Canada is a growing hub for remote work, with 19% of the population working remotely full time and 6% working in a hybrid arrangement. While those numbers have gone down since the height of the pandemic, they’re bigger than the pre-pandemic population of 12%. And a growing number of those remote workers freelance for or are employed by companies in the US, UK, and the rest of the world.
There’s a reason that so many people work internationally from Canada: there are few barriers to remote work and many advantages for employees and employers alike. However, there are some challenges, including finding remote work and ensuring your new arrangement is correctly set up. In this blog we’ll go over who can work remotely in Canada, and how to ensure your remote job is set up the right way.
Benefits of Remote Work in Canada
The benefits of remote work are obvious. Without a commute, employees enjoy a better work life balance, save money, and of course, sleep longer! Remote workers can apply to jobs all over of the country and even outside of it, without leaving home. Employers, meanwhile, enjoy lower maintenance costs and a wider pool of talent to recruit from.
As the population of remote workers grows, countries are creating special tax rates and visas for remote workers. However, Canada is a remote-friendly country with few barriers to seeking domestic or international remote work. The country’s rapidly increasing population and high housing costs have driven many people to live in the suburbs and small towns while working for companies in the city. An economy dominated by service, finance and tech sectors, as well as resource sectors that demand connectivity in remote locations, mean that over 40% of Canadian jobs can be done remotely, and many of them have a partially hybrid component.
However, there are some challenges to working remotely in Canada.
Challenges of Remote Work in Canada
While Canada is a great place to work remotely, and has few institutional barriers to it, there are two challenges: the current return to the office trend and the complexity of provincial employment law.
At the height of the pandemic 37% of workers were doing some level of remote work, now, that’s dropped to 19%. As it became safer, many companies opted to return to their old offices and continue working as they had before. A much smaller group cut the cord and opted for permanent remote work. While the trend has made it harder to find domestic remote work postings, it hasn’t reduced workers’ international remote work options, or made it harder to argue for a remote or hybrid exception.
Who Can Work Remotely in Canada?
In Canada, anyone who can legally work in the country and has the right skills can work remotely. Unlike some countries where remote work is regulated, any job that could theoretically be performed remotely can be transitioned to remote in Canada. However, there are some caveats to keep in mind.
Who Can Legally Work in Canada?
All citizens and permanent residents 17 years and older* can legally work in Canada, without exception. When it comes to visa holders, digital nomads and other travellers, it’s a little more complicated. Canadian work visas can be broken down into three broad categories, a general work visa not attached to a particular employer, a work visa specific to one employer, and a temporary work visa, usually attached to one employer.
|General Work Visa
|Not attached to a specific employer
|Any skilled worker
|Tied to a specific employer after Labor Market Survey
|Highly skilled workers filling unmet needs
|Temporary Work Visa
|Usually attached to one employer, used for low-skilled jobs
|Temporary foreign workers
Employer specific visas are given to highly skilled workers who can fill an unmet need in the labour market. Employers must complete a Labour Market Survey, proving that the company can’t fill the role locally and that it must be filled by a full-time local employee. After the visa has been granted, employers must regularly check in reporting on the success of their new employee and the contributions they’ve made to the business. While there is nothing barring employers from bringing in local but remote employees, some employers are reluctant to take the chance.
Temporary work visas are also unlikely to yield remote work, as they are primarily used to fill labour shortages in low skilled jobs including agriculture, resource extraction, and service. Temporary foreign workers spend a fixed period in Canada, and then return to their home country. Some return annually to work seasonal jobs that are, for obvious reasons, not remote friendly.
Visitors and digital nomads who don’t have visas are a different case. In Canada, taxation is based on where you live, so if you relocate permanently to Canada, or stay for an extended period, you will owe taxes in Canada. Digital nomads and visitors who are working for foreign companies can work remotely from their hotel for 180 days. After which, they would be in violation of Canadian immigration and visa rules.
*Because employment law is provincially governed, the minimum age of employment in Canada differs by province.
Remote Work Laws in Canada
There is no legislation that specifically governs remote work in Canada. However, there are several federal and provincial employment and tax laws that impact remote workers, including how they operate and how when they are paid and taxed.
How Employment Law Works in Canada
In Canada, employment law has a federal and provincial dimension. Employees of the federal government and those in federally regulated industries are governed by federal employment law, while all others are governed by the employment law of the province in which they live, not where they work. For example, remote workers who live in Alberta but work for an Ontario based company must be treated according to the employment standards of Alberta; remote workers who live in British Columbia but work for a UK based company are entitled to the provisions of BC employment law.
|Federal for government and federally regulated industries, provincial for others
|Based on residence, not workplace
|Right to Disconnect
|Enshrined in Ontario, varying policies
Country of Residence vs Country of Employment
Similarly, taxation in Canada is based on where you live, not where you work. Remote workers who are deemed to be residents, temporary or permanent, are taxed in the province they reside in. Remote workers who are deemed to be visitors, do not pay taxes in Canada. Instead, they remit taxes in their home country. However, visitors who exceed a six month stay in Canada may be deemed a resident, unless their home country has a special tax treaty with Canada which allows them to continue remitting at home.
This holds true for Canadians working remotely for global companies as well. No matter where their employer is located, they owe taxes in the province where they live.
Province of Employment vs Province of Residence
Many Canadians cross our internal borders for work, physically and digitally. Employment law is determined by where the work is conducted, not by where the company is incorporated. So, employees who travel to an office or worksite in another province, are treated according to the employment standards of that province. In contrast, employees who work remotely from in one province, for a company located in another province, are treated according to the employment standards of their home province.
Intra-provincial work also has tax implications. As we explained above, Canadians owe taxes based on where they live, however, employers can only deduct and remit taxes according to where they are incorporated and registered to pay tax. Remote employees working in a different province may be taxed according to the rates of that province, any difference between those rates is settled on their year-end tax return.
Right to Disconnect
Unique in Canada, Ontario workers have a newly enshrined right to disconnect after their workday is done. Employers in Ontario are required to have a right to disconnect policy that specifies when and why they can contact employees after work hours and affirms their employees’ right to time off without punishment or censure. The content of these policies vary and have yet to be challenged in court. You can read more about the right to disconnect in our blog.
Working Internationally from Canada
Many Canadian remote workers opt to look for work outside of the country, especially in the USA and UK. The reasons for this are obvious, there are more remote opportunities with bigger salaries in large employment markets. Canadians looking to work remotely for multinational or foreign companies have three options, work as a contractor, work for a subsidiary (which reduces your chances of being able to work remotely) and working through a PEO or EOR.
Options for Canadian Remote Workers Internationally
|Work as a Contractor
|Greater independence, higher wages, but less job security
|Work for a Subsidiary
|Employed by a local subsidiary, suitable for companies expanding
|Work Through an Employer of Record
|Flexible option, HR and payroll responsibilities outsourced
Work as a Contractor
Many international remote workers operate as independent contractors. Working as a contractor is a big change from being an employee, but there can be big advantages for the right person. Contractors tend to have greater independence in how they approach their work, more variety in their contracts, and higher wages. However, that independence often comes at the cost of job security and employer benefits, and small business obligations, including tax filing. For some, that can be stressful, while others see it as an exciting opportunity!
However, some remote workers are independent contractors in name only, operating as an employee while being paid as a contractor. Small businesses that lack internal HR are prone to misclassifying employees as contractors, simply because they are remote or international. Intentional or not, misclassification is a form of payroll fraud that can create serious problems for employee and employer alike. Working with an Employer of Record that specializes in international remote workers can keep you from making this costly mistake!
Work for a Subsidiary
Another arrangement that is common for international remote workers is to be employed by a local subsidiary. When an international company wants to hire a Canadian remote worker as an employee, they have two options, engage an Employer of Record or open a local subsidiary. Opening a subsidiary is a great option for companies that want to hire many Canadian employees and eventually do business in the country, however, it’s a costly and complicated process that isn’t right for every business. Local subsidiaries have the same responsibilities as local employers and learning a new compliance environment can be daunting. For companies that simply want to hire Canadian remote workers, engaging an Employer of Record is the best choice.
Work Through an Employer of Record
Working through an Employer of Record is the most flexible option for international remote work. Professional Employers of Record (EORs) hire employees on behalf of global companies and take on HR and payroll responsibilities for them. The EOR handles onboarding, offboarding, payroll, and benefits, making it possible for companies to hire international remote workers without opening a local subsidiary.
By outsourcing employment services to an EOR, companies can hire international employees quickly and compliantly. Remote workers, meanwhile, enjoy the stability of having all their employment services handled by experienced HR and payroll professionals. Unlike an international company taking its first steps in a new market, EORs are expert at handling payroll, human resources, benefits, and more.
How We Can Help
Canadian Payroll Services is an Employer of Record that specializes in the Canadian market. Our expert team has a native understanding of different Canadian employment contexts and can support companies to hire remote workers in Canada with no in-country obligations, and no need to set up a legal entity. Employers and employees alike are supported by a dedicated Account Manager who will get to know your business needs inside out, and will offer real, human support through the entire life cycle.