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Doing Business in Canada, eh? Top 5 Differences US Employers Need to Know

Posted by Stacey Jones


Aug 15, 2019 9:00:00 AM

redWhen it comes time to expand their business, many American business leaders and owners look to the Great White North. Canada makes sense as your first international market. There are so many similarities between the two countries, success may seem like a guarantee.

Doing business in Canada can prove to be a stumbling block for expanding companies. Although Canadians have much in common with their neighbors to the south, there are also plenty of differences. That’s especially true regarding employment law and managing your employees.

If you plan to hire Canadians to staff your operations, keep these five differences in mind.

1. Payroll for Doing Business in Canada

Payroll is already confusing enough in the United States. When you step over the border into Canada, a whole new set of rules come into play.

At first glance, Canadian payroll may not seem too different than its US counterpart. You calculate how much you owe your employees, you take certain deductions, and you remit those to the Canada Revenue Agency.

Unfortunately it’s not that simple. Canadian law imposes different penalties, different payment schedules, and even different record-keeping obligations on employers. You must be aware of all those differences as you administer payroll.

2. Holidays and Vacation Pay Are Mandatory

Another major difference between employee compensation in the US and Canada is holiday and vacation pay. In the US, both of these are almost entirely optional. If you want to pay your workers for a holiday or give them two weeks of paid vacation, that’s your choice.

In Canada, both are mandatory. Certain holidays are considered statutory, which means employees must be given the day off and paid for the day.

Paid vacation is also non-optional. Employers are expected to set aside a certain amount, often equivalent to a percentage of an employee’s salary or average earnings. This is then used to fund an employee’s vacation entitlement.

Rates of pay for holidays and vacations, as well as the amount of time off, are set by the provinces. That means the rules vary from place to place. An employee in Quebec will be paid differently than one working in Ontario or BC.

3. Health Insurance Is Supplemental

The Affordable Care Act created an obligation for American employers to offer health insurance to their employees. Employers are still able to choose the plan they offer and the provider they work with. Health insurance can act as an incentive for hiring the right talent.

In Canada, the situation is quite different. Canadian employees still like employers who offer health insurance as part of their benefits, but the policies are considered supplemental. Most Canadians are covered by the publicly funded system, so their private insurance usually extends to medical expenses that the provincial programs don’t cover.

Your Canadian employees probably won’t be interested in hospital care or coverage for visiting the doctor. Instead, look for ways to offer them coverage for the care they need, such as dental visits, eye care, or prescription medications.

4. Paid and Unpaid Leave

Another difference US employers encounter when they’re doing business in Canada is the robust set of paid and unpaid leaves Canadian workers are entitled to. Although it varies by province, almost every Canadian employee is entitled to some form of paid or unpaid leave.

Parental leave, for example, is covered for up to 18 months by the federal Employment Insurance program.

5. At-Will Employment Does Not Exist

One of the most jarring differences for US employers operating in Canada is the relationship between employers and employees. In the US, employment is considered “at will.” Either the employer or employee can end it without concern.

The same is not true in Canada, where employers must provide adequate notice or compensation to employees upon termination.

These are just a handful of the differences you’ll find when you’re doing business in Canada. Working with a PEO can help you navigate these issues and help your business succeed north of the border.

Topics: Hiring Canadian Employees, Overseas Workers, Manage Employees Overseas, business expansion into Canada

How to Simplify Hiring in Canada

Posted by Stacey Jones


Jul 11, 2016 9:00:00 AM

How_to_Simplify_Hiring_in_Canada.jpgIf you're an American business looking to enter the Canadian market, you’ll of course want to simplify the process of hiring Canadian employees. Considering everything you need to deal with when entering a foreign market—setting up a payroll account, registering your business, and figuring out Canadian laws and regulations—anything that can be simplified should be, right?

Read on for some tips for streamlining your hiring process to help you make that first jump into the Canadian business landscape.

Look (It up) Before You Leap

First, you're going to need to look into the Canada Revenue Agency (Canadian version of the IRS) and complete a set of administrative tasks, including registering your business number and potentially your payroll department (which requires a Canadian-side address). Since Canada has it's own set of laws and regulations regarding businesses, you'll have to do your research, and it certainly helps to hire a specialist who has experience regarding Canadian compliance and payroll.

Registering your company can take weeks or months, so it's worth doing the research to make sure you're prepared when the time comes. While searching for the right candidates, you'll need to look into all the regulations regarding employees in Canada and prepare to negotiate pay rates that leave both parties happy.

It may seem like a complicated and daunting task to set foot north of the border. However, there are alternatives to taking on all the hiring responsibilities yourself.

Consider Partnering With a PEO

One of the easiest ways to simplify the hiring process is to partner with a professional employer organization (known in Canada as an Employer of Record). A PEO is a firm dedicated to help your business deal with hiring and retaining employees. The PEO will hire employees on your behalf, take on the brunt of the legal responsibility, and make sure your employees’ paperwork is properly filed. They can help you avoid any potential errors that might be made as you grow your business in Canada, and for a flat rate, they will provide services usually offered by multiple departments together in-house.

By filling out all your arduous paperwork, a PEO is going to save you a lot of time and hassle as you seek to fill your Canadian branch with skilled and qualified individuals. Besides being able to negotiate better pay rates with your potential workers, they will keep on top of all payroll related tasks, allowing you to consolidate your company vision and further solidify your core team. A Canadian EOR will be able to use their field of expertise and vast knowledge of the Canadian market to give you advice regarding your HR and payroll needs. They can also access a pool of skilled workers who are ready to join your team and help turn you dream into a reality.

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

Topics: Hiring Canadian Employees

How a PEO Can Save You Stress, Time & Money When Hiring in Canada

Posted by Corinne Camara


Jun 20, 2016 9:00:00 AM

How_a_PEO_Can_Save_You_Stress_Time__Money_When_Hiring_in_Canada.jpgSo you’re looking to hire in Canada, but you’re not familiar with Canadian legal compliance and proper worker classification? Perhaps you’re a small-to-medium sized business without the financial resources for your own HR department. Or perhaps you’re a foreign business, looking to get into the Canadian market, but you’re not sure where to start?

Partnering with a PEO (Professional Employer Organization) can potentially save you significant costs and time, since they’re going to have a firm grasp on all things related to payroll, HR, and legal compliance. They’re going to be able to help you find the key workforce that you’ll need to start up a business in Canada and give you the freedom to focus on your company and what it needs to grow. Read on to see how a PEO can increase efficiency and save you time and money.

Increase Efficiency

It’s a well-known fact that payroll and HR tasks take up a significant amount of resources for any business, and the fact that these non-core tasks take up so much time and effort can be a frustrating experience for a business owner. The cost of those employees hired and trained for human resources can be a drain on other resources—the ones that could be spent on increasing your profit margins. Additionally, if you do attempt to take on payroll yourself, the errors that are made learning on the go will potentially eliminate any cost-savings you could’ve gained.

That’s why outsourcing HR and payroll-related tasks to a PEO can greatly reduce the costs you would usually spend on HR. At your disposal is a team of highly skilled and efficient workers who are experienced in working with a variety of businesses for all of their HR and payroll needs. When you can focus on the vision and core growth of your business, you’re going to be able to create the stability that you need. Furthermore, when trying to find those key team members to fulfill your business goals, it helps that a PEO will already be familiar with the lay of the land, so to speak. A PEO with experience hiring in Canada is going to be able to invest more time into recruiting and filtering potential candidates for positions within your business. They’re going to be able to negotiate better pay rates for those sought after candidates and fill out all the necessary paperwork—and you won’t have to worry about worker classification either!

Finally, if you’re a business trying to settle into Canada, it can be daunting to navigate the administrative labyrinth of Canadian legal compliance. As a foreign business you’ll be required to register for a business number, buy appropriate insurance, hire Canadian employees among other critical yet non-core tasks. Your Canadian professional employer organization is going to alleviate you from having to deal with the majority of the paperwork that’s required, and potentially give you a leg up with other companies that are trying to hustle in Canada’s market.

Let Your PEO Handle the Canadian Compliance

There are enough well-known mistakes made by foreign companies when processing Canadian payroll that it’s clear you need to spend the time and effort researching Canadian regulations and being thorough so you don’t suffer yourself. For a business owner with an already jam-packed workload, the thought of having to deal with a foreign businesses payroll regulation can seem unbearable.

A Canadian PEO will be able to deal with the small details of Canadian compliance that could otherwise cost you in fines and make for some disgruntled employees when they realize that you’ve made a costly error in your payroll accounting. A professional employer organization will supply you with both the homegrown employees and all the necessary documents to streamline their entry into your company.

Consulting a PEO is going to help you make the right choices and well-informed decisions so that hiring in Canada will be the least daunting of your tasks as you enter the Canadian market.

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

Topics: Hiring Canadian Employees

Important Legal Differences You Should Know Before Hiring an Employee Overseas

Posted by Stacey Jones


Nov 6, 2015 2:45:07 PM

Important_Legal_Differences_You_Should_Know_Before_Hiring_an_Employee_OverseasSometimes, the best person for the job is someone who lives outside of your company’s home country. However, trying to hire an employee who lives in another country can lead to complications. For example, the employee payroll and HR management in Canada is very different than in the United States, due to different laws and regulations. There are over 190 regulatory legislative requirements in Canada, which can make it very challenging for U.S. based companies to ensure they are in proper compliance with these requirements when paying their foreign employee. If you’re looking to expand your company by hiring out of country, here are a few important things to look into before setting up your financial management services.

Holidays and Time Off

There are many nationally recognized holidays where employees are expected to be able to get off of work in order to observe the traditions. There are similar holiday rules for other countries; however, that does not mean they are all the same. Different countries have different holidays they observe, meaning your foreign employees will need to take off those days, even if your country doesn’t observe them. When setting up your business management services, make sure you also fully understand the policy for things such as time off, which can be very different from the U.S. laws.


In many countries, unions carry a heavy weight when it comes to industry. Employee benefits and the conditions of work are strongly connected to unions, which negotiate on the behalf of their employees. Many countries have work councils that must be contacted before any changes can be made to an employee’s contract or other work policies. Before hiring an employee, make sure you understand the unions they are a part of, and how they can affect your company.

Non-Competing Contract

Many U.S. companies like to make their employees sign a non-competing contract, which protects them from the leaking of trade secrets that could allow a former employee to become a competitor. However, many foreign countries have regulations against these types of contracts. A company can get in big trouble if they try to sign one of these contracts with a foreign employee.

If you are looking to hire an employee who does not live in the same country as your company’s headquarters, it may be beneficial to look for a business management services provider that has experience in the country where your potential employee resides.

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


Topics: Hiring Canadian Employees, Overseas Workers

What Are the Risks of Employing Someone in Canada

Posted by Ray Gonder


Aug 19, 2015 9:00:00 AM

What_Are_the_Risks_of_Employing_Someone_in_CanadaWith advancements in technology making it easier for companies to source, hire, and manage employees from anywhere in the world, an increasing number of organizations are taking advantage of the global talent pool. Others are expanding their operations in foreign markets in order to reap the benefits of increased brand recognition, new consumers, and more sales. With highly talented workers and a great market, Canada is seeing many foreign companies hiring its workers.

Though a fruitful decision for foreign business owners, employing someone in Canada does come with a unique set of risks. When it comes to paying and managing workers in Canada, the risk is high. Canada is stringent with its payroll legislature, tax regulations, labour laws and health and safety rules. Foreign business owners must fully comply with the appropriate employment laws of the country if they are going to successfully employ workers in the Great White North.

Here are some of the risks they’ll need to prepare for.

Payroll and Taxes

Employing someone in Canada means you have to pay him or her according to the Canada Revenue Agency’s requirements. If your worker isn’t a true independent contractor, you cannot skip on paying taxes, making deductions, and complying with employment laws by labelling them as such. Sure, it would be easier to do this—it would cut out a lot of the legal and administrative headaches—but it isn’t legal. The government has gotten wise to this illegal practice and will subject you to an audit and fine you if you misclassify your workers.

Instead, you have to follow federal, provincial, and local laws when paying your Canadian workers. Among other things, this means receiving the correct tax forms from your employees and deducting the mandatory withholdings, such as CPP, EI, and federal and provincial taxes. The rates for taxes will differ depending on where your workers are located.

Additionally, you’ll need to understand the local laws concerning holiday pay, hours of work, overtime, commission, reimbursement of expenses, and tips. You’ll need to send in government remittances by their deadlines and file in the appropriate tax paperwork to the right government bodies—this is after you’ve set up the correct accounts, of course.

Not only does this become increasingly complex with the more workers you employ, but it also becomes riskier as well. The Canadian government wants to ensure that its citizens are being paid correctly and legally and it also wants to ensure that it’s being paid its dues, as well. It will have a watchful eye over foreign companies who are employing someone in Canada to ensure compliance with tax and payroll regulations.

Human Resources

If you have Canadian payroll and taxes figured out, the next risk you have to worry about when employing someone in Canada is human resources. When managing Canadian workers, you must follow the correct labour laws, health and safety regulations, and other employment rules.

Tasks like writing employment contracts, administering benefits, hiring and firing, and interviewing aren’t so simple in this country. A small misstep could cause a critical error that violates a worker’s rights under Canadian law and could lead to fines, penalties, and lawsuits. 

The Solution

To minimize the risks of employing someone in Canada you could outsource the responsibility of compliance to a back office service provider, or alternatively, engage an employer of record (EOR).

When you outsource, you’re still fully legally responsible for managing the risks as the workers still legally work for you, but you’ll have compliance experts on your side handling your payroll and HR tasks so you can reduce your liabilities and increase compliance.

An EOR, on the other hand, will become the legal employer to your Canadian workers under the law. You enter in a co-employment relationship where you now lease your employees and share the risks and liabilities of employing them. Plus, you still get the help of risk management experts.

Canadian Payroll Tax Deduction Calculator

Topics: Hiring Canadian Employees

3 Ways We Help U.S. Staffing Firms Employ Canadian Workers for Clients

Posted by Stacey Jones


Dec 2, 2014 9:00:00 AM

3-Ways-We-Help-U-S-Staffing-Firms-Employ-Canadian-Workers-for-ClientsYour big contract staffing client loves your service and wishes you were in Canada to help them with their staffing needs up north as well. But you’ve looked into it and it seems very complicated. Is this new revenue stream worth the hurdles you will have to jump to expand your business into another country? It can be, if you contract the services of a PEO provider in Canada. A Canadian PEO provider is the Employer of Record for the workforce in Canada, therefore handling all the pain points for U.S. based staffing firms looking to service their client in Canada but unsure of government registration, remittances and legislation.

1. We Understand Staffing

The Payroll Edge is a subsidiary division of The Staffing Edge, A back office service provider to the Canadian Staffing Industry and the preferred partner for many U.S. staffing firms looking to provide workers for their client in Canada. Our team represents some of the brightest individuals in staffing who understand the complexity and variables within an employment agency. Any old Canadian payroll provider would not understand your staffing firm’s complex inner workings, the client’s position in the equation or the job order dynamic.  The Payroll Edge, unlike other payroll providers, has a core competency in staffing therefore understands your need to be full service to your client without having the complications of understanding a new countries set of rules and regulations.

2. We Can Pay Canadians & Invoice the Client on Your Behalf

The Payroll Edge can pay your Canadian contract employee ensuring timely and accurate payment and taxation, invoice your client’s location here in Canada with your brand represented and wait for them to pay giving you full payroll administration and financing.  We also have the best insurance in the industry; the workers are covered by our errors and omissions and general liability and we take care of the worker’s compensation.  If a client goes bankrupt and does not pay an invoice, you are protected under our receivables insurance umbrella.

3. We Can Be the Employer of Record for Your U.S. Staffing Firm

An Employer of Record service provider like The Payroll Edge takes care of all Canadian government remittances for the workforce dispatched by our contract staffing firm members.  We also take care of all employment standards compliance including providing the employment agreement and manage all claims made such as injuries, human rights and termination.

An Employer of Record with a background in staffing. What more could you ask for?  Next time your client asks you to help them with their Canadian staffing needs, accept the order and contact The Payroll Edge.  Focus on what you do best; sales and service!

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

Topics: Hiring Canadian Employees, US Staffing Firms

American Company Hiring Canadian Employees: What You Need to Know

Posted by Stacey Jones


May 12, 2014 10:06:00 AM

american company hiring canadian employees what you need to knowBefore hiring Canadian employees, there are a few things you need to know. As an American company, you may not be familiar with the many differences between US and Canadian employment laws. Not knowing those differences could result in violations of Canadian laws. If that happens, your company could face expensive fines and penalties. Here are some of the key differences that you should be aware of before hiring Canadian employees.

Minimum Wage

Each province and territory has their own rules for minimum wage payments. Changes to the minimum wage can vary from year to year, and different employee classes can have different minimums. Keeping up with the changes, and making sure employees are properly classified, is the responsibility of the employer.

Vacation Pay

Most Canadian workers are legally entitled to two weeks of vacation time each year. For most employees this means that they are paid 4% of their pay for this vacation period. Only one province has a higher vacation pay standard for new employees and that’s in Saskatchewan where employees are entitled to 5.77%.

Drug Testing

Pre- and post-employment drug testing is generally not permitted under Canadian law. In most instances, it's actually considered a human rights violation, and testing employees could earn you a visit from the Human Rights Commission.

Canadian Pension Plan

You'll be responsible for withholding the correct amounts from employee paycheques and remitting payments for CPP. You'll also be responsible for remitting your contributions to the employees' CPP funds. The maximum withholdings vary from year to year, and it's up to you to know when an employee has maxed out.

Accommodations for Disabilities

As an American company, you're probably familiar with the many provisions for providing equal access to persons with disabilities. In Canada, those provisions can go quite a bit further. Even if it causes an undue hardship or burden on your business, Canadian law requires you to make any necessary accommodations.

Termination of Employment

Throughout much of the US, employment can be terminated "at will" with no notice or severance pay. Canadian law requires that reasonable notice of termination be given to the employee. Employers also have the option of "payment in lieu" of notice. Essentially, payment in lieu is severance pay that employees are entitled to if reasonable notice can't or won't be given.

Changes in Employment Terms

In the US, employers can generally change the terms of employment at any time, without notice. If the employee doesn't quit, they are considered to have accepted the changes. In Canada, changes to the terms of employment generally must be accompanied by a raise or other consideration. If the employee is terminated for not consenting to the changes, they may be owed any payments they would have accrued during the period of reasonable notice of termination.

More Beneath the Surface

These are just examples of some of the legal requirements that cause problems for American companies. There are literally hundreds of differences between US and Canadian employment laws, and it's up to you to make sure you comply with every single one of them.

If you don't have the time, or confidence, to learn an entirely new legal system, it's a good idea to partner with someone who does. A Canadian payroll service provider can help you with payroll compliance, and ensure that your employment practices are lawful. With the costs of fines and penalties factored in, the expense of a payroll service provider is truly worth the cost.

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

Topics: American Companies, Canadian Employment Laws, Hiring Canadian Employees

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