With a growing population of highly skilled, bilingual (and even multi-lingual) workers, Canada is a top employment market for French companies looking to hire remote workers. When French companies want to hire contractors or employees in Canada, they often look for a portage salarial organization to help them manage hiring, onboarding, and payroll. But does the model exist in Canada? Sort of! Canadian Professional Employment Organizations and Employers of Record offer a similar service, but without the strict employment law restrictions that companies and contractors must work within in France.
In this blog we will outline what portage salarial is, how the term is used in Canada, and how the PEO and EOR models offer even more value to French companies!
What is Portage Salarial?
Portage salarial is a three-way agreement between a worker, an employer, and a third-party portage salarial provider. In a portage salarial arrangement, the worker is considered an independent contractor and the wage portage company pays the worker on behalf of the company receiving that contractor’s services. The wage portage company handles contracts, payroll, taxes, pension contributions, health insurance and security contributions, while the hiring company manages the contractor’s daily work.
In France, portage salarial is a highly regulated working model, but in other countries, portage salarial often refers to two less regulated forms of employment: contractor payroll or hiring through a PEO or employer of record.
Why Use Portage Salarial?
Portage Salarial, or payroll and employment outsourcing, is an increasingly popular solution for businesses who are seeking to streamline their administrative processes. It is a great option for businesses of any size who want to simplify their accounting and payroll operations, and it has a variety of benefits, including:
- Reduced overhead
- Streamlined human resources processes
- Natural fit for international and remote work
- Compliance support when working with contractors and international remote workers
- Clarity around the relationship between employers, employees, and contractors working independently
The French portage salarial system in particular offers support to independent French workers so that they can provide services to your company and issue invoices without having to establish their own business. Instead, all of that is handled by the portage salarial organization.
The Canadian model of portage salarial is different. The term here refers to several types of payroll and employment outsourcing that allow you to hire contractors and employees without setting up a local subsidiary in Canada and reap all the same benefits as French portage salarial offers with none of the disadvantages.
What Are the Rules of Portage Salarial?
Working under the portage salarial framework in France is subject to strict rules and regulations. For this reason, contractors must possess a valid work permit or residency status that permits them to work in the country. Furthermore, the contract duration must not exceed the validity period of the contractor’s work visa, which can be difficult to obtain as it requires proof of qualifications, work experience, and language proficiency. To avoid legal and financial penalties for both the contractor and the portage salarial company, it is essential to comply with local employment and immigration regulations. Therefore, seeking legal advice and ensuring all applicable rules and regulations are followed is an absolute must.
In contrast, there is no formal regulation of portage salarial companies in Canada. Instead, there are a range of outsourcing options that can handle payroll and employment outsourcing for Canadian workers, all of which must follow federal and provincial employment and tax laws.
What Are the Options for Payroll and Employment Outsourcing in Canada?
There are many options for payroll and employment outsourcing in Canada, all of which overlap with portage salarial in different ways, and to make matters more confusing, French speakers in Canada often refer to each of these models as portage salarial! But we are here to clear up the confusion.
- Payroll Outsourcing: Companies with an established presence in Canada that want to streamline their payroll process often opt for payroll outsourcing. Payroll providers manage regular payments, disbursements, deductions, and tax forms for your employee base. Some also provide services for contractors. Payroll providers typically have a limited Human Resources Information System (HRIS) where your team can log time off, make corrections, and download tax documents and reports.
- Professional Employment Organization (PEO): PEOs provide payroll outsourcing with the added benefit of Human Resources support. In addition to payroll, they assist with onboarding and can create employment documents and handbooks for your business. They can also provide guidance on setting up and managing employee benefits and perks. PEO is a good option for businesses that have or want to set up a local subsidiary in Canada.
- Employer of Record (EOR): In addition to what payroll outsourcers and PEOs offer, employers of record have one critical benefit to French and international companies hiring in Canada. They empower you to hire in Canada without creating a local subsidiary, by hiring your Canadian candidates on your behalf. While you manage their day to day, your EOR partner handles payroll, HR, employment compliance, benefits, and more. Working with an EOR allows you to hire Canadians, either as project-based contractors or as long-term employees, while staying fully compliant with the respective authorities.
What Are the Differences Between Portage Salarial, EOR and PEO?
The main distinction between portage salarial, PEO, and EOR, is the legal framework that they each operate under. In France, portage salarial is a particular legal structure that allows self-employed professionals to work through a specialized company that acts as an intermediary between the contractor and the client. This method provides administrative, financial, and legal services while permitting the contractor to maintain a large degree of autonomy and independence. Portage salarial is a great way for French companies to expand their augmented workforce while staying compliant with French employment laws.
In contrast, Employer of Record and Professional Employment Organizations provide outsourcing services that connect both contractors and employees with companies that need their services. In Canada, there are few special regulations for augmented workers, remote workers, or payroll and employment outsourcing. Instead, PEOs and EORs operating in Canada are required to follow all relevant federal and provincial employment, tax, and human rights laws. These include:
- Minimum and overtime wages
- Statutory leave, vacation, and protected leaves
- Local labour and human rights codes and employment standards acts
- Federal and provincial taxation and worker misclassification rules
While this sounds complicated (and it is, behind the scenes), the role of PEOs and EORs is to simplify this administrative burden and help you hire quickly and compliantly in Canada.
Why Employer of Record is the BEST Option for French Companies Hiring in Canada
Employer of record providers offer the best compliance outsourcing and employment flexibility for French companies looking to hire in Canada. EORs like Canadian Payroll Services can help you hire both contractors and employees for both project-based and long-term roles in your company. Because employers of record specialize in compliantly hiring workers on your behalf, they have a deep understanding of local laws and can advise on you on when to hire contractors vs employees, and can keep you compliant throughout the whole worker life cycle. This allows you to hire in Canada without opening a local subsidiary, local accounts, or setting up a local payroll of your own.
In other words: you can enjoy all the benefits of French portage salarial and the opportunities of the Canadian employment market, all while minimizing your administrative footprint.
How Canadian Payroll Services Can Help
Canadian Payroll Services is a PEO and employer of record operating exclusively in the Canadian market. We specialize in connecting the country’s highly skilled workforce with global companies looking to hire remote workers. Unlike many global providers, we do not outsource our services to third party payroll and employment partners, and our experienced and fully certified HR account managers and payroll practitioners provide on call support to you and your Canadian team. We provide the best local benefits and employment perks, along with options to match what you provide to the rest of your team.
Canadian Payroll Services can help you grow your team in Canada. Want to learn more about how we can help? Get in touch!