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3 Obstacles That Will Slow Your Business Expansion into Canada

Posted by Ray Gonder

|

Jul 17, 2017 9:00:00 AM

3 Obstacles That Will Slow Your Business Expansion into Canada.jpg

Canada has a steadily growing economy and offers businesses a consumer base that is loyal and true, but before considering expansion into the True North, companies must be able to navigate a different set of employment and import laws, assess the costs of doing business in Canada, and connect with the Canadian consumer.

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

1. Lack of an Employer of Record (EOR)

The best way to break into the Canadian market is to reach out to a company that can act as your Employer of Record in Canada. An EOR can be your trusted partner in navigating the legal requirements, tax regulations, and general complexities of a business expansion into Canada. With the help of an EOR, businesses can focus on their core product and provide the best service that they can to the newfound Canadian market.

2. The Unseen Costs of Expansion

Payroll is a basic and necessary function that has slight differences in Canada versus the US. Whether it’s the numerous taxes Canadians pay or navigating vacation pay, the Canadian Revenue Agency is not very forgiving if businesses fail to accurately provide and report their accounting. Moreover, basic minimum wage laws, in general, vary depending on the province, which adds another layer of cost calculation since the amount is higher on average than US-state rates.

Canada, while boasting a population of around 36.6 million, is a large country. Moving goods across the border further increases the cost of expansion. Canada has its own set of customs laws and regulations, all of which require significant time and manpower to navigate.

Population density also widely varies per province, so businesses need to tailor expansion plans to specific areas. These regional differences also impact language, with slight alphabetical variances in accordance to British-English and regulations concerning access to French labelling.

3. Winning the Hearts of Canadian Consumers

At the end of the day, businesses must win over consumers. Despite its close proximity to and intertwined economy with the US, Canada is home to an economic landscape and discerning consumer market that is starkly different from their neighbours to the south. While US companies believe their tried-and-tested aggressive business models will succeed in the north, what they soon discover is that expansion into Canada isn’t a cakewalk.

Canada’s relatively small and dispersed population means that aggressive takeovers, such as Target’s business expansion into former Zellers locations, simply do not work. Target’s downfall was a result of multiple factors, but primarily expansion costs were higher than projected and sales were lower than expected.

Moreover, Target’s existing systems weren’t prepared to handle a new market, the Canadian dollar, and even French language options. Target’s rush to launch meant that staff were stretched thin, stock levels were inconsistent, and customers often encountered barren stores. Simply put, the magic of Target in the US could simply not be replicated in Canada.

Don’t Fall Behind

The rise and fall of Target in Canada is a prime example of a US-based business failing to gain ground due to an underestimation of the Canadian market. However, US-based retailers such as Home Depot, Staples, Wal-Mart, and Starbucks have all managed to find a home in the Canadian market after a slow testing of the waters, a gradual integration into the Canadian economic landscape, and understanding the preferences of the Canadian consumer.

While Canadian shoppers seem to be no different from their US counterparts on the surface, regional variances, multicultural factors, postcolonial heritage, and even the weather all affect the temperament of the Canadian shopper.

Companies must be willing to adapt, do their research, and make significant changes to their operational models before considering a business expansion into Canada. Canada is a proud country and there are complex economic dynamics that play out across the nation, but if you can win the hearts of Canadian consumers, businesses will find a rewarding market that will truly invest in their company.

What US Companies Need to Know about Paying Employees in Canada

Topics: Compliance

7 Things to Know When Working with Canadian Independent Contractors

Posted by Corinne Camara

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Jul 7, 2017 9:00:00 AM

7 Things to Know When Working with Canadian Independent Contractors--.jpgIs your business looking to do work in Canada without actually being in Canada? If so, Canadian independent contractors will help you get the job done. If you’re located out of the country, you may not be under the same jurisdiction as Canadian companies. In this case, it’s important that you know exactly what you’re getting yourself into so you don’t make any staffing mistakes.

Hiring independent contractors is different in Canada compared to the United States, so you’ll need to brush up on your contractor knowledge.

1. The Difference Between an Independent Contractor and an Employee

Employees and independent contractors are considered two very different working entities in Canada. Because employers are not required to pay taxes on independent contractors, the difference is very important in Canadian law. Unfortunately, the lines between employee and contractor aren’t the most definitive.

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

The most fundamental difference between the two types of workers Is the amount of control an employer can exercise. An employee is almost completely controlled by their employer, whereas an independent contractor can work where they want when they want. Employees will also receive Employment Insurance, income tax, and Canadian Pension Plan deduction from their paycheque, whereas independent contractors will not.

2. Employee Misclassification

If you’re looking to maintain good relationships with your Canadian independent contractors, you’ll need to ensure they are classified properly with the CRA. The CRA takes employee misclassification very seriously. The fines for employee misclassification can be grave.

This can also get your Canadian contractor in financial trouble, as the may be classified by the CRA as a personal service business. This means that they cannot write off any business expenses. No business expenses means everything they earn is taxable. They will then have to personally pay payroll taxes and penalties, which should be paid by an employer.    

3. Employer Coverage       

If you’re a foreign business looking to hire Canadian independent contractors, it’s important to keep in mind how you’re covered. When hiring remote workers, you do not have the same intellectual property, non-solicitation, and non-disclosure protection compared to a company that hires Canadian employees.

4. Working Conditions

Based on the differentiation between an employee and an independent contractor, you have no say over how operations are run. You’ll have to step back when it comes to your independent contractor’s schedule and other clients. You contractor could even be working for your direct competitor, but you won’t be able to ask them to cease working for another company. Canadian independent contractors work for themselves above all else, your company is simply a client.

5. Paying Your Independent Contractors     

The best part about working with an independent contractor is that you only have to pay for the services they charge. If you’re charged $5,000 for a project, you pay $5,000. You don’t have to worry about any additional costs or any hidden fees when you partner with Canadian independent contractors.  

6. An Employer of Record Can Help    

It’s important to ensure that you’re completely confident in your understanding of hiring Canadian independent contractors before you proceed with any over-the-border business ventures. You may require assistance navigating your way through the workforce—an Employer of Record can help you manage all your Canadian contracts and payroll.  

7. Separation is Easy         

If you’re not happy with the work an independent contractor has done, you have the ability to completely sever all ties without the potential of a lawsuit. Once you’ve paid your independent contractor for their services, you are not obligated to ever hire or even speak to them again. There is no risk of a wrongful dismissal lawsuit or a required severance payout to no longer use their services in the future. 

What US Companies Need to Know about Paying Employees in Canada 

Topics: Compliance

Are You A US Company Hiring in Canada? Avoid These 5 Common Mistakes

Posted by Anna Mastrandrea

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Jun 7, 2017 9:00:00 AM

Are You A US Company Hiring in Canada Avoid These 5 Common Mistakes--.jpgWhen hiring Canadian employees to work for your company based in the United States, it is important to understand the law and regulations that you must follow. Even though these people are now working for your company, they are still bound to Canadian employment laws, standards, and regulations.

Especially for things like employee payroll and taxes, you need to make sure that you are being thorough in your compliance of these rules. To ensure that you are not letting anything fall through the cracks, make sure that you are avoiding these five common mistakes.

Employee Classification

You are classifying the employee incorrectly. Many businesses think that they can avoid complying with Canadian employment standards by classifying all of their employees as contractors. The Canadian Revenue Agency, or CRA, knows that employers do this and might be suspicious if they see that all of your Canadian employees are independent contractors. If caught, you could face prosecution. It is important to classify correctly.

Legal Woes

You don't have your legal staff on board. Make sure that your company's lawyers are in the loop as you hire Canadian employees. They will be able to point out any HR or payroll mistakes you are making. This will also eliminate the need for any legal catch-up if you do get into trouble with the CRA.

Know the Terrain

You don't understand Canadian employment laws. The United States and Canada have different payroll rules and regulations, safety standards, and other laws ensuring employee rights. This means that your new Canadian employees will not fall neatly into the regulations you have for your U.S. employees. Research both national and provincial employee laws and make sure that you are complying with your employee's specific local set of rules.

International Communication

You aren't communicating with your Canadian employees. Even if you are outsourcing services to Canada, and you don't see these employees on a regular basis, make sure that you are still communicating with them regularly. Treat them as you would any other employee. This means that you should keep them updated on company news, changes to employee payroll systems, or adjustments to their benefits package.

International Communication

You aren't communicating with your Canadian employees. Even if you are outsourcing services to Canada, and you don't see these employees on a regular basis, make sure that you are still communicating with them regularly. Treat them as you would any other employee. This means that you should keep them updated on company news, changes to employee payroll systems, or adjustments to their benefits package.

Canada has over 190 requirements written into law that dictate employee payroll processing. It is in your company's best interest to be in full compliance with these laws, as taking shortcuts can leave you with high fines and other types of prosecution. 

Get in Touch

The Payroll Edge is a leading employer of record and payroll service provider. Contact us today to learn how you can best expand your business into Canada. 

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

Topics: Compliance

3 Reasons Employment Agreements Are Crucial in Canada

Posted by Corinne Camara

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Jun 5, 2017 9:00:00 AM

3-Reasons-Employment-Agreements-Are-Crucial-in-Canada.jpgA binding contract between and employer and employee is a common document many businesses use. These agreements cover a number of issues regarding both parties—standard documents everyone is expected to read and sign. 

When new employees are hired, employers often use a contract to define and cement the relationship. Employment agreements are crucial in Canada. Here are three reasons why.

1. Protect the Employer

Employers need to protect themselves, and a binding contract allows that. A well-written contract should be error-free and clarify the employer’s obligations. Employers want to protect themselves in two major situations: termination and competition. 

Employers want to be sure they legally can terminate their employees, without getting caught in any legal cross-fire. With this clause clearly defined, an employer can specifically limit what the employee is entitled to claim. As long as it meets the provincial employment standards act and Canadian labour laws, employers are covered when letting go of employees.Anything below those standards though will be a problem. 

Employers also need to protect their business information and clients. Business owners don’t want employees to leave and take their clients with them. When employees move on, they also take with them a lot of knowledge and confidential information as well. This can pose potential problems when employees leavefor a competitoror think of starting their own businesses in the same field. 

Restrictive covenant clauses protect the employer’s confidential customer base and trade secrets. These clauses still have restrictions—such as time period and geography—but it givesemployers some temporary coverage. Businesses want to protect their profits and information, butanything too restrictive will be voided by the courts.

2. Clarify the Employee’sPosition

What’s important to individual employees should be clarified in the contract. Employment agreements specifically outline an employee’s obligations, and any benefits promised by the employer.Any special promises spoken should be in writing in the contract. For example, if an employer has promised a bonus at year-end, establishing this in writing will ensure it’s received as noted.

The contract will detail the agreed-upon terms. Payment policies, commission schedules, responsibilities, etc., will be outlined in the contract. As contracts are generally worded in favour of the employer, this gives new employees a chance to negotiate terms that will benefit them a bit better, and amend the contract to be less one-sided.

Post-negotiated contracts outline final terms regarding pay, job title, vacation policies, and other aspects, and they employ broader definitions of terms to get clarification. And if employees resign or are dismissed, the agreements will protect them in terms of severance packages and other things they may be entitled to.

3. Reduce Risk and Ensure Compliance

At minimum, the terms of an employment contract have to comply with the employment standards act of theapplicable province.Contracts are used to assist both parties by defining terms and responsibilities, and removing the guesswork of what will happen in possible situations. Clauses can be tailored to the needs and positions of each party. Established terms in employment agreements reduce the chance of litigation and minimize other conflicts should they arise.

Employers can face issues regarding liability, as commonly seen with reasonable notice of termination and severance pay. When terms are recorded for these situations, that written definition explicitly details what the employee can expect in this situation, as long as it still complies with the provincial act and human rights code.Employment contracts are crucial because their limitations and defined terms help reduce overall liabilities and risk.

Contracts control human resources risks, including those associated with employee conduct such as confidentiality, harassment, or conflicts of interest and risks from breakdowns. While employment agreements don’t exactly eliminate all misunderstandings between parties, they significantly help reduce them.

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

Topics: Compliance

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

Posted by Stacey Duggan

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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

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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

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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

5 Key Differences Between Canadian & US Employment Law

Posted by Anna Mastrandrea

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Apr 10, 2017 9:00:00 AM

5-Key-Differences-Between-Canadian-&-US-Employment-Law.jpgWhile Canada and the U.S. are similar in many ways, their individual employment legislation could not be more different. Here’s five key differences between the two countries’ employment law.

1. Agreements

Non-competition and non-solicitation agreements are quite different between the two nations. While Canada offers leniency, these types of agreements are more narrowly written in the U.S. 

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

Restrictive covenants are much harder to enforce in Canada because Canadian courts work to balance the interests of an individual’s ability to earn a living with the employer’s proprietary rights. Neither one trumps the other. Canadian courts will enforce reasonable non-compete and non-solicit clauses so long as time, geography, and the nature of protecting the business doesn’t unduly limit the employee’s ability to secure employment. The States places a higher emphasis on the protection of trade secrets, versus the balance seen in Canadian employment law. 

Canadian courts don’t “blue pencil” restrictive covenants. If a clause in the agreement is too broad, the covenant is completely stricken. U.S. courts, on the other hand,will modify the clause in question, particularly if it’s “blue pencil”. Be sure to check with the appropriate state and provincial legislation for individual specifications.

2. Minimum Employment Standards

Federal and provincial statutes outline the minimum employment standards in Canada. Federal, state, and local law outline them in the U.S. 

Canada’s legislation sets a minimum requirement to redress the imbalance of bargaining power between employers and employees. Along with each province’s administrative tribunals, they work alongside the legislation to address employee issues. Employers who don’t comply find with the tribunals themselves facing legal sanctions. 

The U.S. by contrast defines minimum standards through “exempt” and “non-exempt” categories, notably where salaried employees are typically exempt from overtime pay. This distinction doesn’t exist in Canada. Unless the position is truly executive or managerial, everyone is entitled to receive overtime in Canada. Whether the position falls into this category is based by analyzing the job’s duties.

3. Labour Relations and Unions

Canada is very pro-union, with a higher union rate compared to the U.S. The labour relations legislation in Canada reflects this union-friendly bias, noted particularly in sale or acquisition of business.

In Canada, when sale or transfer of business occurs, the union carries over the collective agreement and bargaining rights to the new employer. Contrast this with the U.S., where the acquiring employer doesn’t always receive the predecessor’s collective agreement or duty to bargain.

Canada’s Charter of Rights and Freedoms includes the right to join the union to bargain collectively and in good faith. The U.S. Bill of Rights, “freedom of association”, is much more limited in comparison.

4. Employment Litigation

Jury trials are rarer in Canada, and the threat of a class action lawsuit is not as large. Costs recovery in litigation and counsel is much higher compared to the U.S., so many are hesitant about bringing a case before the courts.

Much of the damage award is considered predictable in Canadian courts and quickly solvable. This is unlike the States, where most cases seem to involve human rights, resulting in large damage awards and costly settlements. In relation to this, lawyers’ fees are generally recoverable from the losing party and punitive damage awards pale in Canada when compared to the U.S.

5. Termination

Canadian employers are required to give reasonable notice or pay in lieu of it, as stated in common law or the employment contract. U.S. employment law allows termination “at will,”where a notice of termination is only required if it’s company policy or stated within the contract.

“At will” is subject to terms of the written agreement, discrimination, and certain other exemptions. Generally, U.S. employers can just let employees go, unlike their Canadian counterparts, where the approach is very different.This is where employee contracts are important to review. They’ll outline the minimum requirements and indicate what the employee is entitled to.

What US Companies Need to Know about Paying Employees in Canada

Topics: Compliance

Why Payroll Compliance Legislation Is Important

Posted by Stacey Duggan

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Feb 20, 2017 9:00:00 AM

Why-Payroll-Compliance-Legislation-Is-Important.jpgBusiness owners have a number of rules to follow to run their businesses effectively, from both a corporate and legal standpoint. Payroll compliance is arguably the largest financial obligation a corporation has, and employers should always keep in mind compliance and legislation to avoid serious penalties. 

The legislation surrounding payroll can be confusing, so it’s critical for businesses to be aware of current and changing regulations. Below are some key issues that highlight the importance of payroll compliance.

Legally Required to Comply

If your company doesn’t meet the standards of various acts and legislation, you’ll run into a mountain of problems. Understanding employment and tax law are necessary to accurately report your company’s operations, and incorrect filing or employee misclassification can lead to fines, penalties, or potential lawsuits. For the growth and safety of your business, ensure you’re complying with the correct laws and regulations so your business is operating in a sound manner. 

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

Making sure your company’s paperwork is accounted for is key, and one aspect of this is that corporations have to file taxes to be recognized as legitimate businesses. To make sure your company is in good standing and filing paperwork correctly, understand which federal and provincial laws apply to your business in order to ensure that your organization is following them. If you’re unsure, you can seek advice from a third party. 

Legal compliance varies across the provinces—businesses in each province abide by a different employment standards act. To make sure your company is in line with regulations, and to avoid fines or penalties, make sure your business adheres to the correct provincial legislation.

It’s Not Just about Payroll: Ethics & HR

Payroll compliance doesn’t stop at making sure your employees are paid correctly and your tax reports are filed on time. It includes your company’s human resources department: employee benefits and bonuses, hiring and firing practices, and how pensions, sick leaves, and holidays are paid, for example. 

Compliance goes hand-in-hand with human resources, and your business should have a strong code of conduct and good company ethics. For their own consideration and security, businesses need to make sure they look after their employees. As the business owner, you want to make sure you aren’t infringing on your employees’ rights or benefits. 

Payroll legislation is about more than simply processing payroll because it affects all areas of a corporation. Manage, and reduce, your company’s risk by making sure every aspect of payroll compliance is included.

Seek Third-Party Help

As payroll compliance can be confusing and overwhelming, you may find it more helpful to consult an outside source. Third-party firms, or professional employer organizations (PEOs), are an advisable solution for corporations that do not have the time or resources to keep a legal team in-house to focus on changing regulations.

PEOs and outsourced providers are convenient because knowing the ins and outs of payroll compliance is the heart of their business. Their expertise extends beyond payroll to include tax filing, classification, health and safety, employee sick leave, holiday and benefit pay, as well as knowledge of employee and tax law.

Instead of using your resources and time to pay a team in-house that may not understand all aspects of compliance, outsourcing the work to a team that does will help your firm avoid costly mistakes. Working with a third party means working with people who are fully capable of handling the trickier parts of compliance legislation.

Companies that don’t follow payroll compliance put their futures at risk. Complying with the demands of payroll legislation will keep your business legally responsible and running smoothly.

7 Signs It's Time to Outsource Payroll

Topics: Compliance

Do I Have to Comply With HIPAA For My Canadian Employees?

Posted by Shannon Dowdall

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Feb 13, 2017 9:00:00 AM

Do-I-Have-to-Comply-With-HIPAA-For-My-Canadian-Employees.jpgAlthough the United States and Canada share a border, these two countries do not share the same payroll and HR compliance laws. U.S. companies looking to hire Canadian employees are often hesitant to do so because of strict regulations and a general lack of knowledge when it comes to Canadian legislation. 

By relying on uninformative documents and outdated practices, U.S. companies can and do make very costly mistakes when it comes to managing Canadian employees. And when it comes to health and safety compliance, a lot of U.S. organizations may choose to completely bypass their Canadian employees, especially if they are not working within U.S. borders.

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

But the reality is that all healthcare organizations and companies that interact with Medicaid or Medicare have to comply with HIPAA and OSHA for all employees, both foreign and domestic.

Partner with a Medical Record Retrieval Services Provider

But since healthcare law in Canada is so much different than it is in the U.S., the best way to manage employee health information services is by partnering with a medical record retrieval services provider. 

Much like payroll service providers, medical record retrieval services work as a third-party human resources service to comply with all necessary regulations. And if you're dealing with Canadian employees, it's essential to use Canadian medical record retrieval services.

The American government is able to view any and all data that is relevant to national security under subpoena. However, this is not the case under Canadian law. In fact, it directly violates Canadian privacy law. All Canadian health information, if it were to be accessed by any agency, must go through a different set of steps in order to be passed along. This is why it is unsafe to have an American record management service handle Canadian health information.

Outsource Payroll Services, Too

By choosing The Payroll Edge, your company is guaranteed a fast, efficient, and legal method of transferring health information between health service providers and insurance agencies for both your American and Canadian employees. There's no need to hire separate companies.

Outsourcing your payroll services as well as medical record retrieval services will give you an advantage over your competitors, as you'll be able to employ a wider range of people from both sides of the border.

If you already have Canadian employees, don't risk a potentially costly HIPAA violation! Contact The Payroll Edge to ensure proper privacy compliance.

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

Topics: Compliance

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