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What US Companies Need to Know about Paying Workers in Canada

Posted by Stacey Duggan

|

Feb 3, 2016 9:00:00 AM

What_US_Companies_Need_to_Know_about_Paying_Workers_in_Canada.jpgIn recent years, a lot of US based companies have been expanding their operations into Canada, a landscape well known for its high standard of education and hard working populace. It's a no-brainer for some, because despite some of the difficulties involved in establishing a business there, the rewards far outweigh the efforts required.

What many US businesses don't consider, however, is all the differences between Canadian and US law, subtle or not. While many laws seem incredibly familiar, others are quite different and like the states, they can vary province to province or territory to territory. It's important to learn the differences and ensure you remain compliant in order to avoid fines and penalties that are otherwise avoidable and that goes extra for paying workers in Canada.

Compliance

The Canadian Revenue Agency (CRA) is the federal authority when it comes to tax laws in Canada, and that extends into how you pay your workers. As a foreign employer, it's critical to do the required research to ensure you understand these laws and how you're meant to process payroll and taxes. Paying workers in Canada as an American business can be rather challenging in this regard, because you often have to abide by Canadian law and also American law and that's why so many businesses have begun turning to employers of record (EORs) for assistance, especially in terms of legal compliance.

Without an EOR to help you out, paying workers in Canada is a delicate task and you need to ensure that their payroll reflects all the taxes they need to pay, as well as any deductions to retirement or pension plans, unemployment insurance and more are done to satisfaction with the law.

Classification

Worker classification is a big issue and is actually intrinsically linked to paying workers in Canada as well. Workers classified as independent contractors have different employment, legal and payroll standards than traditional employees do and that reflects when it comes time to deal with payroll, largely in the tax department.

It can be especially tempting for some companies paying workers in Canada to classify their workers incorrectly, whether intentionally or not. While there are less taxes associated with independent contractors, if you're dealing with employees, they need to be classified appropriately in compliance with the Canadian Revenue Agency and their laws. While in the short-term, it appears to be a quick way to save some money, it can actually end up costing you a great deal more in terms of penalties, levies and fines so it's best to ensure you've done it right the first time to avoid any of that unpleasantness.

Consider an EOR

It's clear to see why so many can get frustrated with the amount of difficulty that can be involved with what seems to be such a cut and dry operation. It leaves a great deal of businesses wondering how to legally, efficiently and easily manage their Canadian workers in a way that doesn't break their budget or take up valuable time and resources in heavy research.

EORs actually owe a lot of their popularity to US companies looking for easy methods when it comes to paying workers in Canada and it's no wonder. When they act as the legal employer of your workers, it's their job to sort of all this out – the classification, the legal compliance, all tax filings and insurance – and best of all, they're already established within Canada which means you can actually skirt the hardest part, which is business registration. They would pay those employees on your behalf, manage them, hire and fire them – everything. That way, you can maintain full control without worrying about breaking the law, or hurting your employees.

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

Topics: Paying Canadian Workers

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

Posted by Stacey Duggan

|

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

What You Need to Know Before Paying Canadian Employees

Posted by Ray Gonder

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Jun 13, 2014 9:05:00 AM

what you need to know before paying canadian employeesPaying Canadian employees can be one of the most difficult tasks faced by Canadian companies and US companies expanding into Canada. The requirements for paying Canadian employees can range from tedious to onerous. There are multiple levels of bureaucracy to deal with, and penalties for any mistakes made along the way. For these, and many other, reasons, paying Canadian employees is often one of the major obstacles to running a successful business in Canada. Before you start paying Canadian employees, here are a few things you need to know.

It’s not Always Easy

Paying Canadian employees requires you to deal with multiple government agencies, and you have to overcome numerous administrative hurdles. Setting up a physical presence in the territory in which you intend to hire employees is just the beginning. After that, you need to set up the required government accounts, establish banking and insurance infrastructure, and conform to all relevant employment, payroll, and health and safety regulations. You’ll need to learn the existing laws, and keep up with any changes to those laws. You’ll probably need to purchase and learn new software for timekeeping and payroll purposes. If you go it alone, you’ll likely make some mistakes along the way. Those mistakes, if caught early, will only cost you the expense of doing things a second time. If caught late, they could result in fines and penalties.

It’s not Always Quick

Getting everything set up in accordance with the law will take time. You can’t start paying Canadian employees until you’ve jumped through every administrative hoop in your path. That means that you won’t be making any money from your Canadian business for weeks, or even months. Any time spent fixing your mistakes is more money lost. The more time you have to spend setting up your Canadian business or expansion, the longer it will be until you can hire employees and start turning a profit. If you’re working on tight margins, the time spent getting your business up and running could derail your plans for a Canadian business.

You’re Never Alone

Fortunately, you’re never alone when it comes to paying Canadian employees. There are payroll service providers that offer all of the services, advice, and guidance you need to get your business up and running quickly and efficiently. They can handle payroll and HR management, set up the required accounts, and even help you with compliance. Using their Employer of Record services, you can even streamline the process of setting up an administrative presence in Canada.

With their experience and training, payroll service providers are able to avoid the mistakes that end up costing you time and money. They have the software and knowledge to get your business started quickly, so you can start turning a profit sooner. Going it alone only saves you money if everything goes perfectly, and you already have the resources in place to deal with all of the bureaucratic hurdles. If you don’t, it’s probably time to talk someone who has those resources in place, and who has helped other businesses become operational in Canada.

7 Signs It's Time to Outsource Payroll

Topics: Paying Canadian Workers, Paying Canadian Employees

How to Pay Your Canadian Employees

Posted by Stacey Duggan

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May 26, 2014 9:05:00 AM

how to pay your canadian employeesUS and Canadian businesses have adopted a variety of different methods for paying Canadian employees. Some of these methods are simple, but not entirely legal. Other methods adhere completely to the letter and spirit of the law, yet are prohibitively complicated. When it comes to paying Canadian employees, you don’t have to choose between simplicity and legality. There is a method of paying Canadian employees that strikes the perfect balance.

Payroll Service Providers

A payroll service provider, like The Payroll Edge, provides a simple, completely legal method of paying Canadian employees. They handle every aspect of your payroll needs, from calculating overtime and vacation pay to remitting government withholdings. Their services guarantee you accurate, on-time payroll processing for all of your Canadian employees.

A Step Farther

However, that’s just the beginning of the benefits you will enjoy when you engage the services of a payroll provider. Any payroll provider can do the math and deliver the pay cheques. Only a true partner like The Payroll Edge can offer you a full suite of services to go along with payroll processing.

Watching out for You

Most payroll service providers simply take the numbers you give them, deduct the proper amounts, and then cut a pay cheque. If you accidentally give them incorrect numbers, they’ll produce incorrect cheques. At The Payroll Edge, Certified Payroll Professionals check the payroll data for errors and inconsistencies before the cheques are printed, saving you the time and expense of rectifying payroll errors.

A Payroll Partner

They’re able to provide this level of service because they take the time to truly understand your business and payroll needs. They don’t rely solely on numbers, they also develop an intimate knowledge of your company, so they can spot errors before they become costly mistakes. This kind of partnership sets The Payroll Edge apart from other payroll service providers.

All this, and More

That deep understanding of your business needs makes The Payroll Edge a valuable partner in many other areas as well. They can assist with human resources management, legal compliance, and annual reporting. As a full service partner, they can take much of the administrative burden off of your existing staff, allowing them to focus on your core competencies.

The Right Way to Pay

Paying Canadian employees doesn’t have to be overly complex, or questionably legal. You want to do things the right way, without having to jump through a lot of administrative hoops. A payroll service provider makes paying Canadian employees easy and legal. To save yourself a lot of time and aggravation, contact The Payroll Edge today.

Canadian Payroll Tax Deduction Calculator

Topics: Pay Canadian Employees, Paying Canadian Workers, US and Canadian Business

What U.S. Companies Need to Know About Stat Pay & Benefits in Canada

Posted by Stacey Duggan

|

May 6, 2014 8:30:00 AM

Employee ‘Benefits’ are Very Different Across the Border

In Canada the health care system is government run with the funding coming from employer taxation. All Canadian citizens can register for a health card and are eligible to have their basic medical needs covered under this program. 

Each province has its own system but in its simplest form it means that Canadians do not pay out of pocket for doctor’s visits, emergency care, surgery, most diagnostic testing and short term medical leave.  Many Canadian companies offer employees a benefit program that offers coverage for those medical needs that are not part of this government system such as prescriptions and dental care.

When a U.S. company looks to match their U.S. employee benefits with those being offered to a Canadian employee, this is an important differentiator that needs be considered. 

Many U.S. companies offer employees a 401k plan and can also offer something similar in Canada called an RSP (Retirement Savings Plan).  Some differences to note in regards to the two are that the Canadian RSP can be set up through any financial institution and the employee can choose to contribute after tax dollars into their own plan.

A 401k has a set annual limit that is the same for every employee regardless of income where in Canada the annual limit is 18% of salary to a maximum of $20,000. In Canada these unused limits can be carried forward indefinitely where in the U.S. contribution amounts have to be used each year or they are lost.

Canadian Holidays Vary Slightly by Province 

Canadian holidays are not the same as those in the United States and in fact vary slightly from province to province. The statutory holidays that are the same across every province include; New Year’s Day on January 1st, Good Friday on the Friday before Easter Sunday, Canada Day on July 1st, Labour Day on the first Monday of September and Christmas Day on December 25th.

Stat Holiday Pay Eligibility

Every province has different rules in regards to statutory holiday pay eligibility. For example, in Ontario an employee is eligible to be paid for a stat holiday right from day one, in Alberta the employee must have been employed for the last 30 days before the holiday with actual working days totalling more than 15 in order to start receiving this pay. Stat holiday pay calculation is based on previous hours worked within a certain timeframe.

Looking to hire a Canadian but Unsure of Canadian Employment Law?

The Payroll Edge’s EOR service is similar to a PEO service in the United States and works to take the strain off U.S. or foreign based employers hiring and paying Canadian employees but who are unfamiliar with employment laws in Canada. An Employer of Record (EOR) service like The Payroll Edge can take care of benefits packages’, payroll calculation (including statutory pay), payroll tax deductions as well as government remittances for your Canadian employees and so much more.

Download our free PDF "Statutory Holidays in Canada" Chart to Track your Canadian Employees Holiday Pay:

Statutory Holidays in Canada  The Payroll Edge PNG Picture resized 600

Topics: Employer of Record, Best Payroll Calculator, Paying a Canadian, Pay Canadian Employees, Paying Canadian Workers, public holiday pay, stat holidays

Canadian Worker's Compensation: What U.S. Companies Need to Know

Posted by Stacey Duggan

|

Mar 17, 2014 9:05:00 AM

Workers Compensation Board in Canada is Government run

Unlike the U.S., the workers compensation program in Canada is government run. Every Employer in Canada must register for a worker’s compensation account in every province that they have employees working in and each province has different rules as far as the registration process.

For example, in Ontario you cannot apply for a workers compensation account until you actually have an employee start date, in Nova Scotia you don’t register for an account until you have 3 workers and in Alberta you can pre-register regardless of whether you have employees or not.

Each province also has different registration fees and some may even ask for a pre-payment for new registrants. As an employer, you pay a certain percentage in taxes to the provincial workers compensation board based on the wages of your workers and the risk associated with the type of work your employees are performing.

The bigger the risk of injury to workers, the larger the percentage used when calculating what is due

For example currently in Ontario a worker in a clerical role would cost an employer 0.22% in workers comp taxes. However a worker on a construction site in Ontario would be taxed at 5.05%.

If a worker is injured on the job, a workers compensation board will assign a claim adjuster who will investigate and make recommendations. The workers compensation boards in every province are in place to protect the worker and ensure employers meet health and safety standards. They can be a daunting authority to a U.S. company unfamiliar with the rules and regulations associated with the Canadian Ministry of Labour.

Many U.S. companies don’t realize that they should complete their own investigations and they have the right to appeal the board’s decision.

They also tend to rely on their own legal counsel in the States to advise them on best practices across the border.

Lack of experience in Canada can lead to hefty fines for non-compliance so it’s important that U.S. companies engage in Canadian expertise, or rely on an experienced Employer of Record, when expanding their workforce to the great white north. 

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

Topics: Ministry of Labour, Payroll Tax in Canada, Employer of Record, U.S. Companies operating in Canada, MOL, Worker's Compensation, Canada Revenue Agency, Canadian Employer of Record, Paying Canadian Workers, Canadian-Based EOR, Canadian EOR

5 Ways Outsourced Payroll Processing Saves You Time

Posted by Stacey Duggan

|

Jan 6, 2014 9:00:00 AM

5 Ways Outsourced Payroll Processing Saves You TimeIn business, time is money. Every minute you spend dealing with payroll processing is a minute that isn’t spent on your core business pursuits. For US-based businesses paying Canadian employees, the time spent on payroll is effectively doubled. Since your US payroll system won’t work for Canadian employees, you need a second, separate system. That means double the investment of time, energy, and money. To avoid this added expense, it makes sense to use outsourced payroll processing. Aside from saving you the time of setting up and utilizing a second payroll system, outsourced payroll processing can save you time in many other areas.

1. Administrative Setup

Setting up a business in Canada is time-consuming and costly. You need to establish a business presence inside of the country, establish all of the necessary government accounts, and create a banking and insurance infrastructure. Using an outsourced payroll processing service allows you to sidestep this investment of time and money. They can operate as an Employer of Record (EOR), which is the Canadian equivalent of a Professional Employer Organization in the States. As an EOR, an outsourced payroll processing service has already met all of the legal requirements for paying Canadian employees.

2. Legal Training

Learning the Canadian employment and tax codes takes a lot of time, and a lot of commitment. As the codes change over time, additional training is a constant expense. Without a deep understanding of the laws and regulations, mistakes are almost guaranteed. When those occur, the time and expense to remedy them can be considerable. Payroll service providers deal with payroll issues every day. They provide services to a wide variety of industries, so there aren’t many situations that they don’t encounter on a frequent basis. To deal with those situations, their staff is constantly training, attending workshops, taking continuing education classes, and meeting with auditors and inspectors.

3. Software Setup and Training

Once you have more than a handful of employees, it becomes impractical to try to handle payroll using a pen and paper. Payroll software is expensive, and it takes time to train employees to use it. As rules change, and software updates are issued, more training becomes necessary. Using a payroll service provider as an EOR saves you the time and expense of maintaining costly software. They already have the best software available, and they constantly train in its use. Instead of spending time learning software that serves a very small purpose for your company, your employees can focus on developing skills that advance your principle business endeavors.

4. Error Checking

Going over timesheets and invoices can take a considerable amount of time. If any errors are made, even more time is necessary to find and remedy the mistake. A payroll service provider has the software and experience to avoid mistakes in the first place, and uncover them quickly on the rare occasions when they occur. Since a payroll service provider has a large number of employees trained to handle payroll, there are more sets of experienced eyes going over your payroll numbers. This greatly reduces the chances of any mistakes slipping through the cracks.

5. Audit Prevention

Mistakes cost time to fix and, if they lead to an audit, cost time spent dealing with multiple bureaucracies. Collecting paperwork, meeting with officials, and sitting through hearings don’t help advance your business. The best way to deal with audits is to avoid them in the first place. Payroll service providers are experts at identifying and fixing any red flags in your paperwork that could lead to an audit. With their help, you can make sure that all of your paperwork passes muster.

7 Signs It's Time to Outsource Payroll

Topics: Payroll Processing, Payroll Service Provider, Outsourced Payroll Service, Canadian Payroll, Canadian Payroll Deductions, Canadian Payroll Regulations, Canadian Payroll Service, Payroll Calculator, Paying Canadian Workers

How American Companies Avoid Fines Paying Canadian Workers

Posted by Stacey Duggan

|

Jan 2, 2014 9:00:00 AM

How-American-Companies-Avoid-Fines-Paying-Canadian-WorkersFor a US-based business, paying Canadian workers is no simple matter. Some companies erroneously believe that all they need is a currency converter to start paying Canadian workers. If that were the case, every US company would be operating on both sides of the border. Unfortunately, despite the cultural similarities, the US and Canada don’t share very much when it comes to employment and payroll laws. The Canadian system is so different from the US system that there is virtually no overlap. For companies wishing to operate on both sides of the border, this presents a unique set of challenges. Paying Canadian workers without meeting those challenges can result in substantial fines and penalties. There are really only two legitimate ways to pay Canadian workers while avoiding those fines and penalties.

Become a Canadian Payroll Expert

If you choose to go it alone, you, or someone in your company, needs to learn everything there is to know about Canadian employment and payroll regulations. Federal and provincial laws are incredibly intricate, with a lot of subtleties that are learned only through years of experience. They are also in a state of constant evolution. This year’s rules and regulations can be substantially different from next year’s rules and regulations. Some policy changes can roll out at completely random times during the year, requiring you to keep up with possible changes every day of the year. Once a policy is in effect, you’re responsible for abiding by it, whether you know about it or not. If you fall behind on your studies, or miss an announcement from one of the many agencies you’ll be dealing with, you’ll be on the hook for any penalties.

Hire Canadian Payroll Experts

Canadian payroll service providers are experts at paying Canadian workers. In fact, it’s something they do all day, every day. They are constantly learning the new laws and regulations, and how they apply to the many different worker classifications and scenarios. They have the newest software and technology to streamline payroll services for maximum efficiency at minimal expense. If you’re interested in paying Canadian workers legitimately, and without the risk of fines, you should consider hiring a Canadian payroll service provider.

Canadian payroll service providers like The Payroll Edge operate as Employers of Record (EORs) within Canada. These fulfill the same functions as Professional Employer Organizations (PEOs) in the US.

Instead of becoming, and remaining, and expert on Canadian payroll law, you can simple hire a Canadian payroll service provider to act as an EOR. They’ll handle all of your hiring, management, payroll, and compliance, without you having to spend all of your free time studying foreign payroll legislation.

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

Topics: Payroll Service Provider, Canadian Payroll, Canadian Payroll Deductions, Canadian Payroll Regulations, EOR, Professional Employer Organization, Canadian Payroll Service, PEO, Canadian Employer of Record, American Business in Canada, Paying Canadian Workers

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