Canada Employer of Record: The Complete Guide to Hiring Internationally

Expanding your business to Canada without establishing a local entity is now easier than ever, thanks to Employer of Record (EOR) services. Whether you’re a startup testing the Canadian market or an established company looking to scale your remote workforce, understanding how EORs work is crucial to making an informed decision.

In this comprehensive guide, we’ll walk you through everything you need to know about hiring through an EOR in Canada—from the basics to advanced considerations that will help you make the right choice for your organization.

---

What is an Employer of Record in Canada?

An Employer of Record (EOR) is a third-party service provider that acts as your legal employer in Canada. Instead of establishing your own corporate entity, the EOR becomes the official employer on your behalf, handling all the complex legal and administrative responsibilities that come with hiring Canadian employees.

Think of an EOR as your partner in Canadian employment. They manage:

• Payroll processing in Canadian dollars
• Tax filing and remittance with federal and provincial authorities
• Benefits administration including health insurance and pension plans
• Employment contracts tailored to provincial labor laws
• Compliance monitoring to ensure you stay within the law
• Employee onboarding and offboarding
• HR advisory services on local employment practices

The key advantage? You maintain full control over hiring decisions, performance management, and your team’s strategic direction—while the EOR handles the bureaucratic complexity.

---

Why Hire Employees in Canada?

Canada represents an exceptional opportunity for global hiring:

Highly Skilled Workforce: Canada boasts top-tier universities and research institutions that continuously produce talented professionals. The country is particularly strong in technology, engineering, healthcare, and finance sectors.

Strategic Location: With proximity to the US and trade agreements with major economies, Canada offers a strategic base for North American operations.

Tech Hub Cities: Toronto, Vancouver, and Montreal have established themselves as thriving tech ecosystems, attracting world-class talent from around the globe.

Bilingual Talent: Certain regions, particularly in Quebec and parts of Eastern Canada, offer access to English-French bilingual professionals.

Stable Business Environment: Canada ranks high in ease of doing business, political stability, and rule of law.

---

EOR vs. Setting Up a Legal Entity in Canada

Before choosing an EOR, it’s important to understand how it compares to establishing your own Canadian business entity.

Setting Up a Legal Entity

Time: 4-6 months Upfront Costs: $5,000-$15,000+ in legal and registration fees Ongoing Responsibilities: You manage all payroll, tax compliance, and HR operations Control: Complete control over employment practices and company policies Best For: Long-term, large-scale operations with significant local presence

Using an EOR

Time: Days to weeks Upfront Costs: Minimal—you pay per employee monthly Ongoing Responsibilities: The EOR handles payroll, taxes, and compliance Control: Limited control over certain HR processes, but simplified operations Best For: Testing new markets, rapid scaling, smaller teams, avoiding legal complexity

The Verdict

For most companies hiring in Canada for the first time, an EOR is the faster, more cost-effective solution. You can start hiring within days and avoid the headache of navigating Canadian provincial labor laws. Once your Canadian operation matures and you have a substantial local team (typically 50+ employees), establishing a legal entity may become more economical.

---

Top 5 Benefits of Using an EOR in Canada

1. Speed to Market

Traditional entity setup takes months. With an EOR, you can onboard your first Canadian employee in as little as 1-3 weeks. This is critical when competing for talent—your best candidate won’t wait six months while you establish a legal entity.

2. Cost Savings

Establishing a Canadian company involves substantial legal fees, accounting setup, and ongoing compliance costs. EORs operate on a pay-as-you-grow model, typically ranging from $200-$800 per employee per month. This means your costs scale directly with your hiring.

3. Provincial Compliance Expertise

Canada has 13 different provincial and territorial labor law jurisdictions. Each has unique requirements for minimum wage, overtime, benefits, and termination procedures. EORs maintain expert knowledge across all provinces and automatically apply the correct regulations based on employee location.

4. No Legal Liability

The EOR is the legal employer, which means they bear primary responsibility for employment law compliance. This shields your company from regulatory violations, tax filing errors, and employment disputes.

5. All-in-One HR Solution

Beyond payroll and taxes, EORs offer comprehensive HR services including contract drafting, benefits administration, onboarding support, and termination assistance. You get an entire HR department without the overhead.

---

Key Canadian Employment Laws and Compliance Requirements

Understanding Canadian employment regulations is essential, even when using an EOR. Here are the critical aspects:

Federal vs. Provincial Authority

• Federal: Canada Labour Code applies to interprovincial industries (transportation, telecommunications, banking, shipping)
• Provincial: Most industries follow provincial labor standards

Standard Working Hours and Overtime

• Standard: 8 hours/day, 40 hours/week
• Some provinces allow up to 44 hours/week for specific industries
• Overtime: Typically 1.5x pay for hours beyond the threshold
• Varies by province (Ontario: 1.5x after 44 hours; BC: 1.5x after 8 hours/day)

Mandatory Employee Benefits

• Pension/Retirement: Canada Pension Plan (CPP) or Quebec Pension Plan (QPP)
• Employment Insurance: Coverage for job loss
• Workers’ Compensation: Coverage for workplace injuries
• Paid Vacation: Minimum 2 weeks after 1 year of service
• Statutory Holidays: 5 federal holidays + provincial variations
• Parental Leave: Up to 15 weeks maternity + up to 40 weeks parental (or 69 weeks extended)
• Sick Leave: Up to 17 weeks unpaid medical leave

Employer Payroll Contributions (2024-2025)

• Canada Pension Plan: 5.95% (capped at $68,500 wages)
• Employment Insurance: 1.66% for employees; 2.32% for employers
• Workers’ Compensation: ~0.21% (varies by province and industry)
• Provincial Health Tax: Varies by province (0.98%-4.26% of payroll)

Probation and Termination

• Probation: Typically 3-6 months (varies by province)
• Notice Period: 1-8 weeks depending on tenure and cause
• Severance: Employees with 1+ year of service receive severance equal to 2 days’ pay per year of service

Minimum Wage (2025)

• Federal: $17.75 CAD/hour (as of April 1, 2025)
• Provincial Range: $11.75-$16.00/hour depending on province

Prohibited Interview Questions

You cannot ask candidates about:

• Gender or gender identity
• Religious beliefs
• Age or birth date
• Marital or family status
• Criminal history (unless relevant to the role)
• Medical conditions
• Drug testing (not permitted as part of hiring process)

---

How to Choose the Best EOR for Your Business

Selecting the right EOR is critical. Here’s a strategic approach:

Step 1: Define Your Needs

Ask yourself:

• How many employees do you plan to hire?
• Which Canadian provinces will they work in?
• Do you need both employee and contractor hiring?
• What’s your budget per employee?
• Do you need specialized industry expertise (healthcare, tech, etc.)?

Step 2: Evaluate EOR Options

Look for providers that:

• Own their own Canadian entity (not relying on third-party vendors)
• Have dedicated legal and HR experts on staff
• Understand worker classification guidelines
• Offer competitive benefits packages
• Provide transparent, flat-rate pricing
• Have 3+ years of experience in Canada

Step 3: Assess Technology and Integration

• Does their platform integrate with your existing HR software?
• Is the dashboard user-friendly?
• Can employees access their information and pay stubs easily?
• Do they provide real-time reporting and analytics?

Step 4: Check Customer Reviews and References

• Read independent reviews on G2, Capterra, and Trustpilot
• Request references from companies similar to yours
• Look for feedback on customer support responsiveness
• Check how they handle edge cases and complex situations

Step 5: Evaluate Data Security and Compliance

• Do they comply with PIPEDA (Personal Information Protection and Electronic Documents Act)?
• Are they SOC 2 Type II certified?
• What data protection measures do they have in place?
• Can you establish a Data Processing Agreement (DPA)?

---

Step-by-Step Process: Hiring Through an EOR in Canada

Step 1: Candidate Selection and Offer

You select your candidates and extend offers independently. The candidate acceptance is your signal to initiate the EOR onboarding process.

Step 2: Information Collection

The EOR will request the following from each new hire:

• Full legal name (matching banking information)
• Date of birth and date of hire
• Canadian mailing address
• Social Insurance Number (SIN)
• Work permit/visa details (if applicable)
• Bank account information for direct deposit
• Completed TD1 forms (Personal Tax Credits Return)
• Emergency contact information

Step 3: Employment Contract Generation

The EOR generates a legally compliant employment agreement tailored to the employee’s province. This contract includes:

• Job title and responsibilities
• Compensation and payment frequency
• Benefits and entitlements
• Probation period (if applicable)
• Termination and severance clauses
• Overtime and scheduling policies
• Confidentiality and IP provisions

Pro Tip: Different provinces have different overtime rules. An EOR ensures contracts reflect these variations automatically.

Step 4: Contract Signing

Both you (or your authorized representative) and the employee sign the contract. This typically happens digitally through the EOR’s platform.

Step 5: Payroll Setup

The EOR configures payroll settings including:

• Salary and payment frequency (typically bi-weekly in Canada)
• Deductions and tax withholdings
• Benefits enrollment
• Any additional deductions (RRSPs, benefits premiums, etc.)

Step 6: Onboarding Completion

The EOR handles:

• Equipment and access setup guidance
• Benefits enrollment and documentation
• Compliance training (if required)
• Welcome and orientation materials

Step 7: Ongoing Payroll Management

• Timely salary processing in Canadian dollars
• Automatic tax withholding
• Benefits premium deductions
• Monthly/quarterly reporting

---

Costs and Pricing Structure

Typical EOR Pricing in Canada

EOR services generally cost $200-$800 per employee per month, with variations based on:

Factors Influencing Cost:

1. Employee Seniority: Senior roles with complex benefits may cost more
2. Number of Employees: Volume discounts often apply for 10+ hires
3. Custom Services: Additional services like recruitment, specialized immigration support, or custom reporting increase costs
4. Benefits Packages: More comprehensive benefits plans increase monthly costs
5. Compliance Complexity: Complex industries or multi-provincial operations may cost more

Pricing Models

Per-Employee Fixed Fee: Most common model (e.g., $500/employee/month)

Percentage of Payroll: Some EORs charge 1-3% of total payroll plus taxes

Tiered Pricing: Discounts as headcount increases

What’s Typically Included

Most EOR services include:

• Payroll processing
• Tax filing and remittance
• Basic benefits administration
• Contract generation
• Onboarding support
• Compliance monitoring
• Employee portal access
• Basic HR advisory

What May Cost Extra

• Immigration/visa sponsorship services
• Specialized recruitment assistance
• Advanced analytics and reporting
• Termination support
• Customized benefits packages
• Multi-country payroll setup

---

Top EOR Providers in Canada (2025)

1. Deel

• Best For: Rapid onboarding and global team management
• Onboarding Time: 1 day
• Pricing: From $29/user/month
• Key Features: Locally compliant contract generation, automated payroll, centralized dashboard
• Standout: Transparent cost calculator helps with budgeting

2. Borderless AI

• Best For: Quick expansion with Canada-based expertise
• Onboarding Time: 3-5 business days
• Pricing: From $579/month
• Key Features: AI contract generation, no upfront salary deposits, deep Canadian compliance knowledge
• Standout: Canada-based EOR with native understanding of federal and provincial laws

3. RemoFirst

• Best For: Budget-conscious teams
• Onboarding Time: 5-7 days
• Pricing: $25-$199/user/month
• Key Features: Transparent pricing, dedicated account manager, global coverage (185+ countries)
• Standout: No long-term contracts, flexible and scalable

4. Native Teams

• Best For: Secure and compliant employment
• Onboarding Time: 1-2 weeks
• Pricing: $99/employee/month
• Key Features: Full legal employment support, localized benefits, comprehensive compliance
• Standout: Strong focus on data security and employee experience

5. Multiplier

• Best For: Quick employee onboarding
• Onboarding Time: Less than 24 hours
• Pricing: From $20/user/month (billed annually)
• Key Features: User-friendly 4-step onboarding, local expert support from Victoria, BC
• Standout: Fastest onboarding in the market

6. Rippling

• Best For: Managing IT assets alongside HR
• Onboarding Time: 2-5 days
• Pricing: From $8/user/month (billed annually)
• Key Features: Unified HR and IT platform, automated compliance training, integrated payroll
• Standout: Unique combination of HR, payroll, and IT asset management

7. G-P

• Best For: Full-time and contractor hiring flexibility
• Pricing: Custom pricing
• Key Features: Dual employment models (employees and contractors), classification compliance, provincial expertise
• Standout: Handles complex worker classification challenges

8. Remote

• Best For: Competitive benefits packages
• Onboarding Time: 2 days
• Pricing: From $29/user/month
• Key Features: No markup on benefits premiums, health and wellness coverage, cost-effective
• Standout: Transparent benefits pricing without hidden fees

---

Common Challenges and How EORs Address Them

Challenge 1: Navigating Provincial Variations

The Problem: Each Canadian province has different minimum wage, overtime, benefits, and termination requirements. Managing this complexity manually is error-prone.

EOR Solution: Modern EORs maintain dedicated compliance teams that track provincial regulations in real-time. When you hire in Ontario vs. British Columbia, the system automatically applies the correct rules for contract terms, overtime calculations, and statutory deductions.

Challenge 2: Expensive Setup and Legal Fees

The Problem: Establishing a Canadian entity requires lawyers, accountants, and registration fees—often $10,000+. This creates a high barrier to entry.

EOR Solution: EORs provide a legal entity already established in Canada. You avoid all registration fees and can hire immediately at a fraction of the cost.

Challenge 3: Payroll Complexity

The Problem: Canadian payroll involves multiple deductions (CPP, EI, provincial income tax, health tax), varying by province and employee circumstances. Errors can result in CRA penalties.

EOR Solution: EORs automate payroll calculations and filing, ensuring accuracy and timeliness. They also manage annual compliance filings like T4s automatically.

Challenge 4: Benefits Administration

The Problem: Offering competitive benefits in Canada requires understanding provincial regulations, sourcing insurance, and managing enrollment—all while competing with local Canadian salaries expectations.

EOR Solution: EORs negotiate group benefits rates with insurance providers and manage the entire enrollment and administration process, allowing you to offer competitive packages without internal overhead.

Challenge 5: Worker Misclassification Risk

The Problem: Incorrectly classifying an employee as a contractor exposes you to back pay, penalties, and legal disputes with Canadian authorities.

EOR Solution: Experienced EORs review every hiring situation and provide classification guidance based on Canadian labor law. This protective layer prevents costly misclassification errors.

---

Red Flags When Choosing an EOR

Avoid EOR providers that:

1. Rely on Third-Party Vendors: If the EOR doesn’t own its Canadian entity, delays and miscommunication are likely
2. Offer Hidden Fees: Watch for unexpected charges for contract changes, terminations, or administrative tasks
3. Lack Local Expertise: Providers without dedicated Canadian legal teams may not understand provincial nuances
4. Don’t Provide Transparent Pricing: If a provider won’t discuss pricing upfront, move on
5. Have Poor Customer Reviews: Consistently negative feedback on support responsiveness is a warning sign
6. Don’t Offer Data Protection Agreements: In 2025, DPA compliance is non-negotiable
7. Have Limited Integration Options: Your EOR should integrate with your existing HR and financial systems
8. Lack Canadian Entity Ownership: Always verify they maintain their own Canadian legal entity

---

Employee Experience: Why It Matters

Your employees are your company’s ambassadors. Even though the EOR handles administration, a poor employee experience reflects on your brand.

Look for EORs that provide:

• User-friendly self-service portals where employees can access pay stubs, benefits info, and tax documents
• Multilingual support (English and French) reflecting Canada’s bilingual nature
• Timely salary processing and accurate calculations
• Responsive customer support available during business hours
• Clear communication about benefits and deductions
• Onboarding materials that help employees feel welcomed

---

Immigration and Work Permits

If hiring international talent who need Canadian work permits, ensure your EOR:

• Understands Canadian immigration law
• Can advise on work permit requirements
• Supports LMIA (Labour Market Impact Assessment) if applicable
• Can manage the administrative aspects of bringing foreign talent onboard
• Knows about provincial nominee programs (PNP)
• Understands transitional arrangements for international mobility program workers

---

Frequently Asked Questions About Canadian EORs

How long does onboarding actually take?

Most EORs can onboard employees in 1-3 weeks, though some claim faster times. The actual timeline depends on how quickly you provide required documentation and how thorough the background checks are.

What if my employee is in multiple provinces?

Some employees work across provinces (e.g., remote employee working from BC but office in ON). Your EOR should clarify which province’s laws apply—usually the province where the employee resides and performs work.

Do I need a Canadian bank account?

No. Your company doesn’t need a Canadian bank account because the EOR processes payroll. However, employees may prefer receiving payments in Canadian accounts to avoid international transfer fees.

Can I use an EOR for contractors?

Most Canadian EORs can manage both employees and contractors. However, worker classification is strict in Canada. An experienced EOR will help you determine whether someone should be classified as a contractor or employee.

What happens if an employee wants to leave?

The EOR handles the offboarding process, including final pay calculations, benefits termination, record-keeping, and any required government notifications. You manage the performance and departure conversations.

Does an EOR help with tax deductions for the company?

Yes. As your legal employer, the EOR files all required tax documents (T4s, source deduction remittances). Consult your accountant about how to deduct EOR fees on your corporate tax return.

What about workers’ compensation claims?

The EOR, as the legal employer, manages the workers’ compensation process. They ensure proper coverage is in place and handle claim administration if an employee is injured on the job.

Can I transition to my own Canadian entity later?

Yes, many companies use an EOR initially, then establish their own Canadian entity as the operation scales. Your EOR can provide guidance on the transition process.

---

Best Practices for Success with an EOR

1. Choose the Right Provider Early

Don’t treat EOR selection casually. This partnership directly impacts your employees’ experience and your compliance posture. Take 2-4 weeks to evaluate options thoroughly.

2. Provide Complete Documentation

Speed up onboarding by having all employee documentation ready before the official start date. Late submissions delay first payroll.

3. Understand Your Employees’ Province

Learn the key employment rules for the provinces where your employees are located. This helps you understand why certain terms are in the contract.

4. Maintain Clear Communication

Establish a point of contact at the EOR for important updates. Good communication prevents issues from escalating.

5. Review Payroll Regularly

Even though the EOR processes payroll, review the first few payroll runs to ensure accuracy. Catch errors early before they compound.

6. Stay Compliant with Compliance Updates

EORs monitor changes in labor laws, but you should too. Subscribe to updates from provincial labor boards to understand your obligations.

7. Plan for Growth

As your Canadian team grows, periodically assess whether continuing with an EOR makes sense versus establishing your own entity. Most companies cross this threshold around 50+ employees.

---

The Future of EOR Services in Canada

Emerging Trends (2025+)

AI-Powered Compliance: EORs are implementing AI to automatically monitor regulatory changes and proactively notify clients of new requirements.

Enhanced Immigration Support: As Canadian immigration remains important for companies, EORs are expanding visa and work permit services.

Integrated Talent Acquisition: Some EORs now offer recruitment services, allowing you to source, hire, and onboard through a single platform.

Specialized Industry Services: EORs are developing deeper expertise in sectors like healthcare, financial services, and technology.

Blockchain-Based Verification: Some providers are exploring blockchain for secure, immutable employment records and compliance documentation.

---

Conclusion

Hiring in Canada doesn’t have to be complicated. By partnering with the right Employer of Record, you can:

• Launch quickly: Onboard your first employee in days, not months
• Stay compliant: Navigate complex provincial laws with expert guidance
• Scale efficiently: Grow your Canadian team without proportional increases in administrative burden
• Protect your business: Shift employment law liability to experienced professionals
• Focus on what matters: Spend time building and managing your team, not managing bureaucracy

Whether you’re a startup testing the Canadian market or an established company expanding internationally, an EOR provides the infrastructure, expertise, and peace of mind to hire confidently.

The key is choosing the right provider that aligns with your business goals, company culture, and growth timeline. Use this guide to evaluate your options thoroughly, ask the right questions, and make a decision you’ll feel confident about for years to come.

---

Ready to Hire in Canada?

If you’re ready to take the next step, start by:

1. Defining your hiring needs (number of employees, provinces, timeline)
2. Shortlisting EOR providers using the selection criteria in this guide
3. Requesting demos from 3-5 top providers
4. Checking references from companies similar to yours
5. Making your selection and launching your Canadian hiring journey

Good luck with your Canadian expansion! With the right EOR partner, you’ll be well-positioned to build an exceptional team in one of the world’s most attractive labor markets.