Simplified Guide to Compliant Hiring and Payroll Services in Canada
UK companies looking to fill highly skilled vacancies are looking to the Canadian talent market to find remote employees – and with good reason! Canadian candidates are highly educated, multi-lingual, and used to working remotely for domestic and foreign companies. The trouble comes when UK employers find the candidate of their dreams, but don’t know how to hire or payroll them without running into compliance issues. Many turn to employer of record services that hire workers on behalf of UK companies. But is this the right solution for you?
In this blog we will go over the options for hiring a Canadian remote worker, and their pros and cons.
How to Hire a Canadian Remote Worker
For UK employers hiring Canadian remote workers, three options come to mind: payroll them out of the UK office, hire them as a remote contractor, or open a local subsidiary. However, none of these is a great option for international employees. Let’s start with the first one. UK companies are not permitted to hire foreign employees, based in foreign companies. Tax laws and payroll regulations require UK employers to either hire those candidates as contractors, or to open a local subsidiary. Both options come with costs and risks.
Opening a local subsidiary is a long and costly process, but one that makes sense for companies seeking to expand their operations and sales internationally. However, for companies just looking to hire in Canada, opening a subsidiary comes with unnecessary tax and compliance burdens. Having an experienced and certified HR and payroll team in country is crucial to ongoing compliance.
Hiring remote Canadian workers as contractors seems like the obvious and cheaper option, however, worker misclassification is sometimes the result of this decision. Misclassification is when employees are hired as contractors, either out of ignorance or to avoid employer obligations or employee taxes. Both HMRC and Canada Revenue Agency take a dim view of treating employees like contractors, and the fines for it can be steep. When hiring workers as independent contractors, they must be treated as independent contractors.
Canadian employment law is complex, with federal and provincial components, and doing things the right way requires an everyday commitment. That’s why so many UK companies hiring in Canada rely on employer of record payroll services to manage their compliance!
How Employer of Record Companies Help
Employer of record (EOR) companies in Canada hire employees on behalf of their clients and set up compliant payroll and HR services. Like umbrella companies, they act as a bridge between workers and employers, ensuring that both parties stay compliant and avoid potential fines. Unlike umbrella companies, employer of record providers allow you to treat your international employees as true employees and avoid misclassification risks in Canada and in the UK. EOR payroll companies hire your Canadian workers, onboard them for ongoing payroll, and then lease them back to you to direct; they are the employer on paper, while you are the employer in every other sense.
This allows UK employers to expand their team quickly and compliantly in Canada without opening a local subsidiary or registering with the Canada Revenue Agency.
Hire Remote Canadian Workers through Canadian Payroll Services
Canadian Payroll Services makes hiring Canadian remote workers easy. We provide compliant local agreements for your employees and contractors alike, manage ongoing payroll including source deductions, employer contributions, paid time off, and holidays so that you don’t have to. Our employer of record solution includes ongoing HR account management, access to our HRIS employee management tools, and on call, discounted recruiting services for when you’re ready to grow your Canadian team.