Employer of Record in Canada

Businesses can only operate smoothly in Canada if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Canada below, to avoid any compliance issues.

Employment Contract Requirements

Each region has its own set of legislation, and the interplay between federal and provincial laws adds complexity to understanding and meeting the specific requirements. The employer should also provide a contract of employment that is signed by both parties detailing:

• The contract must include the employee's name
• Provide a comprehensive job description
• Outline the compensation details
• Include details regarding the termination process

Onboarding Process

We can help you get a new employee started in Canada quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Probation Period in Canada

Probationary periods are common in Canada, approximately three months. While there is no statutory limit for probation, each province has established maximum allowable timelines, varying from one month to six months. In certain provinces, mandatory probationary periods may be imposed, offering employers a level of protection even when the specific probationary duration is not explicitly outlined in the employment agreement.

Standard working hours typically limit employees to a maximum of 8 hours per day and 40 - 48 hours per week, with specific rules varying by province or territory.

Certain industries, such as healthcare and transportation, have unique exceptions due to the nature of their work, and managerial or exempt employees may not be subject to standard limits. Employers are responsible for respecting mandated rest periods, meal breaks, and statutory holidays to avoid penalties. In most territories, as of 2025, medical notes for sick leave are not mandatory unless an absence exceeds 5 consecutive days, and employees are entitled to up to 27 weeks of job-protected leave for serious illness or injury.

Overtime in Canada is typically paid at 1.5 times the employee’s regular rate. Some provinces may mandate higher rates, such as double time on statutory holidays or certain weekend days.

In Canada, the minimum wage is determined by each province or territory, with rates varying depending on the region's economic conditions and cost of living. The federal minimum wage is $17.75 CAD per hour, setting the baseline for federally regulated employees, though many provinces have different minimum wage rates.

It's crucial for employers to stay up-to-date with these rates to ensure compliance, especially as the rates are reviewed and adjusted regularly. This can affect payroll calculations and worker compensation standards across different regions.

Hiring in Canada means navigating local labor laws, mandatory employee benefits, payroll taxes, and strict employment regulations. These requirements aren’t always intuitive, especially if your team lacks in-country legal or HR expertise. An Employer of Record steps in as the legal employer for your hires, managing all compliance-related responsibilities. This includes issuing locally compliant contracts, registering employees with relevant authorities, processing payroll, and handling social security contributions and taxes in line with national laws.

By handing over these complexities to an EOR, your business avoids costly compliance errors and the time required to master local employment standards. You can focus on growing your team and operations while trusting that the legal and administrative foundation is solid. Whether you're making one strategic hire or building out an entire team, the EOR keeps you compliant, removes guesswork, and reduces the risk of legal or financial penalties, without requiring you to open a legal entity or maintain a local HR team.

Employers in Canada must comply with various payroll taxes, including income tax withholding, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums, ensuring accurate calculations and timely remittances to avoid penalties. Understanding these obligations, along with submission methods and due dates, is crucial for maintaining compliance and employee trust.

Additionally, staying informed about regulatory updates and leveraging payroll management software can help businesses streamline payroll processes, consolidate payroll data, and ensure adherence to Canadian tax laws efficiently.

Running payroll in Canada is complex, especially when you're hiring without a local entity. Local laws determine everything from tax withholdings and reporting deadlines to benefit contributions and currency requirements. Missteps can lead to fines, payment delays, or unhappy employees. An Employer of Record takes this burden off your plate by handling the full payroll process. Acting as the legal employer, the EOR ensures you remain compliant with all payroll-related obligations, while still allowing you to manage your team’s day-to-day work and performance.

Key Ways an EOR Supports Payroll in Canada:

• Compliance Assurance: Ensures payroll aligns with local tax laws, labor regulations, and statutory deadlines.
• Payroll Processing & Tax Management: Calculates salaries, applies correct tax withholdings, and submits required reports.
• Benefits & Social Security Contributions: Manages employer obligations for pensions, health insurance, and other legal entitlements.
• Contract Generation & HR Administration: Drafts compliant employment contracts and supports onboarding, terminations, and HR tasks.
• Currency Payments: Issues timely salary payments in local currency, ensuring employees are paid accurately and on time.

In Canada, work permits and visas are essential for employers hiring foreign workers. The process involves understanding the different work permit types, meeting eligibility criteria, submitting applications, and paying required fees. Key visa types include the Temporary Work Permit, which allows foreign nationals to work for a limited time, the Open Work Permit, which allows workers to work for any employer, the LMIA-Based Work Permit, which requires a Labour Market Impact Assessment (LMIA) to prove the need for foreign workers, and the Post-Graduation Work Permit for international students who have completed their studies in Canada.

Employers must ensure compliance with Canadian labor laws and immigration regulations when sponsoring foreign workers.

Mandatory Leave Entitlement in Canada

The annual leave entitlement in Canada is at least 2 weeks (varies by province) for a full time worker after one year of employment. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Canada

Employees get paid for public holidays, and if a holiday falls on a weekend, it shifts to the next workday.

Paid Time Off in Canada

Annual leave regulations in Canada differ from province to province. According to employment standards legislation, employees are entitled to two weeks of paid time off after completing one year of service. After five years of employment, the minimum entitlement for annual leave increases to three weeks, and it further extends to four weeks after completing 10 years of service.

Maternity Leave In Canada

A minimum of 15 weeks of maternity leave is guaranteed, with certain provinces establishing a higher baseline. Employers are not obligated to directly cover the costs of this leave, as Canadian social programs extend payments to support new parents during this period.

Paternity Leave In Canada

There is no specific statutory provision for paternity leave in Canada apart from the 35 weeks provided for either parent as parental leave. However, in Quebec, there is a provision for five weeks of paternity leave.

Sick Leave In Canada

In Canada, employees are entitled to protected time off for sick leave, with the specific annual entitlement varying across provinces. Policies concerning sick leave, encompassing its duration and whether employers are obligated to provide compensation for it, differ from province to province.

Parental Leave In Canada

The maximum duration of parental leave for a single parent in Canada is 35 weeks, extending to 61 weeks when opting for extended parental leave. But certain provinces may establish a higher maximum limit.

Bereavement Leave

Federal legislation ensures that employees are entitled to a minimum of five days of paid protected bereavement leave following the passing of an immediate family member.

Family Violence Leave

Employers are mandated to provide a minimum of 10 days of protected leave for employees to utilize in instances of family violence, with five of these days being compensated. Employees facing allegations of perpetrating family violence are not eligible for this leave.

Administering employee benefits in Canada requires more than just offering a standard package. Local labor laws often mandate specific entitlements, from health insurance to paid leave, and the rules can change without warning. Canada also has unique standards for what an attractive, competitive benefits package looks like. For businesses without in-country expertise, meeting these obligations and expectations can quickly become risky and expensive. An Employer of Record acts as your compliance partner, ensuring all benefits are provided according to the latest legal requirements and without administrative strain on your internal team.

Beyond compliance, an EOR brings clarity and consistency to a process that’s often complex and fragmented. They handle enrollments, ensure accurate employer contributions, manage communications with local providers, and keep everything properly documented. This means employees get what they’re entitled to, and you avoid the headache of navigating benefits systems in a foreign market. Whether you're hiring one person or building a larger team, an EOR provides a clear, dependable structure that lets you offer competitive benefits without taking on unnecessary risk or workload.

Termination Process in Canada

Terminating employment contracts in Canada can be complicated. Unlike the concept of at-will termination commonly found in some jurisdictions, Canadian employers do not have the same flexibility, especially once the probationary period concludes. In Canada, terminations without notice or pay in lieu must be based on just cause to comply with legal requirements. The reasons for termination may include:

1. Breach of employment contract
2. Gross misconduct
3. Redundancy
4. Underperformance

Notice Period in Canada

According to federal employment regulations, employers are required to provide graduated notice of termination based on length of service. For employees with 3 months to 3 years of service, 2 weeks' notice is required. For employees with 3+ years of service, the notice period increases by one week per year (3 weeks for 3 years, 4 weeks for 4 years, etc.), up to a maximum of 8 weeks for 8+ years of service. It's important to note that notice periods differ across provinces and territories. Notice period regulations do not pertain to employees under fixed-term contracts.

Severance in Canada

Upon completing a minimum of twelve months of employment with an employer, individuals are entitled to severance pay equivalent to two days' pay for each year of service completed