A new market presents new opportunities as well as risks. Staff members that are informed and well-equipped on site make your travel smoother and simpler. Hundreds of enterprises have been able to optimally realize their worldwide vision with the aid of Marzuna’s EOR solution. Utilize our infrastructure, knowledge, and internal and external resources to find and employ Canada’s best talent. While you focus on the larger picture and essential company activities, leave the micro-level HR key responsibilities to our innovative solution. Find out more about how Marzuna EOR solutions may assist you in forming a Canadian business organization.
The federal government’s power to alter labor rules in Canada is restricted by the country’s constitution. The federal government alone oversees the public pension benefits and unemployment insurance programs. Other than that, each Canadian province and territory is directly in charge of enforcing its own set of labor laws. Nonetheless, industries like international shipping, telecommunications, and aviation are governed by federal legislation. It may be quite challenging for organizations hoping to expand remotely to navigate the complicated legal landscape. To meet your specific HR demands, EOR Solution may offer solutions that are specially designed.
Canadian labor regulations apply to both native Canadians and foreign workers. The requirement for remuneration for labor, workplace safety, and the prohibition on employers obtaining a foreign worker’s passport or work visa are some of the core rules governing employment in Canada.
Here are some important Canadian Employment Laws to be aware of:
| Title | Explanation |
|---|---|
| Main Sources of Employment Laws | Nine Canadian provinces’ employment regulations are governed by the Common Law. Only in Quebec, the Civil Code of Quebec handles employment legislation. Contracts and laws are the other sources of Canadian employment law.
The Canadian Constitution Act states that provincial governments are responsible for enforcing employment rules throughout the nation, with the exception of certain sectors including banking, telecommunications, and international shipping, which includes port, rail, and air cargo services. |
| Type of workers | In Canada, there are three different sorts of workers: independent contractors, dependent employees, and employees. Employees are free to make use of their Common Law entitlements, such as leave, paid time off, and overtime. Some common law benefits, such as the right to a notice period upon termination, are available to dependent contractors. Under the Common Law, independent contractors are not entitled to any rights or benefits. |
| Trade Union | Employers can recognize unions in the majority of Canadian areas. In Ontario, a trade union must get support from 40% or more of the workforce. The trade union can only negotiate terms and conditions on behalf of the workers once it has been recognized. |
| Employment contract law Canada | Both employers and workers should be aware of their responsibilities and rights under employment law. Although verbal or written employment contracts are acceptable, it is advised to have all terms and conditions in writing to prevent misunderstandings or disagreements.
Employers are required by law to maintain a secure workplace, adhere to all statutory obligations, such as giving reasonable notice before terminating an employee and refraining from discrimination based on protected characteristics. Employees, on the other hand, are obligated to complete their obligations conscientiously and in good faith, preserve employer loyalty, and protect trade secrets and sensitive information even after the end of employment. It is significant to highlight that employment legislation can be intricate; thus, it is advised to get legal counsel to guarantee compliance and prevent any potential legal problems. |
| Working hours | In Canada, a typical workweek is 40 hours long, with an eight-hour workday. Provincial rules, however, control how long employees can work. In a week of seven days, one day off is allowed. |
| Compensation & Bonus | Different industries have different salary compensation. Additionally, it varies depending on the province and work area. However, the average salary in Canada is about CA$54,630.
Bonuses are not required as per Canadian rules. However, employers can cover the clause in individual employment contracts, often as a negotiation tool with senior candidates. |
| Leaves | Although benefits are available, maternity absences are not a paid entitlement in Canada. Maternity leave can last up to 17 weeks, at the employee’s discretion. Additionally, some jurisdictions, like Quebec, have more power since they have insurance that pays out a portion of wages to new parents. While in some other jurisdictions, an employee’s seniority is maintained while on leave, employers in Ontario are not allowed to take any action against new moms.
Additionally, employees are entitled to up to 63 weeks of unpaid parental leave, or 71 weeks if both parents split the time. The leave may be used within 78 weeks of the child’s birth or adoption, whichever comes first. |
| Holidays | After a year of employment, most provinces provide two weeks of paid vacation once a year. Workers in federally regulated businesses are entitled to up to two weeks of paid vacation, followed by three weeks after five years and four weeks after 10. |
| Public Holidays | These are the public holidays in Canada on which employees get paid:
Different provinces have additional paid holidays. When employees work on a holiday, they get a day off and half-pay instead of the same pay. |
| Sick leave | The laws are different in each province. According to Canadian labor laws, 17 weeks of unpaid medical leave are often offered. Employees who have a chronic disease may be eligible for benefits under the Canadian Pension Plan or Employment Insurance. |
| Canadian human rights legislation | Legal discrimination against employees in Canada is severely forbidden. |
| Protecting business interests after termination | Non-solicitation and non-competition are restrictive covenants. |
| Data Protection laws in Canada | The Personal Information Protection and Electronic Documents Act regulates data protection and privacy in all other provinces and territories, with the exception of Alberta, Quebec, and British Columbia. The provincial privacy legislation is in effect in British Columbia, Alberta, and Quebec. Employers can gather employee data in accordance with Privacy Laws, utilise it correctly, and release it when authorised. |
| Employee health benefits in Canada | For the majority of employees, basic health care is covered by Canadian Social Security. Employers provide medical insurance to give other benefits like dental treatment and ambulance services in addition to this fundamental coverage. |
| Additional benefits | Employers in Canada also provide retirement benefits and Workers’ Compensation. But the advantages vary from region to province. |
Employers in Canada are faced with a choice between employing workers and engaging independent contractors, each group enjoying distinct legal rights and protections. Employees, as defined by the Employment Standards Acts, are entitled to statutory protections and benefits, including minimum wages, overtime compensation, payroll deductions, and notice of termination. On the other hand, independent contractors, responsible for reporting their own taxes and HST to the government and receiving payment through invoices, do not have access to these advantages.
A significant differentiation between the two lies in their working arrangements, with employees typically engaged full-time by the business, while contractors operate on a project-specific basis for various clients. Furthermore, contractors are responsible for arranging their own materials, whereas the company takes on the responsibility of providing equipment, uniforms, and office space for employees.
In Canada, the Canadian Labour Code, specifically under its Parts II and III, safeguards the rights of workers by delineating the distinctions between employees and independent contractors. In this context, the determination of an individual’s status as an employee or contractor is influenced by the terms of the employer agreement, and Appendix A of the Code offers a visual representation of the employee/independent contractor spectrum.
To hire employees in Canada, you typically need to have a Payroll Deductions Account and a Business Number (BN). However, with an Employer of Record (EOR) Solution, you can recruit local workers in Canada without the necessity of registering for a BN with the CRA.
The standard hiring process in Canada involves drafting job descriptions, advertising job openings, shortlisting candidates, and conducting interviews. While a formal employment contract is not legally mandated under Canadian labor laws, it’s advisable to outline key terms and conditions, including duties, working hours, compensation, overtime, benefits, probation, and termination.
Popular online job search engines like Indeed Canada, Glassdoor, Monster Canada, CareerBuilder Canada, Eluta.ca, Jobbank, Jobillico, and Jobboom are reliable platforms for sourcing potential candidates. Many businesses have successfully leveraged these platforms to discover exceptional talent in Canada.
However, partnering with an EOR like Marzuna streamlines the entire employment process and relieves companies of additional legal obligations imposed by Canadian labor laws. This includes managing separate employee files, handling documentation such as the Personal Tax Credits Return, Federal TD1, and Source Deductions Return, and verifying new hires’ Social Insurance Numbers (SIN). Our state-of-the-art EOR Canada takes care of all HR requirements from start to finish, allowing you to focus on other aspects of growing your business in Canada. For more information, please don’t hesitate to get in touch.
Our objective is to make the recruitment process as smooth as possible for both you and your new employee. As your Employer of Record in Canada, we handle all payroll and HR-related matters, enabling you to concentrate on your core business activities.
Once we have all the necessary information from you, we arrange a call to discuss HR and employment specifics and address any queries or concerns. Subsequently, the employee is provided with a customized employment agreement in English and French (or another local language) for review and signing.
Our team collects the employee’s tax and banking details to set up payroll, and they offer a local point of contact for any questions related to their position, local HR, or compensation. With our expertise and resources, we aim to complete the entire employee onboarding process within two weeks. Let Marzuna handle the paperwork, allowing you to focus on expanding your business in Canada.
| Probation | In Canada, the trial period lasts about three months. It varies from province to province, though, and in some areas it might last up to six months. The enforcement of employee rights in Canada has never been allowed under the probation regulations in the past. Nowadays, though, things are different because courts are aware of how susceptible new hires might be. |
| Termination of employment in Canada | According to the statutory Canadian Labor Laws, an employee must provide a notice period of one to eight weeks—or compensation in lieu of notice—before they may be fired in Canada. Only when the employee has worked a set amount of time consistently on the job is a notice given.
According to the Canada Severance compensation Law, employees who are fired or laid off after serving a minimum of 12 months are entitled to severance compensation. For each year of service prior to termination, the severance compensation is equal to the wage for two days. |
For businesses embarking on expansion into Canada, careful planning and a thorough understanding of regional labor laws and regulations are indispensable. When it comes to cost-effective global expansion, partnering with Marzuna Employer of Record (EOR) services can yield significant advantages. With our all-encompassing platform, you can engage local workers in Canada without the need to navigate the intricate web of Canadian labor regulations.
Recruiting employees in Canada can indeed be a complex endeavor, but with an EOR company as your partner, you can relax knowing that every aspect of onboarding is seamlessly managed through a centralized platform. From hiring employees on your behalf to ensuring full compliance with federal and provincial labor laws, processing salaries, benefits, and handling taxation – we’ve got it all covered. All you need to do is convey your specific requirements, and we will tailor our solution to precisely fit your company’s needs.
In addition to our comprehensive hire-to-retirement services, our globally-enabled HR ecosystem, transparent flat-rate pricing with no hidden fees, an intuitive self-service platform equipped with various tools for easy access, round-the-clock support, and rigorous compliance with personal data regulations to safeguard your employees’ privacy, Marzuna’s EOR services also include legal coverage. This holistic approach ensures your expansion into Canada is not only smooth but also fully compliant and legally secure.
In order to work in Canada, foreign people must first obtain one of the two types of work permits that are available: open or employer-specific. To be eligible for a Canada work visa, an applicant must prove their health, promise not to work for organizations that are prohibited from hiring them or for the sexual or striptease industries, and demonstrate that they will leave Canada when their work permit expires. In addition to the prerequisites of having a clean criminal background and stable finances, further documentation may be needed. Different requirements apply depending on whether the applicant is submitting from within or outside of Canada.
Types Of Work Permits
| Openwork Permits | A foreign national may choose to work for any employer for the duration of the work permit with this sort of work visa. The applicant has three options when applying for this kind of visa: from within Canada, abroad, or from a Canadian port. |
| Employer-specific work Permits | During the period that the work permit is valid, the foreign national is only permitted to work for one employer. |
In Canada, a work permit is necessary. In Canada, there is no such thing as a work visa without a job offer.
Canada Employer Payroll Taxes
| Process | Detail |
|---|---|
| Confirm if payroll deductions are required or not | It is necessary to define the employer, payers, and trustees. |
| A new employee has to be set up | Form TD1 must be completed, and the employee’s Social Insurance Number (SIN) must be requested for the Personal Tax Credits Return. |
| Opening of Payroll Program accounts | Sending deductions requires the payroll number. |
| Deductions and contributions calculations | Canada Employer country. |
| Remit source deductions | Canada Determining the employer’s payroll taxes and contributions is necessary.
The Canadian employer tax rate was lowered by the government in 2020 from 1.62% to 1.58% in an effort to improve the country’s working conditions. |
| Filing returns on Canadian payroll and tax services | An annual overview of salary and deductions must be submitted. |
The tax rates in each Canadian province vary. The T4032 Payroll Deduction Table lists the deduction tables for employment insurance, payments to the Canada Pension Plan, and federal and provincial tax deductions. For further information, see Canada.ca, the nation’s official website. To make things simpler and quicker for you, you may also choose payroll outsourcing in Canada with an EOR system.
Employer Taxation
| Tax | Explanation |
|---|---|
| Federal Tax | 38% 28% after a federal tax abatement *Individual provinces and territories – lower rate (usually around 2%-3%) and a higher rate (between 11.5%-16%). |
| Canada Pension Plan | 5.25% |
Employee Taxation
| Tax | Explanation | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Income Tax Rates |
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| Canada Pension Plan | 5.25% |
In Canada, bonuses are a typical occurrence. If an employee quits before the bonus is due, is the company still required to pay the incentive? The circumstances of the separation, such as whether the employee resigned or was dismissed by the company, will be taken into account when making the decision. What occurs will probably depend on the contract’s conditions.
Expanding your business in Canada is a smart decision due to the vast opportunities available. One of the ways to set up a business in Canada is by incorporating a holding company or taking the EOR route. The Canadian legal system permits the establishment of a holding company in Canada.
To incorporate a holding company or subsidiary in Canada, you need to follow these steps:
