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How to Manage Canadian Employees from Your American Company

Posted by Karen McMullen


Jul 22, 2015 9:00:00 AM

How_to_Manage_Canadian_Employees_from_Your_American_CompanyWhether you’re expanding your business operations across the border or just employ Canadian workers for their specialized skills, you must manage Canadian employees properly—this means complying with Canadian health and safety regulations and labour laws while handling the day-to-date human resources responsibilities, such as onboarding, termination, contract negotiations, benefits administration, and more. There will be both big and small differences in legislature. And the small differences can be easy to overlook. The fact is you cannot manage Canadian employees in the same way you manage your American workers. You need to do so while following different standards and procedures.

To manage Canadian employees, you have three options: do it on your own, outsource the responsibility to a back office service provider, or engage an employer of record. Below, we detail the three options so you can make an informed decision in order to better serve your employees across the border.

Manage Canadian Employees by Yourself

Many American companies that employ Canadian workers choose to manage them in-house. Although this is a viable option, it’s also cumbersome, complex, and time consuming to handle the responsibility on your own. When you’re thousands of miles away and don’t have the required knowledge of Canadian labour laws, this option becomes risky. For one, human resources issues are often better handled face to face than over Skype or email. They’ll be resolved faster and more efficiently when they’re dealt with in person.

Plus, all HR decisions need to be based on the appropriate Canadian employment regulations, protocols, and standards, or you run the risk of a bad reputation, lawsuits, fines, and penalties. There are specific laws that apply to hiring, firing, layoffs, human rights, health and safety, and everything in between in Canada. You must follow these laws to the letter. This will require extensive research on your part, especially considering the laws change often. Do you really have the time to research every decision? Can you risk the consequences of non-compliance? If this option seems too risky, you have two others to consider. 

Outsourcing HR to a Back Office Service Provider

Many foreign companies falsely believe that back office service provider only offer one service: payroll processing. Many providers actually offer HR assistance as well. In fact, they offer comprehensive approaches to human resources. They take over all of the paperwork, provide legal guidance, recommendations, and advice, and most importantly, ensure compliance. You can mitigate risks associated with managing your Canadian workers when you outsource to a back office service provider.

Engage an EOR

An employer of record (EOR) will take over your HR responsibilities much like a back office service provider would. The difference with this option is that engaging an EOR means you’re setting up an opportunity for co-employment. Though your Canadian employees will still do the work they normally do for you, your EOR will be their legal employer in the eyes of the government. This largely reduces much of the responsibility and risk associated with managing your Canadian workers when it comes to legal issues, insurance, and payroll processing.

Let the Professionals Handle Your HR Work

In order to manage Canadian employees legally, ethically, and properly, you must ensure that your American company always follows Canadian labour laws. You can do so on your own, but it’s going to be time consuming, overwhelming, and risky.

Or, you can outsource your company’s HR responsibilities to a back officer service provider or an employer of record. Both of these options will be more cost effective, save you time, and ensure that you’re always in compliance. If you’re not well versed in Canadian human resource management, you should seek the help of professionals who are. Back officer service providers and employers of record have HR specialists and legal experts on staff to serve your American company.

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

Topics: American Business in Canada, Manage Canadian Employees

Alberta Employee Vacation & Stat Holiday Entitlement

Posted by Stacey Jones


Sep 16, 2014 7:30:00 AM

Alberta, Canada FlagAlberta Employee Vacation & Stat Holiday Entitlement is the third post in The Payroll Edge’s series “Employee Vacation & Stat Holiday Entitlement” where we outline Canadian employment compliance standards by province to assist you in hiring a Canadian worker.

American or foreign companies paying Canadians take note:  Canadian statutory holidays are paid holidays. As a PEO in Canada, we’re often asked about whether there is stat and vacation pay differences between provinces. Every province has different holidays and qualification rules around paying the employee for the time off.   These rules apply to part time, full time, hourly or salaried employees.  

Public paid holidays and minimum vacation requirements are set out by the “Employment Standards Code of Alberta”.

There are nine public holidays in the Canadian province of Alberta:

  1. New Year’s Day on January 1st
  2. Family Day on the third Monday in February
  3. Good Friday or Easter Monday
  4. Victoria Day on the Monday preceding May 25th
  5. Canada Day on July 1st
  6. Labour Day on the first Monday in September
  7. Thanksgiving on the second Monday in October
  8. Remembrance Day on November 11th
  9. Christmas Day on December 25th 

Exemptions to Public Holiday Pay Entitlement:

There are numerous rules affecting Canadian employees’ eligibility within the province of Alberta. For instance, in Ontario, Canadian workers are entitled to public holiday pay from day one. Meanwhile, an employee in Alberta must have worked for the employer for at least 30 working days in the 12 months before the statutory holiday to be paid for it.

Vacation Pay and Entitlement in Alberta

Minimum vacation time Canadian workers are entitled to in Alberta is as follows;

Two weeks’ vacation time for every 12 months worked for the first four years. After five years of continuous employment at one employer, vacation time increases to three weeks annually. Employers can choose to have the employee work for 12 months before granting vacation time but can also choose to allow the worker to take vacation time any time after the employment has begun.

Vacation pay amounts to 4% of wages for the first four years of consecutive employment at the same employer and then 6% of wages after that. Employers can choose to pay our vacation pay with every paycheque or to pay out the applicable amount right before the vacation time is taken.

Let’s get clear on what “wages” to include when calculating vacation pay before you bring out your calculator. In the province of Alberta there is fewer pay types included and considered as “wages” than most other provinces. To calculate the 4 or 6 % of the previous year’s wages; include regular earnings and commissions. Do NOT include; public holiday pay, overtime pay, bonuses or tips and gratuities.

Note that employees are entitled to both Vacation Time and Vacation Pay.   

Please note Alberta employees working in the construction industry have varied employment rules due to the nature of the industry. Refer to Work Alberta’s website or information on employment standards for the construction industry.

There are other industries and jobs that have exceptions to the above rules. Please visit www.work.alberta.ca for further information on Alberta’s Employment Standards rules.

View the province of Alberta’s Vacations and Vacation Pay Factsheet here.

It can be confusing for American and foreign based firms to learn and comply with Canada’s stringent employment laws that often vary by province or territory. We are a Canadian based Employer of Record service provider similar to a Professional Employer Organization (PEO). Our services include payroll processing for local, American and foreign employers who opt to have us as the “Employer of Record” for their Canadian workers. If you’re thinking of hiring a Canadian worker, contact us before you establish the numerous Government of Canada accounts to begin payroll processing.

View our services page for more information on our Professional Employer Organization PEO and Employer of Record EOR services.

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

Topics: PEO, Canadian Employer of Record, American PEO, American Business in Canada

U.S. Employers Beware: 4 Major Changes to Saskatchewan’s ESA

Posted by Stacey Jones


Jul 16, 2014 8:30:00 AM

U.S. Employers beware: Saskatchewan has updated their ESAAs an American or foreign employer of Canadian workers, you need to protect yourself from ESA violations. The government of Saskatchewan made significant changes to their separate pieces of Canadian employment legislation regarding employment standards, occupational health and safety and Canadian labour relations.

The previous versions of Saskatchewan’s Canadian employment laws were found separate from each other across different employment related pieces. As of April 29, 2014, the government of Saskatchewan announced a new Employment Standards Agreement to tie all those pieces together.

If you are an American or Foreign employer paying Canadian employees please take note that Canadian labour standards in Saskatchewan have changed:

1. Minimum Wage Changes

The current minimum wage in Saskatchewan is $10.00 per hour with an increase of twenty cents taking effect on October 1, 2014. Saskatchewan’s ESA sets out that any changes to the minimum wage will now be announced on June 30 of each year and any changes will take effect on October 1 of each year. Furthermore the minimum wage in Saskatchewan will now be indexed to the consumer price index.

2. Hours of Work and Overtime 

The ESA now allows employers to schedule their Canadian employees for either four 10 hour workdays or five 8 hour workdays. Employers and employees can also choose to average an employees work hours over 1, 2, 3 or 4 week schedules without a work permit. Overtime pay can now be banked by employees.

3. Leaves of Absence 

Service requirements for Maternity, Parental and Adoption leaves are reduced from 20 weeks to 13 weeks. 
New Leaves in the ESA include: Organ Donation Leave, Critically Ill Child Care Leave, Crime Related Child Death or Disappearance Leave and Citizenship Ceremony Leave. 

4. Termination 

Workers in Saskatchewan with more than 13 weeks of continuous employment are now entitled to notice or pay in lieu upon termination of their employment. 

Hiring workers in another country is great for expanding business but risky for Employment Standards Act violation liability. Staying on top of new regulations in the Canadian workforce is difficult. Gaining the services of an Employer of Record service provider (similar to a PEO) like The Payroll Edge allows U.S. and foreign companies the freedom of expansion without the compliance and potential for violating Canadian employment law.

For more Canadian employment law updates and payroll tips, subscribe to our blog. Click here for more information on our services or contact us to hear about how our Professional Employer Organizations helps hundreds of American and foreign companies get competitive while staying compliant.

A U.S. Company Looks to Expand Tts Workforce in Canada

Topics: US Firms Expanding into Canada, Employment Standards Act, Employer of Record, ESA, ESA Violations, ESA Compliant, Canadian Employment Laws, Employee Relations, American Business in Canada, Paying Canadian Workers, Paying Canadian Employees

American Companies: 5 Easy Steps to Calculating Taxes in Canada

Posted by Stacey Jones


Jun 11, 2014 1:45:00 PM

american companies 5 easy steps to calculating taxes in canadaAmerican companies paying employees in Canada will need to learn how to calculate Canadian taxes. Even if the business operates from inside of the US, they’ll still need to calculate taxes for any of their Canadian employees. Making timely and accurate tax filings with the Canadian authorities is essential for avoiding fines and penalties. The steps for calculating taxes in Canada are relatively straightforward.

Calculate Pay

To start with, you’ll need a complete record of the employee’s taxable earnings. This may include overtime, holiday pay, gratuities, or certain paid expenses or benefits. The definition of “pay” can vary from one province to the next, so you’ll need to be versed in the applicable tax laws for each work location. Once you know exactly what to count as taxable income, you’re ready to add up the gross income for each employee.

Verify Status

Withholdings can vary depending on the employee’s status, type of employment, location, age, and hours worked. Withholdings for social programs like the Canadian Pension Plan and Employment insurance have an annual maximum, so you need to monitor when employees have reached their yearly limit. Withholdings can also change from year to year, and it’s up to you to keep up with any changes.

Calculate Employer Remittances

Like the US, American companies in Canada are required to contribute to certain government programs. The employer is expected to match a certain percentage of employee contributions to programs like the CPP and EI. Like employee contributions, annual employer contributions are capped. Make sure you don’t overpay, as you may not be eligible for a refund, or underpay, which could result in fines and penalties. Required contributions can vary from year to year, and province to province.

Remit Withholdings

Once you’ve accurately calculated all of the withholdings from your employee’s pay, you must remit them, along with your contributions, to the CRA and other authorities prior to the due date. For some American companies, this will occur annually, while other companies will have to make more frequent filings. Failure to make regular, timely remittances can result in fines, penalties, and even criminal charges.


Each employee needs to be provided with a T4, T4A, or other tax information slip. These slips typically must be received by the employee by the end of February, though that can change depending on which slip is used. These slips show what the employee earned, any commissions earned as well as the taxes that were withheld for that person. These slips, similar to a W2 in the US, are necessary for the employee to complete their personal taxes, so it’s important to get them out on time.

Straightforward isn’t always Simple

While these steps look pretty straightforward, that doesn’t mean that they’ll be easy to follow. Canadian payroll laws are complex, and constantly changing. If you’re not comfortable committing the time and effort to keep up with those changes, you may want to consider a professional payroll service. A payroll service can handle calculating taxes in Canada, so you and your staff don’t have to.

Canadian Payroll Tax Deduction Calculator

Topics: American Companies, Calculating Taxes in Canada, American Business in Canada

Employee in Ontario? Changes to ESA to Safeguard Families

Posted by Karen McMullen


Jun 11, 2014 9:32:00 AM

Gavel American and Canadian Employment Law resized 600The Proposed Bill 21 “The Employment Standards Amendment Act (Leaves to Help Families) 2014” passed legislation on April 29, 2014 and will take effect on October 29, 2014. This new minimum standard set by the ESA will entitle Ontario workers to three new job protected leave of absences:

Family Caregiver Leave

All Canadian employees, regardless of their length of employment will be eligible for up to eight weeks per calendar year to provide care and support to a family member including children, siblings, parents and grandparents.  Family members must be certified as having a serious medical condition by a qualified health practitioner (physicians, nurses and psychologists). The eight weeks of leave will apply to each family member described in the section and does not have to be taken all at once.

Critically Ill Child Care Leave

Canadian employees who have been employed for at least six consecutive months will be eligible to take up to 37 weeks of unpaid leave to provide care or support to a critically ill child of the employee (again as certified by a qualified health professional). Employees who are eligible for this leave may also be qualified to receive Employment Insurance benefits from the federal government (known as special benefits for Parents of Critically Ill Children) for the duration of their leave. As with the Family Caregiver Leave, written notice must be provided to the employer and the employer is entitled to request a copy of the certificate that qualifies the employee for the leave.

Crime-Related Death or Disappearance Leave

Canadian employees who have been employed for at least six months and have a child who dies and it is probable, considering the circumstances, that the death was the result of a crime, are eligible for up to 104 weeks of leave. In addition, where it is probable that an employee’s child has disappeared as a result of a crime, that employee would be entitled to a leave of up to 52 weeks. Similar to the Critically Ill Child Care Leave, employees may also be eligible to receive income support from the federal government in the form of a grant called ‘Support for Parents of Murdered or Missing Children’.

American and Canadian employers should update their existing employment agreements with their workers in Ontario to reflect and comply with the changes when they take effect in October, 2014.

If you are a U.S. or foreign company looking to hire in Canada, consider an Employer of Record service (similar to an American Professional Employer Organization).  The EOR service offered by The Payroll Edge takes on the responsibility of taxation, payroll, and government compliance for employees in Canada so you can service your clients in the north without the hassle of understanding  foreign policies. Contact us today for more information on how we can help you.

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

Topics: Employer of Record Services, Employer of Record, ESA, ESA Compliant, Ontario, American Business in Canada, Bill 21

Americans Conducting Business in Canada Beware: Border Patrol Keeping Tabs

Posted by Stacey Jones


Apr 29, 2014 9:56:00 AM


As seen on thestar.com “Border officials to share travellers’ info with federal government” by Nicholas Keung.

Effective summer of 2014, Canadian and U.S.A. border patrol services will start keeping tabs on Canadians and Americans entering and exiting either side of the border. The Entry/Exit program initiative will further increase both countries security and has already begun taking note of third country national’s information including those arriving to Canada on work permits, foreign students and visitors. 

The Entry/Exit program will be in full effect on June 30 2014, and will be extended to all Canadian and American citizens crossing the border.  

Canada and the USA border patrol services will soon be collecting both countries citizens information as part of the new Entry/Exit initiative from The Payroll Edge

What Information will the Canada Border Services Agency (CBSA) be collecting and sending to federal departments?

  • Travellers Name
  • Date of Birth
  • Nationality
  • Gender
  • Document Type
  • Work Location Code/Port of Entry Code
  • Date and Time of Entry
  • Country where travel document was issued

How does the Canada Border Services Agency use this information? Simple; data on entry to one country would serve as a record of exit from the other. This information will enable government officials to track illegal activity such as citizens scamming Employment Insurance or child tax benefits programs when they are not in the country.

So how does this affect American employers employing or paying Canadian workers? If you conduct business in Canada -and travel there regularly, be prepared to hand over your data to border officials and have it shared between both countries federal departments.  

If you have a U.S. employee who crosses the border into Canada on a regular basis and is away from their country of residence for long periods of time, ensure that you are aware of the rules surrounding foreign travel as it may not only affect the employee’s and companies taxation liabilities, misuse will result in their inability to cross the border at all.

American Employers conducting business in Canada should also be aware of the status of their permanent residency (if applicable) as this will now be tracked under the new Canada-U.S.A. border data exchange program. Permanent residents must live in Canada for a total of at least two out of every five years to remain eligible for the program.

If you conduct business in Canada and wish to avoid the complications of your U.S. employees crossing the border to service your clientele here, employing a Canadian may be the best solution.  To do so without the complexity of registering a business in Canada and understanding foreign employment law, an Employer of Record Service in Canada (known as a PEO in the U.S.A.) can help. A Canadian Employer of Record takes care of everything for American employers retaining Canadian workers including payroll tax deductions, employment standards compliance and HR management solutions. Contact The Payroll Edge to learn more. 

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

Topics: Professional Employer Organization, Government Compliance, PEO, Canadian Employer of Record, American PEO, American Business in Canada, Canadian-Based EOR, US and Canadian Business

U.S. Employers: Navigate Canada’s Employment Standards Carefully

Posted by Ray Gonder


Apr 25, 2014 9:39:00 AM

Ontario's Employment Standards Poster is required to be displayed in Canadian workplaces. Call The Payroll Edge to get employer of record services



As seen on First Reference Talks “Navigating Ontario’s Employment Standards Act” by Doug Macleod

Did you know as an employer you are required by Canadian Law to post a “What you should know about the Employment Standards Act” in your workplace for your employees to see? The Employment Standards Act is in place to set minimum standards for workplaces in Ontario. Most Canadian workers living in Ontario are covered by the act whether they are employed by an American employer or a Canadian company. 

If you’re an American company employing and paying Canadian workers, here are a few regulations from the Employment Standards Act you should follow when hiring and paying Canadians:


  • Canada’s Minimum Wage varies by province. In Ontario, minimum wage will be $11.00 per hour beginning in June 2014. Please note the minimum wage for servers, students and nannies varies.
  • Employers are required to pay Canadian employees (including temporary and contract workers.) for statutory holidays –even if they did not work that day. Employees who work on stat holidays are entitled to time and a half (overtime pay).
  • Employers must pay Canadian workers overtime pay after 44 hours in one work week.
  • Canadian workers are entitled to two weeks’ vacation for every 12 month period of work. Most employees are entitled to a minimum of 4% vacation pay.
  • A reasonable notice of termination must be given to Canadian employees who have worked for their employer for longer than 3 months’ time which is considered the “probationary period”.
  • There are different unpaid leaves of absences an employer is required to give their employees; Pregnancy and Parental Leave, Reservist Leave, Organ Donation Leave, Personal Emergency Leave and Family Medical Leave to name a few. Length of time for each unpaid leave of absence varies. During a leave of absence, a Canadian employee’s seniority is not affected by their leave and benefits offered before a leave are still required to be paid by the employer during a leave.

The Employment Standards Act can be examined in further detail here. Please note these ESA regulations can change depending on workplace, industry, age, length of employment and other factors so be sure to use the tools on the Canadian Ministry of Labour website.

Failing to comply with the ESA could result in hefty fines, penalties and in some cases persecution whereby American and foreign employers cannot plead ignorance as an excuse. If you’re doing business in Canada, you must know the rules to protect yourself, your employees and your reputation.

If you’re an American looking to hire and pay a Canadian worker consider an Employer of Record service. An EOR (similar to a PEO in the United States) is a great option for American and foreign employers who aren’t interested in learning a new set of rules in employment law. Contact The Payroll Edge today for more information. 

7 Signs It's Time to Outsource Payroll

Topics: Employment Standards Act, ESA, ESA Violations, ESA Compliant, U.S. Business operating in Canada, American Business in Canada, Compliance, Canadian-Based EOR, Canadian EOR

Canadian vs. American: Drug Testing & Background Checks

Posted by Stacey Jones


Apr 22, 2014 8:55:00 AM

Canadian vs. American: Drug Testing and Background Checks

Background Checks and Drug Testing

These two often go hand in hand in the U.S. and are a precursor to employment but in Canada the rules and perception surrounding drug testing and background checks are very different.

Drug testing a potential employee is rarely permitted in Canada and is not worth the legal risk with the Human Rights Commission. Although this issue has seen some press as of late, the majority of Canadian employers are not permitted to maintain policies in regards to pre-employment drug testing and random drug testing during employment. The exceptions are safety sensitive positions where an accident or incident has occurred or where being ‘under the influence’ could cause irreparable damages or death.

A great example of this can be seen in the recent lexology article ‘Suncor random drug and alcohol testing decision released’ written by Caitlin Nobes; 

Recently in Alberta, with the oil industry booming the issue of safety has come up because workers living on worksites are suspected of being intoxicated while working. Suncor was set to begin random drug testing on their employees but it was put on hold due to an injunction and the panel who made the decision said “the program cannot be justified” and “In our view, the evidence does not demonstrate a culture at the Oil Sands Operations where the consumption of alcohol is so pervasive as to be accepted by employees, where employees go together to drink openly and where such activity is either condoned or encouraged by management’s practices or inaction”

Unifor Local 707A President Roland Lefort, who represents the workers at the affected sites says:

"Random drug testing of workers that have done nothing wrong is a violation of their basic rights, we will work with Suncor to achieve the highest possible levels of workplace safety with education and prevention, not invasive medical procedures."

The practise of drug testing employees is for the most part, considered a human rights violation in Canada.

Unlike in the U.S., it is not common practice to run a background check on every potential employee. Although there is no law in regards to this, it is best practice in Canada to only run a background check on a potential employee if they will be engaged in a job working directly with money or highly sensitive information. Many times U.S. companies have run these checks on a Canadian out of habit and end up with a disenchanted potential hire.

For those American companies keen on hiring Canadian employees without a good understanding of the rules and regulations to do so, should engage with an Employer of Record (EOR) service for legislative and legal compliance. Canadian EOR's (known as PEO's in the United States) can ensure seamless integration into the Canadian market without the daunting task of understanding foreign employment compliance.

For more information on our Employer of Record Services
Contact one of our Employer of Record specialists.


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

Topics: EOR, Professional Employer Organization, Employment Standards Act, Canadian Employer of Record, American PEO, American Business in Canada, Compliance, Canadian-Based EOR, Canadian EOR

How American Companies Pay Canadian Employees (updated 2019)

Posted by Ray Gonder


Apr 16, 2014 9:05:00 AM

How american companies pay canadian employeesIf you’re a US-based employer trying to pay Canadian employees, the process can be deceptively simple. You may think that all you have to do is convert US dollars to Canadian, then send a check across the border. However, if you use this approach to pay Canadian employees, you’ll soon run afoul of the Canadian Revenue Agency (CRA). The CRA administrates and oversees Canadian payroll tax laws and tax withholdings, and they have some very stringent requirements for how you must pay Canadian employees.

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

Working Around the Laws

Some US businesses are tempted to try and work around the Canadian payroll laws. They do this by paying Canadian employees as independent contractors. As with most workarounds, this approach fails to meet the intent, and the letter, of Canadian payroll laws. The CRA has made a concerted effort to crack down on employers who abuse the independent contractor system. A US-based business caught trying to pay Canadian employees in this manner will almost certainly face fines, back tax payments, and even criminal actions.

Working Within the Laws

Trying to pay Canadian employees within the letter of the law can be equally challenging. The payroll laws are complicated and lengthy. Learning all of them takes a lot of time, and understanding them takes a lot of experience. The complexities of the laws can affect their application from one situation to the next. This can impact everything from withholding amounts to required workplace training. Failure to understand, and properly apply, these laws can also result in expensive penalties.

Working With a Partner

One way to pay Canadian employees without having to worry about workarounds or learning complex legal codes is by working with a professional payroll service provider. They can act as your Employer of Record (EOR) in Canada, allowing them to legally pay Canadian employees on your behalf. As an EOR, they already have the infrastructure and accounts that are necessary for hiring and paying employees legally. They also have the advantage of already being established, so they can begin paying employees almost immediately. Compare this to the weeks or months it will take you to establish yourself legally in Canada so you can pay employees on your own.

The Services You Need, When You Need Them

A service provider like The Payroll Edge can do much more than just help you pay Canadian employees. With their training and experience, they can handle as many or as few of your administrative tasks as you need. They can provide workplace safety and compliance training, contract negotiations, benefits management, and much more. With their help, you can quickly and easily hire workers in Canada and begin to service the needs of your clients here in Canada without worrying about running afoul of the CRA.


Topics: American Companies, Pay Canadian Employees, American Business in Canada

U.S. Employers: There is No At Will Employment in Canada

Posted by Stacey Jones


Apr 10, 2014 8:41:00 AM

describe the imageAmerican Companies “At Will Employment Policy” and Canada’s “Reasonable Notice Policy”

We see it all the time in the movies. An employer at odds with a worker shouts out ‘You’re Fired’, the employee gathers their things, leaves the building and that’s the end of it. What you don’t see is the work the HR department then has to go through determining pay in lieu of notice, severance package and a possible wrongful dismissal suit. 

In the U.S. many employment relationships are considered to be ‘at will’ or, in other words, can be terminated by either party without cause or notice without the worry of retribution. In Canada no such relationship exists so hiring a Canadian employee can be much more complicated.

Canadian law states that an employer can terminate an employee without cause but they are required to provide ‘reasonable notice’ or compensation in lieu of this notice.

Minimum requirements for ‘reasonable notice’ vary from province to province and will depend on the tenure of the employee. If an employee has been with the company for less than three months the issue of termination is less complicated so often Canadian companies will refer to this as the “probationary period” and assess the employees ‘fit’ and ‘competence’ for the position before the three months end.

When terminating a Canadian employee without notice or pay in lieu, there must be evidence of ‘Just Cause’. Just cause can be used for certain serious acts such as theft or harassment or employees can be fired as a result of a series of minor incidents.  For the latter dismissal, the employer must document that they followed a progressive discipline policy of increasing severity.

A solid employment agreement is essential when it comes to outlining notice and probationary periods as well as other regulations when it comes to employment standards in Canada. An essential step to take before engaging with an employee in the great white north is to consult a company in the know, preferably one well versed in Canadian employment law.

The Payroll Edge is a Canadian based Professional Employment Organization (PEO) or Employer of Record (EOR) as it’s called in Canada. We take on the responsibility of employment compliance when it comes to hiring north of the border so you can focus on expanding your business presence in Canada rather than learning a whole new set of rules and regulations.

Contact us today for more information on how we can help you!

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

Topics: workforce compliance, EOR, Employer of Record, Canadian Employer of Record, American Business in Canada, Regulatory Compliance, Canadian EOR, Employment Agreements

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