Complete Guide to Hiring in Ontario

Beautiful Ontario Skyline

Market
Overview

How to Hire in Ontario, Canada

Step By Step Guide

1

Identify Candidates

The initial step in the Province hiring process involves identifying potential candidates. To begin your search, consider using a mix of methods such as job postings, advertisements, and collaboration with recruiters. Keep in mind that Province imposes strict guidelines on employment and recruitment agencies, so it’s essential to work exclusively with provincially licensed agencies.

2

Choose Between Subsidiary or Employer of Record (EOR)

The next decision is whether to establish a local subsidiary or opt for an Employer of Record (EOR) arrangement. EORs allow you to hire in Province without setting up a local subsidiary and offer various other advantages, which we’ll delve into below.

3

Prepare an Offer

Once you’ve identified a suitable candidate, it’s time to create an employment offer. If you decide to hire through an EOR, they can assist you in drafting an offer that aligns with local laws and meets the candidate’s expectations. Canadian candidates typically anticipate supplementary health insurance and a retirement match as part of their employment package.

4

Draft an Employment Contract

Employment laws vary across countries and within Canada’s provinces. To minimize risk, engage an employment lawyer practicing in Province or rely on an EOR to draft your employment contract.

5

Onboarding and Payroll Setup

After the candidate accepts the offer, focus on their onboarding process and payroll setup. In Province, employees contribute to federal and provincial taxes, the national Pension Plan (CPP) and Employment Insurance (EI) wage replacement program.

EOR vs Subsidiary

Establishing a Local Subsidiary

One approach to hiring in Province involves opening a local subsidiary or branch. This process entails incorporating a business within the province, setting up a Canadian bank account, and establishing a local payroll and accounting office. However, it’s essential to note that creating a local subsidiary is a significant, long-term commitment, primarily suited for businesses intending to sell or operate extensively in Province.

VS

Employer of Record (EOR)

Alternatively, companies can choose to hire through an Employer of Record (EOR). EORs act on behalf of businesses that lack a local presence. They handle administrative tasks related to employment, including payroll management, benefits administration, and compliance guidance.

Which is better?

Cost to Hire in Ontario

Ontario Employer Taxes

Employment Insurance (EI): 1.66% up to a maximum of $1,468.77
Canada Pension Plan (CPP): 5.95% up to a maximum of $3,867.50

Ontario Payroll Rules

Minimum Wage:16.55 per hour; $17.20 on Oct 1, 2024.
Hours of Work:44 hours before overtime must be paid.
Overtime Rate:1.5 times the employee’s base wage.

Vacation Entitlement

Vacation Time

TenureEntitlement
1 year2 weeks
5 years3 weeks

Vacation Pay

TenureEntitlement
1 year4%
5 years6%

Termination Notice and Pay

TenureEntitlement
More than 3 months but less than a year1 week
1 year or more2 weeks
3 years or more3 weeks
4 years or more4 weeks
5 years or more5 weeks + severance pay
6 years or more6 weeks + severance pay
7 years or more7 weeks + severance pay
8 years or more8 weeks + severance pay

 

Severance Pay

After five years of continuous service Ontario employees are entitled to Severance Pay. When employees with tenure are terminated without notice, they are entitled to notice and severance pay.

Severance is calculated as

1 regular week of wages x (years of service + (months of service in an incomplete year / 12))

Up to a maximum of 26 weeks under the Employment Standards Act

Ontario Employment Law Overview

How Employment Law Works in Canada

Canada has a federal system where legislative and executive power is shared between the central government and the provinces and territories. Employment law is the purview of provinces and territories, and of the federal government when it comes to its own and employees and those in federally regulated industries.

Who It Applies to:

All employees except those in a few licensed professions, IT, and managers (partial exclusion).

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.

Get In Touch

Fill out the form to contact us to discuss how we can help your company hire employees in Canada.

Frequently Asked Questions About Hiring Ontario Workers

To hire an employee in Ontario you must first have a presence in Canada, either by opening a local subsidiary or engaging an Employer of Record to hire on your behalf. Next, extend an offer of employment. If you opt to use an offer letter or letter of intent, these should undergo a compliance check with your legal department or EOR. Once the offer is accepted, have your candidate sign a compliant employment contract that spells out hours of work, vacation entitlement, wages, job duties and basic policies. Next you must onboard your new hire, provide a handbook, and get them set up for payroll. EORs like Canadian Payroll Services provide locally compliant contracts and a full onboarding experience.

Working with a PEO or EOR to hire in Ontario makes your life easier. PEOs and EORs provide payroll and HR outsourcing services that allow you to focus on managing your team and achieving business goals, instead of administrative details. Outsourcing these functions saves your business money, improves your local compliance, and allows you to increase business productivity.

Ontario is Canada’s most populous province and the top target for people seeking to immigrate to the country. The province’s booming economy is the largest in the country, with thriving financial, technology, manufacturing, and service sectors. Ontario is a top talent market for international companies seeking remote workers.