An Employer of Record (EOR) in Canada is a company that takes on the responsibility of being the legal employer for a worker. This includes managing payroll, benefits, and other employment-related tasks on behalf of the worker's actual employer.
An employer of record in Canada assist you with the following
- Draft local employment contracts
- Register employees with the social security agencies
- Withholding taxes
- Provide Benefits
- Comply with the local labor laws
- End to End Payroll
- Work Permit
- Hiring and Payments
Discover the key considerations and essential details you should be aware of before you hire your remote team in Canada.
Facts About Canada
Canada is home to a thriving innovation landscape, with several cities standing out as global startup hubs. Here's a look at the country’s top five ecosystems, their industry strengths, and key success stories:
- Toronto: Canada’s top startup hub, driven by strong activity in Software & Data, Fintech, and Marketing—with success stories like Wattpad and support from major tech firms like Constellation Software.
- Vancouver: A fast-growing ecosystem with strengths in Energy & Environment, Healthtech, and Hardware—home to Hootsuite and supported by a vibrant tech and sustainability community.
- Montreal: A tech-forward city where nearly half of startups focus on Energy, Software, and Edtech—fueled by strong academic ties and companies like Talent.com.
- Ottawa: A thriving capital city ecosystem where over half of startups operate in Ecommerce, Hardware, and Software—boosted by homegrown giants like Shopify.
- Calgary: A rising innovation center in Western Canada, focused on clean Energy, Fintech, and Foodtech—anchored by notable startups like Neo Financial.
Employment Contracts in Canada
While written employment contracts are not legally required in Canada, they are highly recommended to clearly define the terms and conditions of employment. A well-drafted contract helps protect both employers and employees by setting clear expectations around roles, compensation, and legal rights. Because labour laws vary across provinces and territories, contracts should be tailored to comply with the applicable jurisdiction.
Below are the main elements typically included in Canadian employment contracts. Depending on the specific job, industry, or company policies, additional clauses may also be necessary to address unique circumstances.
- Type of Position: Specify whether the role is permanent full-time, permanent part-time, temporary full-time, or temporary part-time to clarify employment status and entitlements.
- Jurisdiction: Customize the contract based on the province or territory where the employee works, as labour laws differ across Canada and affect employment terms.
- Place of Work: Define where the employee will perform their duties—whether in-office, remote, hybrid, or another location.
- Start Date and Work Hours: Clearly state the employee’s start date and their expected working hours or schedule.
- Position Title and Duties: Include the official job title and a description of duties, noting that responsibilities may evolve and the contract can be updated accordingly.
- Compensation and Payment: Detail salary or hourly wages, commission structures if applicable, payment frequency, and currency.
- Vacation Entitlement: Outline vacation time in accordance with provincial standards (e.g., Alberta’s 2 weeks after one year, increasing to 3 weeks after five years) or company policy.
- Probation Period: Define if a probation period applies (usually 1-3 months), allowing performance evaluation and termination without cause during this time.
- Termination Notice: Specify the notice period required by both employer and employee before ending the employment relationship, following legal minimums.
- Employer and Employee Details: Include full names, addresses, and contact information for both parties.
- Confidentiality and Non-Solicitation: Add clauses to protect confidential information and restrict employee solicitation of company staff or contractors post-employment.
- Additional Clauses: Optionally include clauses on intellectual property, conflict of interest, equipment use, and dispute resolution as needed.
Employment Laws in Canada
Minimum Wages
In Canada, minimum wage rates are set by each province and territory, not at the federal level. This means employers must comply with the minimum wage laws of the jurisdiction where their employee works. These rates are reviewed and updated regularly, often based on changes to the Consumer Price Index (CPI) or other economic indicators.
Below is a summary of the current and upcoming minimum wage rates across Canada’s provinces and territories. These figures are important for ensuring legal compliance when hiring through an Employer of Record (EOR) in Canada.
| Province/Territory | Minimum Wage Details |
|---|---|
| Alberta | $15.00/hour (effective since Oct 1, 2018) |
| British Columbia | $17.40/hour (increasing to $17.85/hour on June 1, 2025, adjusted annually by CPI) |
| Manitoba | $15.80/hour (rising to $16.00/hour on Oct 1, 2025) |
| New Brunswick | $15.65/hour (effective April 1, 2025) |
| Newfoundland & Labrador | $16.00/hour (adjusted annually based on CPI, effective April 1, 2025) |
| Northwest Territories | $16.70/hour (adjusted annually using CPI and average hourly wage in NWT) |
| Nova Scotia | $15.70/hour (increasing to $16.50 on Oct 1, 2025, then adjusted annually by inflation + 1%) |
| Nunavut | $19.00/hour (effective Jan 1, 2024 – highest in Canada) |
| Ontario | $17.20/hour (rising to $17.60/hour on Oct 1, 2025, adjusted annually for inflation) |
| Prince Edward Island | $16.00/hour (increasing to $16.50 on Oct 1, 2025, and $17.00 on April 1, 2026) |
| Quebec | $15.75/hour (increasing to $16.10/hour on May 1, 2025) |
| Saskatchewan | $15.00/hour (effective Oct 1, 2024) |
| Yukon | $17.94/hour (effective April 1, 2025, adjusted annually based on CPI) |
Probation Period
In most provinces, a probationary period of up to 3 months is allowed. During this time, employers may terminate employment without statutory notice or pay in lieu. However:
- Employees may still file claims for discrimination during or after the probation period.
- If the contract does not explicitly limit notice entitlements, employees may have a right to common law notice or pay in lieu—even during probation.
- In Quebec, the Civil Code does not allow contractual limits on notice entitlements, and employees may still be entitled to reasonable notice during probation, depending on the facts.
Working Hours
As an employee or student intern in Canada, the standard hours of work are typically:
- 8 hours per day (any period of 24 consecutive hours)
- 40 hours per week (measured from midnight Saturday to midnight the following Saturday)
In addition to regular hours, employees are entitled to:
- One full day of rest per week (usually Sunday)
- Meal breaks and rest periods as set by applicable provincial or territorial labour laws
Employers must ensure that these minimum standards are met, though some variations may apply depending on the province, industry, or type of employment (e.g., shift work or flexible schedules).
Maximum Working Hours
In most cases, Canadian labour laws limit the total hours an employee can work to protect health, safety, and work-life balance:
- Maximum of 48 hours per week is generally allowed for most employees across provinces and territories.
For individuals combining both paid and unpaid roles with the same employer—such as student interns fulfilling academic requirements while also working in a paid position—the following limits apply:
- No more than 10 hours per day, and
- No more than 48 hours per week (combined total)
These rules ensure students are not overburdened and help employers stay compliant with Canadian labour standards.
Overtime
-
Standard working hours are generally limited to:
- 8 hours per day
- 40 hours per week
- Overtime applies to any hours worked beyond these limits (unless provincial rules specify otherwise).
-
When working overtime, employees are entitled to one of the following:
- Overtime pay at 1.5 times their regular hourly wage (commonly referred to as "time-and-a-half"), or
-
Paid time off at a rate of 1.5 hours off for every 1
hour of overtime worked
- Example: 5 hours of overtime = 7.5 hours of paid time off
Note: Overtime eligibility and rules may vary slightly by province or territory, so it's important to consult local employment standards for specific requirements.
Termination of Employment in Canada
Under the Canada Labour Code, different rules apply depending on whether the termination is individual or group-based. Here's an overview of the individual termination requirements:
Individual Termination
When an employer terminates an employee, they must either:
- Provide written notice of termination:
- Minimum of 2 weeks' notice, or
- 1 week per completed year of service, for employees with 3 or more years of continuous employment (up to a maximum of 8 weeks), or
- Pay the employee wages in lieu of notice, or
- Use a combination of notice and wages in lieu of notice
Notice Not Required If:
An employer is not required to provide notice or pay in lieu of notice when:
- The employee has worked less than 3 consecutive months
- The employee resigns voluntarily
- The employee is dismissed for just cause
- The employee is on a temporary lay-off (not considered a termination)
- The employment contract includes a fixed end date, and the work ends as scheduled
Statement of Benefits
When employment is terminated, employers must provide a statement of benefits outlining:
- Wages
- Vacation pay
- Severance pay (if applicable)
- Any other outstanding benefits or compensation
Employee-Initiated Termination
- Under the Canada Labour Code, employees are not legally required to give notice when they resign.
- However, if the employee has signed an employment contract, it may specify a required notice period.
- In such cases, the terms of the contract will apply, and the employee should comply with the agreed-upon notice terms to avoid breach of contract.
Severance Pay: Employer Obligations
- Employers must provide severance pay to employees who have completed at least 12 consecutive months of continuous employment and whose employment is terminated.
- This applies to employees laid off or dismissed due to lack of work or the end of a work function resulting in termination.
- Severance pay is calculated as the greater of:
- 2 days’ wages at the employee’s regular rate for each full year of service, or
- 5 days’ wages at the employee’s regular rate
- In addition to severance pay, employers must also provide either:
- A notice of termination, or
- Pay in lieu of notice
Social Security Contributions in Canada
Hiring employees in Canada? Here’s what you need to know about payroll deductions in 2025. As an employer, you’re legally required to withhold certain amounts from your employees' pay—and remit both the employee and employer portions to the right government authorities.
Social security contributions in Canada include pension plan contributions and employment insurance premiums. These deductions fund important benefits like retirement income, disability support, and temporary income during unemployment or parental leave.
Contribution rates and rules vary across Canada — Quebec has its own pension and parental insurance plans, while the rest of Canada follows the federal system.
1. Canada Pension Plan (CPP) — Outside Quebec
CPP provides retirement, disability, and survivor benefits to eligible workers and their families. Both employers and employees share the cost equally.
- Contribution rate: 5.95% each (employer and employee)
- Applies to earnings: Between $3,500 and $71,300 annually
- Maximum contribution per year: $4,034.10 per party
- Monthly max: Approximately $336 per party
2. CPP Second Additional Component — Outside Quebec (New for 2025)
This component funds enhanced benefits for higher earners and is gradually being phased in. Both employer and employee contribute equally.
- Contribution rate: 4.00% each
- Applies to earnings: Between $71,300 and $81,200 annually
- Maximum contribution per year: $396 per party
3. Quebec Pension Plan (QPP) — Quebec Only
QPP functions similarly to CPP but is managed by Quebec. It provides retirement, disability, and survivor benefits tailored to Quebec workers. Employers and employees share contributions equally.
- Contribution rate & limits: Set annually by Revenu Québec (similar to CPP)
- Max contributions: Approximately $4,348 per party annually
4. Employment Insurance (EI) — Outside Quebec
EI offers temporary income support for unemployment, illness, and parental leave. Employers pay 1.4 times the employee’s contribution.
- Employee contribution rate: 1.66% on insurable earnings
- Maximum employee contribution: $1,049.12 per year (on $65,700 max insurable earnings)
- Employer contribution: 1.4× employee contribution (max $1,468.77)
5. Quebec Parental Insurance Plan (QPIP) — Quebec Only
QPIP provides paid maternity, paternity, parental, and adoption benefits under Quebec’s parental leave system. Contributions are shared between employer and employee.
- Maximum employee contribution: $464.36 per year
- Maximum employer contribution: $650.48 per year
Notes for Employers:
- Employers must match employee CPP/QPP contributions and remit total amounts to the government.
- For self-employed workers, they pay both employer and employee portions.
- EI employer contributions are 1.4 times the employee’s contribution.
- Quebec has separate pension and parental plans with different contribution rates and limits.
- Contributions are calculated on pensionable or insurable earnings, within specified minimum and maximum limits.
- Accurate payroll systems and regular remittance ensure compliance and avoid penalties.
Personal Income Tax Rates 2025
In Canada, personal income tax is charged on the income individuals earn from work, business, and investments. Taxes are collected by both the federal government and the provincial or territorial governments. Most provinces and territories follow a similar tax system, but Quebec is unique — it administers its own provincial income tax separately from the federal government. Because of this, tax rates and filing requirements differ between Quebec and the rest of Canada. The tax system is progressive, so higher income levels are taxed at higher rates.
2025 Federal Income Tax Rates
|
Tax Rate |
Taxable Income Threshold (CAD) |
|
15% |
On the portion of taxable income up to $57,375 |
|
20.5% |
On the portion over $57,375 up to $114,750 |
|
26% |
On the portion over $114,750 up to $177,882 |
|
29% |
On the portion over $177,882 up to $253,414 |
|
33% |
On the portion over $253,414 |
2025 Provincial and Territorial Income Tax Rates
Newfoundland and Labrador
|
Tax Rate |
Taxable Income Threshold (CAD) |
|
8.7% |
On the portion up to $44,192 |
|
14.5% |
On the portion over $44,192 up to $88,382 |
|
15.8% |
On the portion over $88,382 up to $157,792 |
|
17.8% |
On the portion over $157,792 up to $220,910 |
|
19.8% |
On the portion over $220,910 up to $282,214 |
|
20.8% |
On the portion over $282,214 up to $564,429 |
|
21.3% |
On the portion over $564,429 up to $1,128,858 |
|
21.8% |
On the portion over $1,128,858 |
Prince Edward Island
|
Tax Rate |
Taxable Income Threshold (CAD) |
|
9.5% |
On the portion up to $33,328 |
|
13.47% |
On the portion over $33,328 up to $64,656 |
|
16.6% |
On the portion over $64,656 up to $105,000 |
|
17.62% |
On the portion over $105,000 up to $140,000 |
|
19% |
On the portion over $140,000 |
Nova Scotia
|
Tax Rate |
Taxable Income Threshold (CAD) |
|
8.79% |
On the portion up to $30,507 |
|
14.95% |
On the portion over $30,507 up to $61,015 |
|
16.67% |
On the portion over $61,015 up to $95,883 |
|
17.5% |
On the portion over $95,883 up to $154,650 |
|
21% |
On the portion over $154,650 |
New Brunswick
|
Tax Rate |
Taxable Income Threshold (CAD) |
|
9.4% |
On the portion up to $51,306 |
|
14% |
On the portion over $51,306 up to $102,614 |
|
16% |
On the portion over $102,614 up to $190,060 |
|
19.5% |
On the portion over $190,060 |
Ontario
|
Tax Rate |
Taxable Income Threshold (CAD) |
|
5.05% |
On the portion up to $52,886 |
|
9.15% |
On the portion over $52,886 up to $105,775 |
|
11.16% |
On the portion over $105,775 up to $150,000 |
|
12.16% |
On the portion over $150,000 up to $220,000 |
|
13.16% |
On the portion over $220,000 |
Manitoba
|
Tax Rate |
Taxable Income Threshold (CAD) |
|
10.8% |
On the portion up to $47,564 |
|
12.75% |
On the portion over $47,564 up to $101,200 |
|
17.4% |
On the portion over $101,200 |
Saskatchewan
|
Tax Rate |
Taxable Income Threshold (CAD) |
|
10.5% |
On the portion up to $53,463 |
|
12.5% |
On the portion over $53,463 up to $152,750 |
|
14.5% |
On the portion over $152,750 |
Alberta
|
Tax Rate |
Taxable Income Threshold (CAD) |
|
10% |
On the portion up to $151,234 |
|
12% |
On the portion over $151,234 up to $181,481 |
|
13% |
On the portion over $181,481 up to $241,974 |
|
14% |
On the portion over $241,974 up to $362,961 |
|
15% |
On the portion over $362,961 |
British Columbia
|
Tax Rate |
Taxable Income Threshold (CAD) |
|
5.06% |
On the portion up to $49,279 |
|
7.7% |
On the portion over $49,279 up to $98,560 |
|
10.5% |
On the portion over $98,560 up to $113,158 |
|
12.29% |
On the portion over $113,158 up to $137,407 |
|
14.7% |
On the portion over $137,407 up to $186,306 |
|
16.8% |
On the portion over $186,306 up to $259,829 |
|
20.5% |
On the portion over $259,829 |
Yukon
|
Tax Rate |
Taxable Income Threshold (CAD) |
|
6.4% |
On the portion up to $57,375 |
|
9% |
On the portion over $57,375 up to $114,750 |
|
10.9% |
On the portion over $114,750 up to $177,882 |
|
12.8% |
On the portion over $177,882 up to $500,000 |
|
15% |
On the portion over $500,000 |
Northwest Territories
|
Tax Rate |
Taxable Income Threshold (CAD) |
|
5.9% |
On the portion up to $51,964 |
|
8.6% |
On the portion over $51,964 up to $103,930 |
|
12.2% |
On the portion over $103,930 up to $168,967 |
|
14.05% |
On the portion over $168,967 |
Nunavut
|
Tax Rate |
Taxable Income Threshold (CAD) |
|
4% |
On the portion up to $54,707 |
|
7% |
On the portion over $54,707 up to $109,413 |
|
9% |
On the portion over $109,413 up to $177,881 |
|
11.5% |
On the portion over $177,881 |
Quebec
|
Taxable Income (CAD) |
Tax Rate |
|
$53,255 or less |
14% |
|
More than $53,255 up to $106,495 |
19% |
|
More than $106,495 up to $129,590 |
24% |
|
More than $129,590 |
25.75% |
Work Permit in Canada
When hiring foreign workers in Canada through an Employer of Record (EOR), the worker must hold a valid Canadian work permit. The EOR or its partner agency typically sponsors or supports the permit process. Here are the most relevant types of work permits and their durations:
1. Employer-Specific Work Permit (LMIA-based)
Issued when a Labour Market Impact Assessment (LMIA) proves that no Canadian can fill the job.
- Typical Duration: Up to 2 years
- Renewable? Yes, with a new LMIA
- Max Duration: No formal cap, but frequent renewals are scrutinized
- Use in EOR: Common; EOR acts as the legal employer in the LMIA application
2. LMIA-Exempt Work Permit (International Mobility Program - IMP)
Used where international agreements or public policy remove the need for an LMIA.
Key Subtypes:
- Intra-Company Transfer: 1–3 years per term, max 7 years (execs), 5 years (specialists)
- CUSMA, CETA: 1–2 years, renewable
- Francophone Mobility Program: Up to 3 years, renewable
- Renewable? Yes, if conditions are still met
- Use in EOR: Allowed in many cases, but must ensure contract structure aligns with permit terms
3. Open Work Permit
Allows the holder to work for any employer in Canada, not tied to a specific job.
Common examples:
- Spouses of skilled workers or international students
- Post-Graduation Work Permit (PGWP)
- Duration:
- PGWP: 1–3 years (based on study program length)
- Spousal: Matches sponsor’s permit duration
- Renewable?
- PGWP: Not renewable
- Spousal: Often renewable
- Use in EOR: Ideal, as no LMIA is needed
Employee Benefits in Canada
Mandatory Employee Benefits in Canada (2025)
When hiring employees in Canada, employers must provide certain mandatory benefits. These ensure financial security, job protection, and income during various life events such as retirement, illness, and parental leave. Below is a simplified breakdown of these key benefits.
Pension Plans
Canada Pension Plan (CPP) – Applies outside Quebec
- Mandatory for employees earning over $3,500/year.
- Provides income during retirement, disability, or to survivors.
- Contribution (2025):
- 5.95% by employer and employee (on earnings up to $71,300)
- Max contribution per party: $4,034.10
CPP2 – Second Tier (New in 2025)
- Additional contributions for those earning $71,300–$81,200
- Rate: 4% each (employer + employee)
- Max contribution: $396 per party
Quebec Pension Plan (QPP) – Applies in Quebec
- Similar to CPP but administered by Revenu Québec
- Contribution rates and limits set annually
Old Age Security (OAS)
- Paid from government tax revenue, not employee/employer contributions
- Starts at age 65, based on years lived in Canada after age 18
Employment Insurance (EI)
Provides temporary income for employees facing job loss, illness, or life events like maternity leave.
Outside Quebec:
- Employee pays: 1.66% (max $1,049.12)
- Employer pays: 1.4× employee contribution (max $1,468.77)
- Benefit rate: 55% of weekly earnings (max $668/week)
- Duration: 14–45 weeks, based on region and work history
Quebec:
- Covered by Quebec Parental Insurance Plan (QPIP)
- Higher benefits and shorter waiting period than EI
- Max employee contribution: $464.36
- Max employer contribution: $650.48
Maternity & Parental Leave
Maternity Leave (biological mother only):
- Up to 15 weeks of benefits
- Can start up to 12 weeks before delivery
Parental Leave (for either parent):
Two options:
- Standard: 55% of income, max $695/week, up to 40 weeks shared
- Extended: 33% of income, max $417/week, up to 69 weeks shared
- One parent cannot claim more than 35 (standard) or 61 (extended) weeks
- Must apply within 52 or 78 weeks of child’s birth/adoption
Paid Time Off (PTO) & Legislated Leaves
- Includes vacation, personal emergency leave, and public holidays
- Job-protected leaves for sickness, caregiving, bereavement, etc.
- Paid through EI in most cases; duration and types vary by province
Eye Exams & Vision Benefits (Supplementary)
- Often included under employer health plans
- Standard coverage:
- Eye exams every 24 months (adults), 12 months (children)
- Glasses/contact lenses: up to $250 per 24 months
Retirement Savings (Supplementary)
Group RRSP, TFSA, or DPSP:
- Popular employer-sponsored savings plans
- 2025 RRSP limit: 18% of income up to $32,490
- Contributions based on previous year’s earned income
Supplementary Employee Benefits in Canada
In addition to mandatory benefits, many Canadian employers offer a range of supplementary benefits to attract and retain talent. These vary based on company size, industry, and workforce needs.
Retirement Savings Plans
- Group retirement plans (e.g., Group RRSP, DPSP, or TFSA) are widely used.
- Employer matching is a key feature of competitive programs.
- Tax-free savings options help employees meet short- and long-term financial goals.
- Contributions are usually made through payroll deductions.
Extended Healthcare Coverage
- 91% of employers offer supplementary health plans for salaried staff.
- 77% cover 100% of premiums.
- 51% offer health plans for hourly workers.
- 73% cover 100% of premiums.
Coverage typically includes:
- Prescription drugs
- Hospital and medical services
- Paramedical practitioners
- Out-of-country emergency care
Voluntary Benefits
Offered mostly by large employers, these include:
- Virtual wellness programs
- Pet insurance
- Discounted products or services
Flexible Benefit Plans
- Popular among large employers; increasingly available to small/mid-sized businesses via packaged plans.
- Allow employees to choose from a variety of benefit options.
- Can include voluntary benefits, employer-funded accounts, or wellness platforms.
Healthcare & Wellness Spending Accounts
-
Healthcare Spending Accounts (HSAs):
- 100% employer-funded
- Tax-free for employees
- Can be used on CRA-approved medical expenses
-
Wellness Accounts:
- Taxable to the employee
- Broader usage: mental health, fitness, family wellness
- Popular for their flexibility and inclusiveness
Gym & Fitness Benefits
- Large employers may offer on-site gyms.
- Smaller companies often provide subsidies or corporate gym rates.
- Often funded through wellness spending accounts.
Workplace Meals
- Not common across Canada
- In tech and competitive industries, catered lunches or discounted cafeteria options may be provided
Working with an Employer of Record (EOR) in Canada is a smart solution for companies looking to hire employees locally without establishing a legal entity. The EOR handles all employment-related responsibilities, including payroll, taxes, social security contributions (such as CPP/QPP and EI), work permits, employment contracts, and compliance with Canadian labor laws. Canada’s employment regulations include mandatory and supplementary benefits, public holidays, and a variety of protected leave entitlements, all of which the EOR manages to ensure full compliance and minimize legal risks. This allows businesses to onboard Canadian or foreign talent efficiently while reducing administrative burdens. With Canada’s strong economy, diverse workforce, and stable business environment, partnering with an EOR provides a flexible, cost-effective way to grow operations with confidence.