the second-largest country on Earth and holds a massive expansion in an interconnected global economy and free trade.
• Canada provides low risk to investors. The country is first among the G7 in political stability. Canada has the top six safest banks in the North American region, and those six are among the top 50 safest banks in the world.

Challenges of hiring in Canada

• Canada’s 10 provinces have separate governments and laws. Expanding businesses must consider how government regulations differ by province.
• Although Canada boasts attractive tax rates, paying and preparing taxes in Canada is an arduous process and takes 131 hours annually, according to the World Bank.
• Canada and the United States share one of the largest bilateral trade relationships in the world. Canada’s dependence on the U.S. comes with risks, requiring businesses to remain cautious of fluctuating economic trends. About 79% of Canadian goods exported to the U.S. are integrated into U.S. supply chains.

Cultural nuances and must-knows of doing business in Canada

• Canadian colleagues are generally reserved but warm up as conversations progress.
• All colleagues present at meetings are welcome to share their opinions regardless of business hierarchy.
• Canadian business culture doesn’t respond well to high pressure or tough bargaining tactics. Canadian professionals prefer calm discussions and win-win outcomes.
• Although building professional relationships is important, Canadian colleagues prefer a clear boundary between personal and professional lives. Over-sharing facets of personal life and expecting Canadian colleagues to give the same in return can make them uncomfortable.
• There is no definitive hierarchy of age or gender in Canadian business culture. However, those with more experience generally hold more managerial positions than less experienced colleagues. Middle management behaves as a filter before reaching upper management.

Minimum wage and salaries in Canada

• In Canada, minimum wages vary by province and annually increase based on the Consumer Price Index.

Probation period in Canada

• Probation periods in Canada vary by province, ranging from three to six months. Employers may dismiss their employees without notice and without payment in lieu of notice during the probationary period.

Bonus payment in Canada

• Employers have no legal obligations to reward employees with a contractual or discretionary bonus. However, bonuses are common. Employers have absolute discretion to decide if an employee receives a bonus. Employees have a legal claim to a bonus if it’s stated in the work contract or enterprise agreement.

Onboarding in Canada

• In Canada, a written employment agreement is not mandatory by law. However, most employers enter into a written employment agreement as best practice. Employment agreements must include the following information:
  • Duration of contract
  • Remuneration, payment schedule, and overtime pay policy
  • Probationary period, if applicable
  • Employee duties
  • Notice period for termination of contract
  • Statutory leaves

Termination and notice periods in Canada

• Employers must provide employees who have three consecutive months of employment with at least two weeks of written notice to terminate their employment agreement.
• Employers may provide payment in lieu of notice.
• The Canada Labor Code does not require employees to notify their employer to terminate their employment agreement. However, if the employment agreement explicitly states a notice period, employees must adhere to it.
• Employees who have completed at least 12 months of consecutive service qualify for severance pay. Severance pay includes two days’ pay for each full year of service, with a minimum of five days’ pay.
• Employers must pay severance in all conditions except for the following:
  • A layoff does not result in employment termination
  • An employment agreement includes an end date and the contract has ended
  • An employee is dismissed for just cause
  • An employee terminates their own employment

Annual leave in Canada

• Employees in Canada are entitled to annual leave based on their years of service, as follows:
  • Two weeks of annual leave after completing one year of continuous service
  • Three weeks of annual leave after completing five consecutive years of service
  • Four weeks of annual leave after completing 10 consecutive years of service

Parental leave in Canada

• Canadian residents who are pregnant, have recently given birth, newly adopted a child, or newly caring for a newborn qualify for employment insurance maternity benefits.
• Employment insurance maternity benefits include up to 15 weeks’ leave and 55% of an employee’s earnings, with a maximum of CAD 650 per week.
• Parental benefits are available to both parents of the newborn or newly adopted child. Parents can receive their benefits simultaneously or one after the other.
• There are two options for parental benefits: standard or extended. Employees must apply standard parental benefits within 52 weeks of childbirth or adoption and extended parental benefits within 78 weeks.
• Standard parental benefits include the following:
  • Up to 40 weeks of leave shared between two parents, where one parent cannot receive more than 35 weeks of benefits
  • 55% of an employee’s earnings, with a maximum of CAD 650 per week
• Extended parental benefits include the following:
  • Up to 69 weeks of leave shared between two parents, where one parent cannot receive more than 61 weeks of benefits
  • 33% of an employee’s earnings, with a maximum of CAD 390 per week

Sick leave in Canada

• Employment insurance sickness benefits in Canada provide employees with up to 15 weeks of financial assistance, including 55% of earnings, with a maximum of CAD 650 per week. Employees must provide a medical certificate to show illness, injury, quarantine, or a medical condition that prohibits them from working.

Regional and national holidays in Canada

• Canada has six federal statutory holidays in a calendar year, which are not included in the minimum paid leave entitlement and are taken in addition to annual leave. The following are national holidays recognized by all of Canada:
  • New Year’s Day (January 1)
  • Good Friday (March or April; the specific day fluctuates each year)
  • Canada Day (July 1)
  • Labor Day (first Monday of September)
  • National Day for Truth and Reconciliation (September 30)
  • Christmas Day (December 25)
• Some Canadian provinces and territories observe regional-specific holidays in addition to federal holidays.

• Canada’s federal employee benefits programs are administered by the Employment and Social Development Canada (ESDC). The ESDC is a coalition of government departments, including the Ministry of Labor, Ministry of Employment and Workforce Development, Ministry of Seniors, and Ministry of Families, Children, and Social Development.
• The ESDC provides and administers general health benefits, medical procedures, and labor force needs to Canadian residents. Health maintenance organizations collect contributions from employers and employees to maintain the Canadian Social Security scheme, which includes pensions, survivor benefits, short-term and long-term disability insurance, healthcare, and paid leave entitlements.

Learn more in our guide to employee benefits in Canada.

• The Canadian federal government considers individuals residents when they stay in the country for at least 183 days in a year.
• Canadian residents are lawfully required to pay income tax on their worldwide income, while non-residents are taxed solely on their Canadian-sourced income.

Tax thresholds in Canada

• As of 2023, the Canadian federal income tax brackets are:
  • Up to CAD 53,359: 15%
  • CAD 53,359 to CAD 106,717: 20.5%
  • CAD 106,717 to CAD 165,430: 26%
  • CAD 165,430 to CAD 235,675: 29%
  • Above CAD 235,675: 33%
• Income tax brackets also vary by Canadian province.

Health insurance in Canada

• Canada’s healthcare system, called Canadian Medicare, is decentralized, universal, and publicly funded. The country’s healthcare is funded and administered by province, each with its own insurance plan. All residents receive hospital and medical services for free.

Pension in Canada

• Employees in Canada are subject to eligibility requirements for the country’s old-age retirement pension, called the Canada Pension Plan (CPP). The CPP is a monthly benefit that retirees receive for the rest of their life. Qualifying conditions for the CPP include the following:
  • Being at least 60 years of age
  • Making at least one valid contribution to the CPP
• The pension is calculated based on the following:
  • An insured employee’s average earnings throughout their career
  • An insured employee’s CPP contributions
  • The age at which an insured employee decides to start their CPP

Tax due dates in Canada

• In Canada, the tax year is the calendar year. Tax returns must be filed no later than April 30. If April 30 falls on a weekend, the deadline is the next business day. The tax filing deadline is June 15 for the self-employed.

Payroll cycle in Canada

• The payroll cycle in Canada is usually bi-weekly, where payments are made twice a month.

Average working hours in Canada

• The Canada Labor Code designates standard working hours to be eight hours daily and 40 hours weekly.

Overtime in Canada

• In Canada, overtime is considered time worked in addition to standard work hours. Employees who work overtime are entitled to one of the following:
  • Pay that is at least 1.5 times their regular wage
  • Paid leave that is equivalent to 1.5 hours for every hour of overtime