Employer of Record in Canada: A Guide for US Businesses

Canada has become a magnet for international businesses. The country combines economic stability, favorable immigration policies and a workforce recognized for its education and technical skills.

Since it’s also the top destination for international job seekers, employers also get access to global talent in Canada.¹ Organizations that want to grow in the country without establishing a local entity can work with an employer of record in Canada for administrative convenience.

In this guide, we discuss the role of an employer of record (EOR) and how working with them takes the load off employers. We also share some notable companies providing EOR services in Canada. We'll also discuss BatchTransfer, which can help your team send international business payments at low cost.

What Is an Employer of Record in Canada?

An employer of record (EOR) in Canada is a third-party organization that officially employs workers on behalf of a foreign company. It saves employers from the cost and headache of setting up a local subsidiary. Businesses can instead partner with an EOR that already meets Canadian employment laws.

The arrangement allows the foreign company to direct the employee’s day-to-day responsibilities while the EOR becomes the legal employer. So, they handle contracts compliant with provincial labor codes, manage payroll, deduct and remit taxes and administer statutory benefits.

In Canada, an EOR also manages workplace obligations and helps employers maintain adherence to employment standards that vary across provinces.

Importance of Working With an Employer of Record in Canada

Employment in Canada comes with risks, and an EOR can help deal with them. First, misclassifying employees as contractors is a major risk that can result in fines and back pay. An EOR helps you classify employees correctly to avoid these problems.

Besides, employers also have to meet obligations around payroll, taxes, pensions and statutory leaves. If you miss deadlines for any of these contributions, you may face penalties and interest, which can accumulate quickly.

Similarly, incorrect administration of provincial labor laws, such as leave entitlements and notice periods, can also result in legal disputes. An EOR mitigates these risks and protects your business from fines and legal challenges.

More importantly, it helps you establish a presence compliantly so that you have a solid reputation from the start. In a new country, this might just be the factor that sets you apart from the local competition.

Benefits of Using an Employer of Record in Canada

Companies that expand in Canada with an EOR enjoy a number of benefits. Some of them are as follows:

Benefit	Description
Faster Market Entry	It can take months to create a legal entity in Canada. Plus, you need a lot of upfront investment. An EOR sidesteps that process and gives organizations the ability to hire Canadian employees almost immediately.
Compliance Across Provinces	Canada’s employment laws differ between regions, and an EOR can manage these variations. They can draft compliant contracts and handle statutory leaves, overtime pay and mandatory contributions. Their regional understanding of the laws helps companies avoid costly mistakes and maintain credibility with the Canadian regulators.
Reduced Operational Strain	Payroll, tax filings and benefits administration consume substantial resources when managed in-house. When businesses transfer these responsibilities to an EOR, they can keep their internal teams focused on growth and strategy rather than local administrative requirements.
Access to Local Talent and Expertise	An EOR can provide insights into the Canadian labor market, including competitive salary ranges, benefit expectations and recruitment trends. Companies can use this information to attract and retain top talent. Plus, these insights help you make informed hiring decisions in competitive fields.

How to Work With an EOR in Canada

An EOR helps businesses enter the Canadian market without tackling too many administrative responsibilities. But working with one isn’t as simple as choosing one randomly and handing off your employees’ data.

It starts with proper EOR selection, followed by streamlined employee management. Here’s how to make this happen.

Select an EOR Provider

As mentioned, employment regulations differ between provinces in Canada. So, the first thing to keep in mind when selecting an EOR provider in Canada is that they should be familiar with the labor laws of the province you want to establish your business in.

Their experience is also important. An EOR that has a solid track record in your industry or the type of roles you plan to hire can navigate sector-specific employment practices more effectively.

For example, they’ll understand typical benefits packages for businesses like yours. They can also structure compliant contracts for technical and operational positions.

During the selection process, consider the EOR’s service offerings, too. Some only provide payroll and compliance, while others offer full support for onboarding and benefits administration. Make sure the provider has the infrastructure to manage employee records and update processes as laws change.

There are plenty of options for you to choose from. Some of the top EOR providers in Canada include Remote, Safeguard Global, Rippling, Oyster HR and Velocity Global.

Specify the Role and Employment Terms

Outline the position you plan to fill with the EOR. Include responsibilities, expected outcomes, compensation, benefits, work hours and location.

Then, give this information to the EOR. They’ll use it to create an employment contract that complies with provincial laws.

Formalize the Employment Agreement

Once terms are defined, the EOR signs the contract with the employee and becomes the legal employer. Your organization retains control over daily activities, task assignments and performance oversight.

Employees remain fully integrated into your team and company culture, while the EOR manages regulatory and legal responsibilities in the background.

What Does an Employer of Record in Canada Do For Your Business

As opportunity-rich as Canada is, a complex web of employment laws, payroll cycles, tax rules and benefit structures sits behind it. An EOR can handle the legal and administrative framework of hiring in Canada on your behalf.

Here’s what an EOR can do for your business.

Hire in Canada

Employment contracts have become standard practice in Canada. They define rights and responsibilities, reduce risk and set the foundation for a strong relationship between employer and employee.

Typically, these contracts cover the following:

• Contract length
• Pay schedule and overtime rules
• Job duties
• Probationary terms
• Termination notice
• Statutory leave entitlements

Since provinces have different employment laws, errors in drafting can create liabilities. An EOR prepares compliant agreements that meet provincial standards and reflect company policies. So, you can extend offers quickly without any legal hassles.

Manage Probationary Periods

Probation periods in Canada range from three to six months, depending on the province.² During this time, employers can dismiss workers without notice or payment in lieu of notice.

An EOR manages these rules carefully. They align contracts with provincial standards and track timelines for probationary completion. Their assistance helps companies reduce the risk of wrongful dismissal claims.

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Pay Employees With BatchTransfer

BatchTransfer has an easy-to-use instant payments system that allows you to make multiple payments, for both domestic and international, in one go. Small businesses and enterprises can get access to BatchTransfer with no additional cost after getting a Wise Business account.

BatchTransfer’s core strengths for payroll:

What sets BatchTransfer apart is its commitment to providing the mid-market rate for currency conversions. This means that businesses get a fair and transparent deal when making international payments.

Another perk of using BatchTransfer for international payroll is its extensive coverage of over countries and currencies! With features like automatic payment scheduling and API integration, small businesses can streamline their payroll process, freeing up valuable time and resources for other important tasks.

• How can businesses use BatchTransfer for payroll?: Businesses can send up to 1000 payments with a single click with BatchTransfer. US-based business can access BatchTransfer at no extra charge.

• Connect to your accounting software: You can easily manage and reconcile your mass payments through accounting software integrations such as QuickBooks or Xero.

Start making payments
with BatchTransfer >>

Wise Features	Price
Mid-market exchange rate for currency conversions Payments to countries in currencies Delivery estimator, real-time tracking, pay-to-email & more	Free to sign up for US business accounts, no monthly fees, no minimum balance requirements. Transparent and competitive rates Free access to API, BatchTransfer, and integrations features. You can also get major currency account details for a one-off fee to receive overseas payments.

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Manage Hours of Work and Overtime

The Canada Labour Code sets a baseline of eight hours per day and 40 hours per week, though provincial standards may differ.³ Overtime pay is triggered once these limits are exceeded, and the rates vary depending on location.

An EOR monitors working hours against local rules. They also apply the correct overtime pay rates and keep accurate records for compliance audits.

Handle Payroll

In Canada, running the payroll isn’t just paying your employees’ wages on time. You also have to comply with provincial wage standards and withhold the correct taxes. Then, you need to report these figures accurately to the relevant authorities.

Many companies pay employees on a biweekly cycle, and bonuses are discretionary unless stated in the contract. The minimum wages also differ by province and are adjusted annually.⁴

• Federal: CAD 17.75 (All employees must be paid at least the federal minimum wage. If a province or territory has a higher rate, the higher wage applies.
• Alberta: CAD 15
• British Columbia: CAD 17.85
• Manitoba: CAD 16
• New Brunswick: CAD 15.65
• Newfoundland and Labrador: CAD16.00
• Northwest Territories: CAD 16.95
• Nova Scotia: CAD 16.50
• Nunavut: CAD 19.75
• Ontario: CAD 17.60
• Prince Edward Island: CAD 16.50
• Quebec: CAD 16.10
• Saskatchewan: CAD 15.35
• Yukon: CAD 17.94

An EOR calculates the wages and deductions for your Canadian employees. They also issue timely payments to the regulatory authorities and administer contractual bonuses. Many of them have payroll systems with centralized reporting, so you can view periodic reports.

Withhold Taxes

Taxes are one of the most intricate aspects of employment in Canada. The federal government sets brackets ranging from 14% to 33%, while each province applies its own rates on top.⁵

Taxation becomes even more complex when you account for filing deadlines, contribution requirements and residency rules. An EOR manages every step, such as withholding federal and provincial taxes, filing payroll taxes on time, managing contributions to programs like the Canada Pension Plan (CPP) and Employment Insurance, and issuing year-end tax forms to employees.

Manage Benefits and Pensions

Canada has a universal healthcare system, yet private benefits remain common. Employees expect supplementary health, dental or vision coverage as part of a competitive package.

The Canada Pension Plan (CPP) is a national plan that employers have to contribute to. It provides retirement income for employees who contribute during their working years. Contributions are based on annual earnings within defined limits.

The maximum pensionable earnings are CAD 71,300, with a contribution rate of 5.95% for both the employer and the employee.⁶

Similarly, Employment Insurance supports workers in the event of job loss or certain types of leave. Premiums are deducted directly from insurable earnings, with the employee contributing 1.64%.⁷ The employer has to contribute 1.4 times this amount.⁸

For international companies hiring in Canada, contributions are not optional. An EOR manages these deductions and keeps a record of them for your annual filings. They can also coordinate private health or dental plans to integrate benefits into your payroll.

Handle Leaves and Termination Rules

Employees in Canada are entitled to statutory leaves, including maternity and parental leave, which vary across provinces. Termination rules also depend on local regulations, with notice periods or severance payments required after certain lengths of service.

An EOR calculates the severance and notice correctly so that your business stays compliant. If needed, they guide you on lawful termination practices. Plus, they administer statutory leaves for your employees in the country.

Here are the standard leaves available to employees in Canada:

• Annual Leave: After a year of continuous service, employees get two weeks of paid vacation. Once they’ve completed five years of continuous service, the paid vacation increases to three weeks.⁹
• Maternity Leave: Expectant mothers may take up to 15 weeks of maternity leave, with EI benefits covering 55% of regular earnings, capped at CAD 695 per week.¹⁰
• Parental Leave: Parental leave is available to both parents of a newborn or newly adopted child. Parents may share leave, either at the same time or one after the other. The standard leave is up to 40 weeks in total, with one parent limited to 35 weeks.¹¹
• Sick Leave: Employees who cannot work due to illness, injury, quarantine or a medical condition may qualify for EI sickness benefits. They get up to 15 weeks of financial support at 55% of earnings, with a maximum of CAD 695 per week.¹²

Canada also observes federal public holidays, which apply in addition to annual leave entitlements.

Popular EORs in Canada

Let’s take a look at some well-known employers of record in Canada.

1. Remote

Remote provides legal employment support in Canada, taking care of payroll, tax filings and compliance at both the federal and provincial levels. It handles deductions for CPP, EI and income tax automatically. Plus, Remote gives businesses access to health benefits and retirement contributions.

2. Oyster

Oyster focuses on compliance that respects the provincial differences across Canada. Its system supports remote teams with secure access controls, while benefits like health care, parental leave and RRSPs can be built into local packages.

3. Velocity Global

Velocity Global takes a high-support approach, as it offers immigration sponsorship, benefits management and more in Canada. Its service also includes personalized legal guidance.

4. Papaya Global

Papaya Global is known for its advanced workforce analytics and strong support for payroll accuracy. Employers get detailed dashboards that track costs, along with automated CRA, CPP and contributions. Benefits administration and province-based reporting are also a part of its model.

How Much Does It Cost to Use an Employer of Record in Canada?

The cost of an EOR in Canada depends on the provider and your workforce. Similarly, the more services you need, the higher the cost will be. Most EORs charge a monthly fee per employee, while some use custom pricing based on headcounts or features.

Flat-fee models are common, with businesses having to pay a certain amount per employee, per month. These fees typically cover payroll and basic compliance, including statutory deductions and benefits administration.

If you need additional services such as work permit sponsorship or equity management, costs can climb higher. Larger providers like Velocity Global that offer legal support may offer custom quotes. These may be more suitable for enterprises with larger workforces.

Keep in mind that the monthly EOR fee is in addition to an employee’s salary and statutory contributions. So, you should factor in all these coverages and supplemental benefits when you estimate total employment costs.

Frequently Asked Questions

Can an EOR hire employees in multiple Canadian provinces?

EORs understand provincial labor laws and statutory benefits across the board. So, the same EOR can help you hire employees in multiple provinces while keeping you compliant with local rules.

How does an EOR handle payroll in Canada?

An EOR calculates employee wages, withholds federal and provincial taxes, manages CPP and EI contributions and issues payslips. Payroll cycles and statutory reporting are managed automatically, so companies stay compliant even without any in-depth knowledge of Canadian regulations.

Are contractors covered by an EOR in Canada?

Many EORs in Canada also manage payroll and other administrative tasks for independent contractors. They can also convert contractors to full-time employees under local labor laws. Plus, they maintain proper classification to prevent legal disputes and fines.

Can Canadian EORs handle immigration and work permits?

Some EORs offer immigration support to help foreign hires obtain work permits under Canadian programs. International employees can then work legally in the country, without the hiring company having to spend months dealing with complex immigration processes themselves.

How quickly can a company start hiring with an EOR in Canada?

An EOR speeds up the hiring timeline. Contracts, payroll setup and compliance are managed immediately, so companies can onboard employees within weeks.

How does an EOR in Canada handle provincial labor law differences?

Canada’s provinces have unique rules for minimum wage, vacation, statutory holidays and termination. An EOR can adapt contracts, payroll and benefits for each process to keep businesses compliant across multiple jurisdictions.

What are the risks of not using an EOR in Canada?

Often, when companies try to navigate local labor laws themselves, they risk employee misclassification, missed tax filings, unpaid statutory contributions and legal disputes. The lack of familiarity with the country’s employment laws can further tarnish the company’s reputation. Repeated non-compliance can also harm their legal standing with regulatory authorities.

How is employee data managed by an EOR in Canada?

EORs in Canada comply with the Personal Information Protection and Electronic Documents Act (PIPEDA). Employee records, payroll data and sensitive documents are stored securely, with access controls to protect confidential information.

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Sources:

1. Canada The Top Destination for International Job Seekers, Report Says | Immigration
2. Probationary Periods and Employment Standards | Employment Lawyers
3. Hours of work - Federally regulated workplaces | Canada
4. Current and Forthcoming General Minimum Wage Rates in Canada | Canada
5. Tax rates and income brackets for individuals | Canada
6. 2025 Canada Pension Plan (CPP) and Employment Insurance (EI) Rates (includes 2024) | SSL Group
7. Calculate payroll deductions and contributions | Canada
8. Employment Insurance – Information for employers | Canada
9. Annual vacations and general holidays for employees working for federally regulated employers | Canada
10. EI maternity and parental benefits | Canada
11. Digest of Benefit Entitlement Principles Chapter 13 - Section 1 | Canada
12. EI sickness benefits | Canada