How to Hire Remote Employees In

Canada

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The Basics

Currency
Canadian Dollar (CAD)
Employer Taxes
12.6%
Payroll Frequency
Bi-Monthly/Monthly
Official Language
French, English
OVERVIEW

Employment in

Canada

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors

  • Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
  • Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
  • Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.

Disadvantages of Hiring Independent Contractors

  • Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
  • Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
  • Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
  • Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.
EMPLOYMENT IN
Canada

Set up a subsidiary in

Canada

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Canada can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Canada, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Canada.

EMPLOYMENT IN
Canada

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Hire with Panther

Paying Remote Employees

Paying employees in Canada is not the same as paying workers in your own country. Employees have to be paid using Canada's employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Canada

 Specific Information

Working Hours

A full-time workweek is 40 hours.

Overtime

Overtime pay is paid for every hour after 44 hours weekly at a rate of at least 150% the regular pay. The maximum number of hours an employee can work is 48 hours a week unless agreed upon in writing by the employee and employer.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Taxes

Payroll Tax

Employer

12.6% - Employer Contributions
- Employer Contributions

Minimum Wage

The general minimum wage in Ontario is 14.25 CAD per hour.

Payroll

Pay Cycle

Salaries are paid bi-weekly, bi-monthly, or monthly. The paydays are decided between the employee and employer.

13th Salary

There are no provisions in the law regarding 13th salaries.

Leave

Paid Time Off (PTO)

Employees that have been employed for less than 5 years are entitled to a minimum of 2 weeks’ paid leave, while employees who have worked over 5 years are entitled to 3 weeks.

Public Holidays

There are 9 public holidays in Ontario. More information can be found here.

Sick Days

Employees are entitled to 3 unpaid sick days a year if they have been employed for more than 2 weeks.   

Maternity Leave

If the woman has been employed for at least 13 weeks, she is entitled to up to 17 weeks of unpaid maternity leave. Maternity leave can start any time starting 17 weeks before the due date. 

Paternity Leave

Paternal leave falls under parental leave. 

Parental Leave

At the end of the maternity leave, the mother is able to extend the leave with parental leave for up to 61 weeks of unpaid parental leave. Parental leave rights also extend to the father. 

Termination

Termination Process

If an employee has been employed for at least 3 months, the employer is obligated to provide the employee with written notice of termination or termination pay.

Notice Period

The employee is obligated to give at least 2 weeks’ notice.

The length of the notice period that the employer is obliged to depends on how long the employee has been employed:

Length of employment           Notice Period
Less than 1 year                      1 week
1-3 years                                  2 weeks
3-4 years                                 3 weeks
4-5 years                                 4 weeks
5-6 years                                 5 weeks
6-7 years                                 6 weeks
7-8 years                                 7 weeks
8+ years                                  8 weeks

Severance Pay

In order for the employee to qualify for severance pay:

The employee must have completed at least 5 years of employment
The company has a payroll of over 2.5 million CAD per year or have terminated over 50 employees in the past 6 months due to all or part of the company closing
The severance pay amount is calculated by multiplying the weekly salary amount by the number of years the employee has been employed.

Probation Period

3 months