Hiring new employees is an exciting and busy process, butit can get complicated quickly, especially when the new employee lives in a territory outside your own. American companies hiring Canadian employees remotelyneed to be aware of the significant differences that occur when employing non-U.S. residents.
Employing a Canadian in an American company requires compliance with certain regulations. Here’s what U.S. employers need to know.
Labour Legislation Is a Provincial Matter
Unlike the U.S., employment legislation in Canada is largely a provincial matter.The federal government rules on a minority of employment issues, meaning each province has its own regulations to follow.Employing a Canadian in Ontario, for example, will have different labour rulesthana Canadian employee working and living in British Columbia.
Where said employee works will determine the pay schedule, the applicable minimum wage rate, holiday and vacation pay, acceptable employee contract terms, and more. Provinces individually outline these minor details for legally employing Canadians, so American companies must do their due diligence beforehand to ensure they’re following the correct provincial standards.While the regulations may appear similar across the provinces, many haveminor variances.
Agencies and tribunals that deal with work issues, whether discriminatory practices, human rights violations or other issues, also vary. Each province has its own administrative tribunal to handle these situations, and while they all do the same job in principle, each tribunal conducts business in its own way.
Unions,as well,are governed differently in Canada. Unlike the National Labour Board in the U.S., which governs the entire country’s unionized force, Canada’s unions are run by their own trade and vary between provincial and federal positions.
If Canadians are employed from several provinces, American employers will need to be sure each individual employee’s management is in line with that province’s human resources, employee benefits, and contractual standards.
“At Will” Termination Isn’t an Option
Should you employ a Canadian, it’s crucial to remember they cannot be terminated “at will.” Unlike U.S. employers who have this option, Canadian employers must have a legitimate reason for termination, and as such, employees are entitled to reasonable notice or pay in lieu of it.
As legal justification is difficult to prove when firing an employee, severance packages are a popular alternative. American companies need to be absolutely aware of this to avoid lawsuits or possible discrimination charges should they need to terminate their Canadian employees. Unless they’re contractually obligated, American employers can terminate without giving sufficient reasoning, notice, or pay.
Canadian courts place a very high onus on the employer to meet human rights standards to prevent wrongful termination. American companies need to fully grasp what side courts will choose when deciding to terminate. If you’re considering hiring a Canadian employee, fully understand how termination and dismissal works.
Calculating Payroll and Taxes
It’s crucial to correctly calculate employee payroll and deduct the right taxes, in order to submit accurate remittance reports later. Canadian tax remittance reports are submitted to the federal agency namedthe Canada Revenue Agency (CRA).The CRA outlines when these reports are due based on timing and type of company, and late submissions cause problems. Canadian employees have three major tax deductions American employers need to account for: the Canada Pension Plan, Employment Insurance, and income tax. All three are deducted each pay period.
In addition, correct employee classification outlines how said employee is paid, and mistakes here can result in audits, fines, and penalties from the CRA.
American companies should also pay attention to the fluctuating exchange rate to determine the best way to pay their Canadian employees and understand all the financial obligations, including what’s mentioned above, involved when employing a Canadian.
Some U.S. employers find it helpful to outsource these tasks to a Canadian employment of record, to ensure they’re handled correctly.