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How Canadian Employer of Record Services Can Help Your Company

Posted by Stacey Duggan

|

Aug 2, 2017 9:00:00 AM

So, your company is growing at a rapid pace and you’re beginning to expand your business into Canada. Congratulations! That’s great news. Business growth is the goal for every company, however sometimes it happens faster than anticipated. Keeping up with new payroll regulations, expansion of HR duties, and Canadian regulations can be daunting and costly.

Download our free guide on what US companies need to know about paying  employees in Canada.

But there is a solution that can help your business continue to grow while you focus on important tasks. It’s called an employer of record. These companies help you organize your HR and payroll administration duties, working completely on your behalf. Keep reading to see how Canadian employer of record services can help your company navigate through this newly found territory.

HR Support

While you focus on growing your business, sometimes HR duties become the last thing on your mind. Between recruiting, hiring, training, and terminating employees, it’s possible the task of managing it all has become too much. You need more time to focus on your business and its goals, and less time spent worrying about administrative duties.

With Canadian employer of record services, you’ll be able to hand off these administrative tasks confidently. All HR responsibilities will be handled, leaving you to sit back and manage the other aspects of your company with ease. This improved process will help your company expand into Canada, while you continue to take control of things back home.

Rules and Regulations

Staying on top of another countries rules and regulations adds a handful of duties and education to your plate. If managed incorrectly, you can be left in an expensive situation, facing multiple lawsuits and expensive fines. For example, submitting your payroll data to the CRA (Canadian Revenue Agency) late, even by three days, can leave you responsible for late filing fees. And that’s one of the smaller legal responsibilities. It’s a mistake you don’t want to make, especially as your company tries to grow.

Avoid the hassle and stay on top of things by working with Canadian employer of record services. Keeping track of all important dates, legal regulations, and taxation policies are just some of the many benefits these professionals provide. Expanding into Canada can seem intimidating, but working with an EOR helps you streamline the process and avoid mistakes.

Speeds Up the Process

Establishing your business on new soil can be a slow process. For some companies, it can take years to get their company functioning in Canada. Without knowledge of the country and its regulations, getting things moving is inevitably slow.

Avoid the painstakingly slow process and consider Canadian employer of record services. These professionals take care of all the tasks involved with breaking ground in Canada, like employee recruitment, payroll, and staying up to date with regulations. This saves you time, allowing you to focus on the other aspects of growing your business.

Saves Your Money

If done correctly, expanding your business into Canada can be an extremely smart move. In fact, in 2014 Canadians spent $22.9 billion dollars in ecommerce sales, and the numbers are expected to rise. With audiences very similar to the US, Canadian consumers can become the perfect target audience for many American businesses.

However, setting up a business in Canada can be incredibly expensive. The cost of hiring and training employees alone costs thousands of dollars. Not to mention any fees associated with errors in payroll or CRA mishaps. It seems like there’s a lot of room for costly errors.

Canadian employer of record services help you save money as you expand your company into Canada. From keeping up with regulations, training employees, and handling all payroll functions, working with a EOR might be the smartest investment you can make.

What US Companies Need to Know about Paying Employees in Canada

Topics: Canadian Employer of Record

What You Need to Know About Vacation Policies for Canada

Posted by Stacey Duggan

|

Jul 31, 2017 9:00:00 AM

What You Need to Know About Vacation Policies for Canada--.jpgWhether it’s to another country, into the Canadian wilderness, or just a relaxing staycation at home, Canadians love their vacation time. So much so, that many Canadians take this into account when negotiating their employment contracts.

In fact, Canada was the only country that chose vacation time as their preferred benefits. 20 percent of Canadians said that they would prefer an additional week of vacation time, compared to a $500 salary increase. Clearly Canadians know their priorities!

Download our free guide on what US companies need to know about paying  employees in Canada.

With vacation time comes vacation policies for Canada. Companies and employees alike need to be aware of what the rules and regulations surrounding Canadian vacation policies to properly account for accurate payroll processing. There are many myths surrounding vacation policies for Canada and it’s important to know truth from fiction. If you don’t already, here’s four things you’ll need to know about vacation policies for Canada.

They’re Different in Every Province

That’s right, if you conduct business in only one province, you’ll only have to know your province’s vacation policies. However, if you conduct business and hire employees in multiple provinces, you’ll need to be aware of the differences to ensure proper payroll accuracy and ensure compliance.

If you have trouble keeping track of provincial regulations, it may be a smart investment for your company to enlist the support of a back office solutions provider, who can not only keep you informed on provincial differences, but handle all your payroll needs to avoid any mistakes or errors. Don’t leave your payroll to chance, trust the experts.

Vacation Policies for Canada—How it Works

Unlike Canada’s neighbours south of the border, it is mandatory for Canadian employers to offer vacation time to employees after one year of employment. Employees are entitled to two weeks of vacation time, except in Saskatchewan where the minimum is three weeks, and Quebec where the minimum is 12 days (one for every month of the year).

You may have noticed on your paycheque that every payday four percent, or six percent in Saskatchewan, is deducted for vacation pay. What does this mean? While vacation time may seem like free money, it’s actually an accumulation of a percentage of your paycheque. So, each pay period, four or six percent of your pay is withheld from you in order to pay for your time off.

For temporary employees, the accumulation of their vacation pay is given to them once they complete their employment with the individual business.

Can an Employer Reject a Request for Vacation Time?    

When it comes down to it, yes, an employer does have the right to reject requests for vacation time. Vacation policies for Canada are not meant to harm businesses, and if your employer believes that the time you have requested may negatively impact their business, they have the right to reject your request.

While they have the right, most employers do not exercise this. It diminishes employee morale, and ultimately can leave employees feeling very bitter towards their employers. While employers can reject vacation time requests, many do not in order to keep their employees happy and productive.

The Use It or Lose It Rule

Many people have heard of the use it or lose it rule, but what does it mean? The use it or lose it rule only applies to extra vacation time granted to employees by their employers. For the minimum two weeks’ vacation, employers cannot implement a use it or lose it policy.

Employees must take two full weeks off within 10 months of the end of the vacation period. You should never be fearful that you’re going to lose your vacation time unless you receive over two week’s holiday.

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: human resources

5 Tips for How to Manage Payroll Effectively

Posted by Stacey Duggan

|

Jul 14, 2017 9:00:00 AM

5 Tips for How to Manage Payroll Effectively.jpgManaging payroll can be confusing to say the least. If you’re not sure how to manage payroll effectively, you’re not alone. Many companies don’t know the best ways to execute their payroll processes, which can be problematic in the future. If you’re looking to maximize the efficiency of your HR department, here’s five tips on how to manage payroll effectively.

Download our free guide on what US companies need to know about paying  employees in Canada.

1. Stay Organized

Organization is absolutely essential when you’re looking to maximize your payroll efficiency. When your payroll processing documentation is arranged in an orderly fashion, it makes your task easier and less time consuming.

Your business also needs to be organized when it comes to how to manage payroll effectively to avoid missing important dates. Never miss a deadline again by setting up a payroll calendar. This will give you a visual reminder of when tasks need to be completed before important dates. You’ll be able to manage your time more effectively, and won’t be stressing out over your payroll duties last minute.

2. Get Technical with the Right Software

Technology has made payroll processing easier than ever. For those that don’t know how to manage payroll effectively, the answer you’re looking for can be found in the right software.

There are many different kinds of software that your company could use. Payroll tax deduction calculators can help you determine how much you’ll need to deduct for your staff including federal tax withholding, provincial tax withholding, employment insurance, and Canadian Pension Plan.

Other additional payroll software, like PayDayTrak, can help you:

  1. manage clients and employees;
  2. add additional expenses or changes to an employee’s pay;
  3. track time off;
  4. easily download reports;
  5. access previous employee documents, such as paystubs, cheque history, ROE’s and T4’s; and
  6. access all payroll invoices.

3. Stay on Top of Relevant Payroll Rules and Regulations

Legislation surrounding payroll is always changing. In order to avoid any potential lawsuits, you need to be up-to-date on all relevant payroll rules and regulations. There’s no excuse for a company managing their own payroll to not know how to comply with government regulations. This will also help you when tax season rolls around so that you don’t get audited.

To help companies better understand the rules and regulations surrounding payroll compliance in Canada, the Canadian Payroll Association released a variety of Payroll Best Practices Guidelines.

4. Keep it Simple Yet Effective

There’s no need to overcomplicate your payroll. Simplifying your payroll process can help keep things running smoothly, with less effort from you and your HR department.

As an example, switching from cheques to direct deposit is a great way to simplify your payroll process. Instead of having to keep track of all the cheques you’ve handed out, you can keep a simpler electronic documentation of your bank transfers which will make your payroll process easier in both the short and long term.

5. Don’t Stress, Outsource Payroll Services

We get it, managing your own payroll can be seriously stressful. The last thing you need to add on top of your already busy schedule is payroll and HR administrative tasks. That’s why many businesses choose to outsource their payroll—but you’ll need to find the right one.

Payroll service providers know not only how to manage payroll effectively, but can give you peace of mind knowing that everything is completed with the utmost diligence and knowledgeable expertise.

Outsourcing payroll services is especially beneficial if your business is located outside of Canada, but are still looking for Canadian employees. An employer of record can help you effectively navigate the Canadian judicial system free from error, saving you precious time and money.

Why wait? Get in contact with a payroll provider and employer of record today!

Canadian Payroll Tax Deduction Calculator

Topics: Payroll Processing

How to Handle Canadian Payroll Taxes for a US Company

Posted by Stacey Duggan

|

Jun 30, 2017 9:00:00 AM

How to Handle Canadian Payroll Taxes for a US Company--.jpgPayroll taxes are complex and require a trained eye for accurate compliance. For American companies entering new territories in Canada, Canadian payroll taxes for a US company feel even more complicated than calculating taxes at home base.

There’s plenty of key points to take away that reduce the burden of calculating Canadian payroll taxes. Here’s how US companies can handle them.

Meet Deadlines

Canadian payroll taxes have to be submitted to government agencies and regulatory bodies by a specified date. This date varies depending on the type of business and its annual revenue.  The Canada Revenue Agency (CRA) is the federal government agency that sets these deadlines. They promote Canadian tax regulations for person and business, along with filings, forms, and all other related issues. They’re in charge of guidelines regarding business and personal tax.

Download our free guide on what US companies need to know about paying  employees in Canada.

Deadlines can change, so US employers need to stay vigilant to ensure timely submission, and avoid fines, audits, and other issues that could occur with late filing. Filing remittance reports falls to the responsibility of the employer only, meaning it’s crucial that American businesses are punctual with reports.

Ensure Correct Classification

US companies need to define their Canadian employees correctly to ensure they’re paying the correct Canadian payroll taxes for US company. Independent contractors and full-time employees do not have the same withholding rates, and tax deduction mistakes could result in back tax payments to reimburse the employee.

In addition, US employers will find themselves in the CRA’s sight, and could face fines and penalties for misclassification. While some American businesses opt to label all employees as independent, this method is rarely correct, and results in further consequences–easily avoidable with correct classification. Talk to the in-house payroll department or the CRA for a clear understanding about labels to ensure taxes are properly deducted.

Know the Applicable Taxes

US companies need to know which taxes apply and which amounts are deducted according to the necessary federal and provincial laws. Canadian employees have source deductions removed from each period: Canada Pension Plan (CPP), Employment Insurance (EI), and income tax.

CPP funds the retirement income system, which all Canadians 18 and over are required to contribute to. EI is a benefit to employees who lose their job, outlining receivable amounts as based on previous salaries, hours worked, the jurisdiction’s unemployment rate, and other factors. Income tax is a mandatory federal deduction as based on the taxable income of individual Canadian citizens.

US companies need to ensure thorough understanding of these three players when calculating Canadian payroll taxes.

Understand How to Calculate Withholdings

Canadian employee wages are subject to Canadian tax withholdings. Withholdings are calculated based on employee income, and are affected by other non-salary monies, such as tips or bonuses, before deduction. Withholdings, or deductions, are done every pay period, and calculated from both the employee’s pay statement, as based on the individual income and tax class, and the employer’s business itself.

Both EI and CPP are subject to yearly and pay period maximums. It’s up to the employer to track contributions to ensure the right amount is withheld. Any excessive amounts withheld have to be refunded to the employee.

Outsource to the Pros

A great alternative to DIY is to outsource Canadian payroll taxes for US company. Partnering with an employer of record provides knowledgeable experts who know tax codes and remittance deadlines inside and out, ensuring US businesses stay on time and are compliant with Canadian payroll regulations.

Acting as the employer for Canadian workers, they’ll manage tax withholding so American businesses can relax knowing their company meets the right tax codes. This kind of partnership provides peace of mind that the job is done correctly and free of error.

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: Payroll Processing

5 Ways an Employer of Record Can Contribute to Business Growth

Posted by Stacey Duggan

|

Jun 19, 2017 9:00:00 AM

5 Ways an Employer of Record Can Contribute to Business Growth--.jpgBusinesses are always looking for ways to expand their business, through work practices, company brand, and increasing the number of staff employed. With expansion comes a number of other burdens, particularly in the administrative field. These very quickly take up time alongside growth of the business itself.

There’s a solution that makes it easy. An employer of record (EOR) can help with business growth in five different ways. Keep reading to learn how.

Download our free guide on what US companies need to know about paying  employees in Canada.

1. Long-Term Savings

An employer of record handles a wide variety of issues and matters for a cost that’s less expensive than it is to manage in-house. As EORs help many clients, businesses are essentially sharing these resources through the EOR, generating savings from software updates, HR training, and time dedicated to understand workforce compliance.

Hiring new employees, for example, is a good sign, but with it comes more paperwork and additional time to manage them. It means legal and regulatory changes, ongoing training regarding HR, adding to payroll, and other employee training regarding health and safety, workplace management.

Ensuring HR and payroll is in line with government standards is a time-consuming that takes time away from core tasks. EORs stay on top of these duties, allowing employers to use that time growing their business.

2. Added Value to Hiring and Staff Management

A growing business includes an increase to the number of staff employed. As a co-employer, an employer of record will hire and manage staff on behalf of the company. For businesses venturing into new markets, EORs understand the process in place to ensure correct hiring.

They’ll handle the interview process and training, to guarantee new hires meet the specific qualities sought by employers. Providing EORs this kind of pre-determined outline ensures the best fit and staff for a company to continue to grow with the necessary support and resources.

3. Avoid Mistakes

Mistakes have serious consequences with the Canada Revenue Agency, other government bodies, and generally cause an overall headache for businesses. An EOR makes sure a business’ payroll and deductions are error-free to avoid fines, penalties, and lawsuits.

With an EOR handling payroll, compliance, and related matters, they’ll ensure employees are classified as they should be, the business is in line with provincial and federal workplace standards, and all other necessary requirements are met. This keeps businesses on the government’s good side, and employees happy.

4. They Provide the Right Tools

Software eases business growth and expansion. It’s also expensive and requires constant updates. Working with an EOR means there’s no need to worry about forgetting to update software or searching for the right kind because they maintain the different platforms in order to do their job effectively.

EORs are experts trained in HR and payroll to make implementing easy as businesses grow. They have knowledgeable associates and offer additional perks, such as group benefits and discount insurance rates, which employers–particularly for small businesses, don’t always have access to alone. EORs provide support to deal with all kinds of situations and answers to any questions there might be.

Whether it’s a company with a small client base and limited staff, or a bigger company entering new territory, EORs cover many aspects so businesses don’t have to worry about remembering to keep up with software or ensuring access to appropriate benefits.

5. Peripherals Managed

With the time-consuming and tedious tasks covered, businesses can get back to focusing on strategy, marketing, and overall growth. It’s hard to manage core tasks when administrative tasks are taking up a significant part of the day.

Tax, payroll, labour, and employment are covered by professionals with the knowledge and time to research and understand these matters. When employees stay focused on core tasks and an employer of record handles the rest, businesses can ensure the best competencies are in place for business practice and expansion.

What Are You Leaving to Chance by Handling Payroll on Your Own

Topics: Employer of Record

Canadian Payroll Providers Can Take Your Business to the Next Level

Posted by Stacey Duggan

|

May 29, 2017 9:00:00 AM

Canadian-Payroll-Providers-Can-Take-Your-Business-to-the-Next-Level-1.jpgBusiness owners are always looking to develop their companies,whether by strengthening brand reputation or discovering new marketing trends and strategy. More businesses have become aware ofthe advantage that outsourcing payroll leads to business improvement

You’ve no doubt noticed the time this department takes and the tedious tasks involved. If you’re looking for a way to take your business up a notch, consider Canadian payroll providers.

Download our free guide on what US companies need to know about paying  employees in Canada.

Industry Expertise and Innovative Technology

The world changes, the markets change, and new trends can be hard to stay on top of while trying to make sure you also meet your business goals. With Canadian payroll providers handling payroll, you can get back to doing the best job. 

Accurately and efficiently handling payroll is their livelihood, which means they stay in the know and remain ahead of the curve for new payroll methods and changes. Their expertise will increase your department’s efficiency and give you insights into the latest HR and payroll trends. Payroll providershave a full understand of new laws, along with cutting-edge information, which are passed on to improve your business.With this information available to you, your business isalways up to date. 

Communication and technology are always changing, and to do their jobs properly these providers must have the latest information available. With their state-of-the-art software and technology to calculate payroll, you don’t have to worry about mistakes or worry aboutregularlybuying andupdating software. 

Canadian payroll providers are always trained with the latest information, tools, software, and payroll methods to make your businessas efficient as possible.You’ll get the upper hand on industry knowledge without spending additional time or money on payroll—a win for everybody.

Navigate Compliance

Tricky, complex, and time consuming, compliance is hard to navigate and comprehend if you don’t have a full legal team that knows the ins and outs of the business. Each territory comes with its own regulations, and if you’re operating or expanding into multiple places, you need to comply with each individual province’s rules. 

Wages, benefits, employment standards, human resources—your business has to meet all of these guidelines to avoid penalties, audits, and lawsuits. Canadian payroll providers minimize the risk of error with experts whose job it is to successfully navigate these waters and ensure your business is, and remains, error-free. From tax filing to work conditions, this team is in the loop to do their jobs effectively. 

You’ll have security in knowing they’re keeping your business compliant.You can eliminate mistakeswith the help of a knowledgeable team that knows how to correctly calculate payroll, file remittance reports, and generate end-of-year paperwork. These payroll professionals handle all of your payroll and tax law, human resources, and associated matters to ensure your business is compliant.

Time for Core Tasks

Payroll is tedious and time consuming. Time spent here takes time away from your core duties. With the legwork handled by Canadian payroll providers,time is freed up so you can get back to improving and expanding your workforce.With a team that’s nolonger dedicated to in-house payroll processing, you can delegate your staff to principal matters.

With the tricky aspects of payroll covered, your HR employees can get back to business. Canadian payroll providers increase your company’s efficiency and cut down on waste.

With a single team handling the peripherals of the job, removing payrolloff your plate gives you the time to focus on branding, marketing, and other company duties. Get back to focusing on your employees and meeting your business goals.

Canadian Payroll Tax Deduction Calculator

Topics: Payroll Processing

What U.S. Companies Need to Know about Canadian Payroll Regulations

Posted by Stacey Duggan

|

May 15, 2017 9:00:00 AM

What-U.S.-Companies-Need-to-Know-about-Canadian-Payroll-Regulations.jpgExpanding your business into a new territory is an exciting time. With it, of course, comes a number of new regulations and rules to follow. Canadian employees have a different set of payroll regulations, and U.S. employers need to be well-versed in them to ensure they’re paid correctly. 

Although Canadian neighbours aren’t too far north, the standards are quite different. Here’s what U.S. companies need to know about Canadian payroll regulations.

Download our free guide on what US companies need to know about paying  employees in Canada.

Federal and Provincial Heads

Canadian payroll regulations are regulated at two levels: federal and provincial. It’s not enough to be in line with federal standards; you need to comply with each individual province. This brings a few more rules into the mix, and several variations if employees live in different provinces. 

Each provincehas its own employment standards act, outlining payroll compensation, work standards, health and safety issues, termination, and other related matters.Public holidays, for example,can vary between provinces. British Columbia celebrates Family Day a week earlier than Ontario, meaning employees in those provinces could have holiday pay in different pay periods.All provinces abide by the Employment Insurance Act, a major federal law, which covers funding for maternity and paternity leave, as well as sickness and compassionate care. 

U.S. businesses need to be aware of both levels for accurate recordkeeping, tax filing, and overall compliance.

Registration

Before a business can begin operating in Canada, it needs to be registered with the proper accounts. This establishesa presence in the Canadian market and confirms Canadian employees can be paid. All businesses have to register for a business number and payroll program account through Canada’s federal tax agency,the Canada Revenue Agency (the CRA). This is where GST, tax deductions, and other annual payroll and tax information are reported. Without registration, Canadian employees cannot be paid, and the business doesn’t yet exist. It’s important to complete this step right away.

Classification

Employee classification is important to get right because it effects total amounts paid to employees, any benefits they’re entitled too, their source deductions, and more.The CRA has problems with businesses that misclassify workers.

While it might seem easiest to classify all Canadian workers as independent contractors, this could still cause headaches, especially if these workers don’t meetthe government’s definition of an independent contractor.

The CRA developed a four-point test to determine the type of employee. Elements include: control, tool ownership, integration, and profit risk/loss. Courts will look at individual circumstance to determine the type of worker, so U.S. companies should pay close attention to the employer-employee relationship.

Compensation

Canadian payroll regulations outline the minimum standards for employee compensation and when employers have to compensate their employees.Provincial regulations define whether employees must be paid once a month, biweekly, or a weekly minimum. It’s important to note the province employees work in to ensure U.S. companies are following the right regulations.

Minimum wage rates vary across the provinces. Alberta has a higher minimum wage rate than Ontario. The industry employees work in also affects wage rates. Waitressing, for example, has a different minimum wage rate than retail. Each location has itsown standard to be aware of to ensure U.S. businessescomply with the correct legislation.

Tax Deductions and Filing

Payroll taxes are deducted and filed with the CRA and some other government agencies.U.S. companies need to know all the agencies to ensure correct filing. Failing to remit and deduct taxes correctly can lead to fines, unnecessary audits, and overall embarrassment for businesses.

Taxes at both the federal and provincial level have to be applied, and remittance periods depend on each company’s status. Ensure the right amountsare deducted based on employees in different provinces, and the right forms are prepared for submission. Setting this up correctly at the start will help avoid headaches later on.

What US Companies Need to Know about Paying Employees in Canada

Topics: Compliance

What Every Business Should Know about Paying Employees in Canada

Posted by Stacey Duggan

|

May 1, 2017 9:00:00 AM

What-Every-Business-Should-Know-about-Paying-Employees-in-Canada.jpgIf you’re just starting a business or considering expanding your foreign business into Canada, you need to brush up on Canadian payroll laws. For any business owner exploring new territory, paying employees in Canada is nowhere near the same as the geographic area of your current employees. Keep reading to learn about paying employees in Canada.

Pay Varies Provincially

Your employees in Manitoba adhere to different pay and labour standards than your employees in Ontario. If you thought pay legislation would be the same across the country, you need to think again. Provinces stipulate their own minimum wage rates, acceptable overtime hours, paid leave–even pay frequencies. Statutory holidays and its pay isn’t even the same across the country. 

Download our free guide on what US companies need to know about paying  employees in Canada.

Businesses can avoid pay mistakes by ensuring they read the correct provincial legislation in addition to the federal regulations. Don’t oversimplify this process. With so many detailed differences between provinces, businesses need to be aware of the ones applicable to them.

Accounting for Deductions and Reporting

Employers deduct three big taxes from employees and themselves each period. Known as source deductions, these have to be deducted and filed correctly, or you’ll run into problems such as penalties and fines, from the Canada Revenue Agency. Source deductions include the Canada Pension Plan, Employment Insurance, and income tax, and each one has their own exceptions within, requiring annual remittance reports filed with the total amounts deducted throughout the year. 

Employers have other reporting requirements to follow as well: maintain T4 accounts, which accounts for salary, tips, bonuses and all other monies paid to employees throughout the year, and issue ROEs, the record of employment all employers must keep and file when an employee leaves the company. For help and other questions, business owners can visit the CRA’s website.

Employee Information for Payroll

Paying employees in Canada requires some personal information. Upon hiring an employee, there’s important documents new staffmust complete and submit in order to receive the correct pay and have the right tax amountsdeducted.

Their SIN number will be necessary to confirm they can legally work in Canada, and will be used to administer government benefits. Both a TD1 form and personal tax credits return form is completed to determine the correct tax deductions from said person’s employment income. Businesses should also consider other administrative things, like keeping individual employee files to store all related paperwork and notes.

Type of Employee

Correctly labelling employees is vital to correctly paying employees in Canada. It effects their pay rate, tax deductions, and eligible benefits. Independent contractorsand full-time employees vary in terms of control, supervision, job flexibility, and more. The nature of the employer-employee relationship is important in knowing what kind of employee it is.

Understand the correct factors and consult the government’s four-point test to be sure you’ve classified your employees correctly. Misclassification leaves the CRA irritated, and poised to hand out severe penalties. Even after hiring, it’s a good idea to regularly revisit employee files and duties to ensure their labels haven’t changed.

The Right Software to Use

Having the right software significantly eases the burden of paying Canadian employees. Businesses will need the latest program and correct tax tables to ease pay calculations. Ensure staff using it have undergone the right training, and fully understand how payroll is calculated to reduce your business’ risk of errors.

The CRA provides tools and online calculators to help, and a number of software options are available to employers. On top of calculating payroll, software automates the manual tasks to save time, archives employee pay slips, and generates in-house reportsfor concrete pay history.

Whether you’re a new business owner or growing your current business, there’s a lot of information concerning pay rate, hours, tax deductions, and more. Businesses should keep all of these aspects in mind when paying employees in Canada.

What US Companies Need to Know about Paying Employees in Canada

Topics: Compliance

5 Mistakes to Avoid When Hiring Canadian Independent Contractors

Posted by Stacey Duggan

|

Apr 17, 2017 9:00:00 AM

5-Mistakes-to-Avoid-When-Hiring-Canadian-Independent-Contractors.jpgSometimes, employers just don’t need full-time employees but require workers for specialized projectsin shortertime period. For those looking to hire these types of worker, it’s important to make sure you understand how contractors differ from employees

Avoid these five mistakes if you’re considering hiring Canadian independent contractors.

1. Classification

Misclassification is big problem for businesses. Wrong employee labels result in serious consequences. By misclassifying, you’ve been miscalculating wages, benefits, and taxes incorrectly from the start. Canadian independent contractors are not employees, and this crucial distinction is defined by their nature within the company. 

Download our free guide on what US companies need to know about paying  employees in Canada.

Courts use a four-point test to classify an independent contractor:control, equipment and tool ownership, subcontracting ability, and profit chance/risk loss.Contractors have more independence from the employer than full-time employees. They generally own and provide the majority of the equipment and tools for the project, and theyhave the ability to subcontract some work if necessary. In addition, if they have a chance of profiting and run the risk of incurring lost profits, they’re contractors.

2. Poorly Drafted Contracts

An employee contract should be drafted in line with the provincial Employment Standards Act, and the same rules apply for contractors. If a contract is signed between the business and the independent contractor, it’s necessary to clearly indicate within that said person is an independent contractor. Clearly defining this worker within the contract helps it hold up and remain enforceable in court. This will also later help fend off categorizationissues by the Canada Revenue Agency. 

A well-written contract classifies the intention of the relationship. While courts will still consider circumstance and individual facts of the case, well-worded contracts between businesses and independent contractors better highlight theirindividualsituations.

3. Miscalculated Taxes

Taxes for Canadian independent contractors are calculated differently than employees, precisely because of their different classification. In fact, employers do not handle the tax responsibilities for contractors at all. Again, the importance of labelling workers correctly at the beginning is key for avoiding future penalties and ensuring the right amounts are calculated in final remittance reports. 

When it comes to contractors, withholding amounts, reporting requirements,and CPP and EI contributions are not deducted as with regular employees. 

Knowing the difference is crucial forensure compliance with tax regulations.

4. Wrongful Distribution of Wages and Benefits

Pay and benefits also have to be precisely calculated. Just like tax deductions, these are also totalled differently. Canadian independent contractors aren’t provided benefits. 

A contractor isn’t employed by the employer in the same sense that an employee is, so a contracto’s pay is calculated differently—they are typically paid a higher wage but they do not have deductions for benefits, pension, or anything else. An employee integrates commercial activities to the payer while independent contractors integrate the payer’s activities to their own commercial activities.

5. Miscommunicated Intention

If you’re unclear about contractors’ roles from the beginning, the intention of their business may never clear up during the project. Confusing employee status can cause problems in the working relationship.Remember that unlike with the employee, the employer has less control over independent contractors. Contractors set their own schedules, which both parties agree to. 

Contracting shouldn’t be a full-time job disguised an independent contract work–this is an incorrect intention. Employers should familiarize themselves with the legislation and policies on employees and Canadian independent contractors to ensure they clearly understand the differences between them and can clearly communicate the intent of both workers. The four-point test mentioned earlier is key to distinguishing the type of worker hired. 

Clearly understandwhy contractor services are considered independently contracted. Be clear about who you’re working with and the job needed to ensure both parties know a contractor is hired and not an employee. Miscommunication just leads to confusion.

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: Compliance

How Do I Terminate an Employee Who Isn’t Working Out?

Posted by Stacey Duggan

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Apr 5, 2017 9:00:00 AM

How-Do-I-Terminate-an-Employee-Who-Isnt-Working-Out.jpgIt happens. You hire someone who appears to be the right fit with the right qualifications. Shortly after they start though, it’s a disaster. Incorrectly firing personnel is bad business, so how can you fire staff without getting into legal hot water? You have to cover all your bases to ensure you correctly terminate an employee, and protect your business.

Timing

Employers have to be incredibly careful when deciding to terminate an employee. Ideally, the sooner you can terminate an employee, the better. The standard 90-day probation period generally lets employers off the hook for firing, however, confirmwith the correct legislation in case a period of notice, or pay in lieu of,still applies. Firing an employeewithin this period can also leave employers vulnerable to backlash comments that this intervalis a training and skill-testing period, but generally, employees fired at this time have no right to appeal.

Firing a staff member after probation requires a reasonable notice period.Various factors will determine how long reasonable notice is: age, years of service, their character, and availability of similar jobs. Employees are still entitled to receive compensation and benefits for a sustainable period, as if still employed by the employer.

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Comply with the Employment Standards Act

Review all the various laws to ensure you can terminate said employee and have met the provincial legislation standards to avoid possible lawsuits and legal penalties. Each province has its own labour law or employment standards act to follow, which specifies whether the employee has to be paid out or not. They also outline the minimum standards of pay and benefits employees are entitled to receive upon leaving. 

When you terminate an employee, their severance package must meet these minimum requirements. Ensure you’ve followed the provincial legislation, your employer handbook, and the employment contract prior to firing. If necessary, obtain legal advice to confirm you’ve covered your bases.

The Employment Contract and Termination Letter

Complying with the correct terms of the employment contract is key to verifying termination. Employment contracts need to be reviewed to make sure you’re not breaching any terms, and the contract will spell outspecific provisions regarding termination. Examining this document first ensures you have legal grounds to fire this employee.You may also need to confirm the employee was given proper warnings and a chance to improve, and that regular performance reviews were conducted along with meetings and chances to explain, if necessary.

Keep in mind that termination clauses in contracts may vary depending on who drafted it. Courts have the power to set aside documents that don’t meet the provincial requirements, so it’s important your employment contracts meet minimum standards in initial drafts to avoid future legal disputes. Improperly drafted contracts that fail to meet ESA standards can be thrown out.

After reviewing the contract, draft the termination letter. The termination letter must be ready when you call the meeting with the employee, and after you’ve inspected the employment contract. It should specify the end date, and clearly communicate that this is termination, to avoid confusion of it beinga disciplinary or time out period. Details about the amount of notice, payment in absence of, and severance package will be noted here.If your letter offers benefits above the requirements outlined in the ESA, have the employee sign a release in exchange for receiving the statutory amounts. This ensures full coverage and future liability for your business. This option is completely discretionary to employers.

Once you’re legally and ethically clear to fire, deliver a termination notice and hold an exit interview to explain to the outgoing employee the reasons they are being let go. It’s not easy firing staff, but at the end of the day, it’s just business.

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Topics: human resources

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