Although you may think you’re paying your Canadian employees legally—you could be wrong. International companies often believe their payroll practices are on the up and up, but without proper experience and expertise in Canadian payroll legislature, they could be partaking in illegal activities. It’s not so easy to pay Canadian workers—you can’t just convert funds to Canadian dollars and mail out cheques every couple of weeks. There are laws to follow, employee classification to figure out, and taxes and other deductions to consider.
To ensure you are paying your Canadian employees legally, check out your three options below.
Learning the Ropes
International companies can choose to take on the responsibility to pay Canadian workers on their own. Though this is a fair option to choose, it takes considerable time and effort and is usually the reason that workers aren’t paid legally—either because of a lack of knowledge or because employees want to ignore the law.
If you are serious about paying your workers legally, you’ll have to learn the ropes. The Canadian legal system related to payroll is complex, ever changing, and often confusing. Not every law applies to all international companies so you’ll have to be able to decipher each law and understand whether or not it applies to your type of business. Additionally, the legislature changes depending on where your Canadian employees are working—each province has its own regulations.
If you want to learn the ropes and get the experience and knowledge you need to legally pay your workers in Canada, it’s quite admirable, but it’s going to be more difficult than you think. The legislature, taxes, deductions, remittances, and deadline all differ from those in your home country. Miss even one vital piece of the puzzle and you could be setting yourself up for fines and penalties—not to mention a bad reputation.
In short, there’s a lot to learn, and you’ll have to learn it quickly—before you hire and pay your first employee. Additionally, if you’re going to handle this administrative work internally, you’ll have to establish a presence in the country, and set up the appropriate government accounts and infrastructure before you even get started. This can delay your expansion efforts considerably.
A Payroll Service Provider Can Help
Your second option is to outsource your payroll needs to a payroll service provider. When you take this route, you don’t have to worry about learning the Canadian laws or ensuring that you’re complying with them. The payroll provider can do this for you. Not to mention, the company can do this at a fraction of the time and cost that it would take you to manage payroll, because it already has a team of experts on staff that knows the ins and outs of the business. You won’t have to worry about deducting taxes, remitting payments, filing annual tax returns, mailing pay stubs, or keeping track of benefits, contributions, or vacation and sick days. Choose the right service provider and you can also outsource your human resources administration as well, so your entire business can be more streamlined in the back office.
Partner Up with an Employer of Record (EOR)
The last and most beneficial option for international companies is to partner up with an employer of record in order to pay Canadian workers legally. The employer of record in Canada legally acts as the employer to your workers in the country. The EOR takes over the responsibility of dealing with all aspects of your Canadian workforce, including payroll and human resources and all other administrative roadblocks.