Expanding your team into Canada? Avoid the administrative challenges of setting up a legal entity and navigating the country’s legal framework. With an Employer of Record (EOR), you can simplify the process of hiring employees in Canada.
By managing payroll, taxes, and compliance with provincial laws for you, an EOR eliminates the administrative burden, allowing you to focus on your core activities while ensuring you meet all legal requirements.
Let’s explore how an EOR works, its benefits, and the associated costs.
What Is an Employer of Record (EOR)?
An Employer of Record (EOR) is a third-party organization that handles the administrative and legal responsibilities of employing staff on behalf of your company in a target location. In this arrangement, the EOR becomes the legal employer of your workers, managing payroll, taxes, and compliance with local employment laws, while you direct the employees’ day-to-day activities.
The legal relationship involves the EOR assuming liability for employment contracts and statutory obligations, while you benefit from the workforce’s productivity without the administrative burden. This partnership ensures that your business stays compliant with provincial and national regulations.
Core services offered by EOR companies include:
- International payroll processing
- Compliance with labor laws
- Management of employee benefits
- Tax withholding and remittance
For more details, see: Working With an EOR: Who Is The Employer?
How Does an EOR Work in Canada?
An Employer of Record (EOR) provides a streamlined solution for companies looking to hire employees in Canada without establishing a legal entity.
The process typically begins with an initial consultation where the EOR assesses the company’s needs and outlines the services they will provide. This includes understanding their business objectives, workforce requirements, and compliance obligations specific to Canadian provinces.
Once the consultation is complete, the EOR takes over the role of the legal employer. They handle all aspects of employee onboarding, ensuring that employment contracts and agreements meet local labor laws. This includes verifying that new hires are legally eligible to work in Canada and that all necessary documentation is in order.
Payroll processing is another critical function managed by the EOR. They ensure that employees are paid accurately and on time, adhering to Canadian payroll regulations. This includes calculating and withholding taxes, as well as remitting them to the appropriate government authorities.
Additionally, the EOR manages employee benefits administration, which can include health insurance, retirement plans, and other perks that are compliant with local standards. This ensures that employees receive competitive and comprehensive benefits packages.
The EOR also maintains ongoing compliance with Canadian labor laws, adapting to changes in legislation and keeping clients informed of any updates. This continuous oversight allows companies to focus on their core operations while confidently relying on the EOR to manage the complexities of Canadian employment regulations.
Benefits of Using an EOR in Canada
If you are looking to hire employees in Canada, partnering with an EOR can provide numerous advantages, including:
Compliance
EORs ensure strict adherence to Canadian labor laws, tax regulations, and other legal requirements, mitigating the risk of non-compliance. This ensures your business remains within legal boundaries and avoids potential penalties.
Cost Savings
By using an EOR, you can significantly reduce expenses associated with setting up a legal entity in Canada, such as legal fees, registration costs, and administrative overhead. This allows your business to allocate resources more effectively towards growth and operations.
Faster Hiring and Onboarding
An EOR accelerates the hiring and onboarding process, reducing time to market. With established systems and expertise, you can quickly integrate new employees, allowing businesses to capitalize on opportunities without delay.
Reduced Legal and Financial Risks
Engaging an EOR minimizes legal and financial risks by outsourcing the liability for employment contracts and statutory obligations. This provides peace of mind and allows you to focus on strategic objectives.
Access to Local HR and Legal Expertise
EORs provide access to local HR and legal expertise, offering insights into regional employment practices and regulations. This knowledge is invaluable for navigating the complexities of the Canadian workforce landscape.
Flexibility
An EOR allows your business to easily scale their workforce up or down according to changing needs, providing the flexibility to adapt to market dynamics without the constraints of a permanent legal entity.
Simplified Payroll and Tax Management
EORs manage payroll and tax obligations, ensuring accurate and timely processing, which reduces administrative burden and enhances operational efficiency. This enables you to focus on core activities while maintaining compliance.
Costs of Using an EOR in Canada
When considering an Employer of Record in Canada, understanding the cost structure is crucial for budgeting and financial planning. EOR services can be priced in various ways, depending on the specific needs of the business and the complexity of services required.
- Percentage-based fees: Some EORs charge a percentage of the employee’s salary. This structure aligns the EOR’s fees with the compensation levels of the employees they manage.
- Fixed fees: A flat monthly or annual fee can provide predictability in budgeting. This option is often preferred by companies with stable workforce numbers and simpler service needs.
- Per-employee fees: Charging on a per-employee basis is common, especially for companies with fluctuating staff levels. This model allows businesses to scale costs in line with their workforce size.
Several factors influence EOR pricing:
- Number of employees: Larger workforces may benefit from volume discounts, while smaller teams might face higher per-employee costs.
- Complexity of payroll: Businesses with diverse payroll needs, such as varying tax jurisdictions or international employees, might incur higher fees due to increased administrative effort.
- Benefits packages: The type and scope of employee benefits required can significantly impact costs, especially if the packages are extensive or need customization to meet local standards.
How Canadian Payroll Services Can Help
An Employer of Record in Canada can accelerate your access to top talent, enabling fast, cost-efficient, and fully compliant hiring, without the delays and complexities of establishing a local entity.
At Canadian Payroll Services, we help global companies hire remote workers in Canada. As your EOR partner, we manage hiring, payroll, compliance, and benefits for you, and provide support at every step of the way.
Seeking to hire employees in Canada? Contact us today for a tailored quote based on your business’s unique needs.
