Complete Guide to Hiring in Canada

Why Hire in Canada?

Canada is a growing country with a highly skilled workforce. But it also has a much smaller employment market than other G8 countries like the US, UK, or France. This forces many talented candidates to look to the world for bigger opportunities – while staying at home as a remote worker! Remote work and labour outsourcing for global companies is booming in Canada. They have discovered that hiring in Canada has many benefits, including:

Three persons working together

Team Integration

Canada is a diverse country that welcomes highly skilled immigrants from all over the world. Canadians speak over 200 languages and, as of 2023, 20% of the population is foreign born. Protection of that diversity is enshrined in the law of the land, and respect for it is a core part of Canadian culture. Tolerating and adapting to differences and building cultural competency is just part of the Canadian work experience.

Because Canadian culture has many similarities to those of the USA and the UK, is even easier for companies from those countries. They share a common language, broad legal framework, and workplace culture.

Talent Benefits

With booming tech and finance sectors, Canada has become home to some of the world’s most talented workers. Over 30% of Canadians graduate with a university degree, and over 50% of the population holds a university degree or higher. Canadians are equally accustomed to commuting long distances to work and to remote working, and bring a high degree of flexibility to their work.

Financial Benefits

While Canada is not the first country you might think of for labour outsourcing, it is a top market for companies looking for highly skilled tech, finance, and creative employees. Compared to countries that hire in Canada, including the USA, UK, Germany, and Singapore, the country has a smaller employment market and lower wages. This drives Canada’s most talented workers to be open to international opportunities that allow them to work remotely from home.

Because Canada is a large country spanning 7 timezones, the country has also become a top target for expanding customer service teams that can work outside of your company’s normal hours.

Two woman working together
Beautiful Toronto Skyline

Market Overview

  • Population: 39.10 million
  • Currency: Canadian dollar
  • Official Languages: English and French
  • Most Common Languages: English, French, Mandarin, Cantonese, Punjabi
  • Capital: Ottawa
  • Economic Centres: Toronto, Montreal, Vancouver
  • Industries: Oil and Gas, Mining, Finance and Insurance, IT and Technology, Manufacturing, Agriculture, Service Sector
  • Time Zones: AST, NST, EST, CST, MST, PST
  • Date Format: mm/dd/yyyy
  • Political System: Constitutional monarchy and parliamentary democracy
  • Social System: Welfare state including publicly funded healthcare, subsidized post-secondary education, and employment insurance

How to Hire in Canada

Global companies have three options to hire in Canada: open a local subsidiary, hire only temporary contractors, or hire employees through an Employer of Record.

Open a Subsidiary

Opening a local subsidiary allows global companies to operate in Canada and hire local teams. After incorporating your business, you must register with the Canada Revenue Agency to pay tax and your local Worker’s Compensation Board for workplace insurance. Subsidiaries are a great option for companies that want to expand operations into Canada but not for those just looking to hire Canadian workers.

A woman looking at the camera with a globe in her hands

Hire Contractors Only

Global companies that don’t want to open a local subsidiary can choose to hire employees through an Employer of Record or hire contractors. Contractors are a great option for employers looking specialists to work on specific projects, or to supplement their in-house team. However, contractors are a temporary solution, not a replacement for employees. In Canada, contractors are defined by their working relationship, not the terms of their contract. Companies looking for long term, in-house resources must hire employees.
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Hire Through an Employer of Record

Hiring through an Employer of Record (EOR) allows global companies to hire Canadian employees without opening a local subsidiary. Employer of Record providers hire your workers and then lease them back to you. In doing so, they take on all the duties of local compliance and payroll, including leave management, expense management, and taxes. EORs use their local expertise to advise their clients on compensation, create benefit packages, and provide Human Resources support. Hiring through an EOR is the best option for global companies looking to hiring long-term Canadian employees.

What is an Employer of Record (EOR)?

Like Professional Employment Organizations (PEO), Employers of Record (EOR) handle a range of HR, payroll, and compliance tasks for companies looking to outsource. PEOs and EORs provide many similar services but there is one key difference that make EORs such valuable partners for international companies. EORs empower you to hire employees and contractors compliantly, without opening a local subsidiary, by hiring your team onto their own establishment and then contracting them to you to direct. They assist you in staying compliant throughout the employee life cycle, providing contracts and documents current with the latest employment laws, handling tax deductions and remittances, and advising your employer obligations.

Ensure You and Your Contract Workers are Compliant

Canadian employment law is complex and staying compliant can be a challenge for companies new to the market. Outside of a few federally regulated industries, the treatment of employees is governed by provincial employment law, which differs significantly from one territory to another. Canadian payroll and tax law has federal and provincial components. In addition to basic taxes, provinces require employees to contribute to social welfare programs, carry Worker’s Compensation insurance and some have special health taxes.

Key Hiring Facts

Canadian employment law has a federal and a provincial component. Federal employment law applies to federal government employees and those working in federally regulated industries. Provincial employment law applies to all other employees and varies greatly from one province to another.


Employers in Canada are required to provide paid leave to their employees. Vacation accrues throughout the year and increases over years of service. Canadians receive an average of two weeks paid vacation per year. Learn more about provincial vacation rules here.


Canadians receive an average of 10 statutory holidays per year. Statutory holidays are paid, province or country-wide holidays observed by all non-essential and non-hospitality businesses. Employees who work on statutory holidays receive a holiday premium or time off in lieu.


The average Canadian non-exempt employee receives overtime pay at time and a half after 40 hours of work. Managers, IT workers, and many other categories of employee are exempt from overtime. Some provinces have overtime rate minimums. Learn more about provincial overtime rules here.

Employment Insurance

All Canadian employees and some Canadian workers can draw from the national Employment Insurance program. EI provides wage loss relief to Canadians on sick leave, parental leave, or who have lost work due to no fault of their own.

Parental Leave

Canadians who have contributed to EI can take paid, protected parental leave. Parental leave is available to all parents of biological and adopted children. Parental leave can be split between both parents and can be started before or after the child arrives. Some employers choose to opt to top up EI parental leave.

Sick Days

There is no national standard for protected or paid sick days in Canada. Each province has different regulations for job protection and mandatory paid sick days. Learn more about sick time and sick leave here.

Canada Pension Plan

All Canadian workers 18 years and older contribute to the national Canadian Pension Plan. They can choose to retire at age 60 and begin receiving CPP pension payments. CPP is designed to supplement Canadians’ own retirement savings, not replace them. Many employers offer contributions to those savings through RRSP matches.

Workers Compensation

In Canada, worker’s compensation insurance is managed by provincial Worker’s Compensation Boards. Worker’s comp is mandatory and cannot be replaced by private insurance. Learn more about provincial WCB rules here.


The average probationary period in Canada is three months long. During this period employers can fire employees for any reason, without penalty.


Once the probationary period is over, employers must carefully follow provincial employment rules regarding discipline, termination, severance, and cause. The average period of notice that employers must provide is two weeks. Learn more about termination rules here.

Cost to Hire in Canada

Global companies hiring in Canada can choose to hire employees or contractors. Wages for skilled contractors tend to be higher than for employees, whereas the employer tax contributions tend to be higher for employees.

Average Salaries

The cost to hire in Canada varies by province and sector. Provinces with large populations such as Ontario, Quebec and British Columbia tend to have higher salaries. While Alberta has a smaller population, its thriving energy sector has increased average wages across the province. Average salaries in Canada tend to be lower than the USA or UK.

Hiring through an EOR is the best option for global companies looking to hiring long-term Canadian employees.

Average Salary in Canada $68,400
Senior Software Engineer $127,000
Senior Marketing Manager $109,000
Senior Sales Manager $113,000


Lower wages

Employment Insurance 2.32%
Canada Pension Plan 5.95%
Worker’s Compensation 1-3%
Benefits 3-5%
Vacation Pay 4-6%
Health Tax 1.95- 2.7%
Outsourcing Fees 5-25%

Hiring Costs in Canada

While hiring costs have the same structure, province to province, the rates differ. Learn more about Canadian payroll taxes here.

Hire Your First Employee in Canada with Canadian Payroll Services

As an employer of record, Canadian Payroll Services can help you hire quickly and compliantly in Canada, without having to open a local entity. We handle payroll, onboarding, and local compliance so that you never have to worry about it.

Frequently Asked Questions
About Hiring In Canada

In Canada employers must contribute to the Canada Pension Plan and Employment Insurance and pay premiums to the relevant provincial Worker’s Compensation board. Employers are not required to provide health insurance, dental or eyecare. However, employer-sponsored health and wellness plans are common.
International companies looking to hire employees in Canada have two options: 1) they can open a local subsidiary, or 2) they can work with an Employer of Record who will compliantly hire employees on their behalf.
Working with an EOR or PEO can provide two forms of cost savings to your company: 1) they provide the same or better payroll and HR services that an internal team can, at a fraction of the cost, 2) they prevent you from making costly mistakes in a market where you’re unfamiliar with the local employment and tax laws.