How Much Does it Cost to Employ Remote Workers in Canada

How Much Does it Cost to Employ Remote Workers in Canada?

International Hiring Is on the Rise

The popularity of flexible and remote work arrangements continues to grow. 70% of people globally now work remotely at least once a week, and 53% work remotely at least half of the week. The advantages of flexible and remote work arrangements are clear: employees save time and money without a commute; employers lose less productive time to illness and delay, and can shrink their infrastructure investments. The majority of global organizations now offer remote work options, but some are still reluctant to make the change.

That reluctance is driven by two facts: knowledge and cost. Organizations that lack expertise in remote work strategies may not know how to set up remote teams, or how to manage their payroll and HR needs. Worse, they may fear the costs of setting up remote arrangements – despite studies showing that remote work offers a huge cost savings for both employers and employees alike. But what does that savings really look like?

Breaking Down the Cost to Employ 

There are a number of costs associated with employment, some of them more obvious than others. Salary, payroll taxes and benefits are the first that come to mind. Next you might think of infrastructure costs: setting your team up in an office and the time and money spent on getting them set up in your systems. Then there are HR costs like onboarding, training and employment compliance.

All of these costs exist in remote work arrangements, but unlike with in office teams they can be optimized and carefully controlled. Infrastructure costs don’t exist and HR can be outsourced or fully digitized, to ensure the same satisfying onboarding experience every time.

Cost to Employ Remote

Most employment costs should be understood as a percent of base salary. Taxes, vacation pay, insurance and some fees are all pegged to base salary.

  • Payroll Taxes ~10% of Base Salary
  • Benefits ~15% of Base Salary
  • Vacation Pay ~4-6% of Base Salary
  • Outsourcing Fees ~5-25% of Base Salary

Payroll taxes and vacation pay are fairly static costs. Each year the Canadian federal government issues updated CPP and EI rates, while provincial governments and workers compensation boards do the same for EHT and  compensation premiums.

Infrastructure and onboarding costs, however, are static across much of the workforce. Executives, middle managers and customer service representatives all take time (and money) to find, hire and onboard. They all come with relatively fixed equipment costs. It’s in these areas where employers can find the most savings. Remote teams require no additional infrastructure spending (ie. new desks) and only the cost of adding new users to your existing applications.

HR costs too, can be minimized, as a purely digital hiring and onboarding experience is easily optimized for speed and cost. Digital onboarding might consist of a PDF contract, some self-directed learning modules and a welcome video. Or it might include a video call with an HR rep or team mentor. Because the onboarding experience is fully remote, it minimizes distractions and time spent travelling to the office, and the number of employees needed to deliver a good onboarding experience.

In short, remote onboarding is easier, faster and less expensive.

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