How to hire in Canada through an EOR

Indefinite contracts are the most common choice for Canadian hires. They're the safest option for ongoing roles because fixed-term contracts can convert to indefinite if renewed too many times, which gives employees full protections like statutory notice periods.

Contract types

The right contract type depends on the role. Indefinite contracts are the default for most companies because they avoid the renewal risks that come with fixed-term arrangements.

Full-time is typically 30-40 hours/week, though this varies by province. Probationary periods can apply to any contract type, but they work well with indefinite contracts. Whatever you decide, spell out the length clearly in writing.

What has to be in the contract

Canada doesn't legally require a written contract. That said, you should always have one. Oral agreements are valid, but courts will fill in the gaps themselves, and they tend to side with employees when something's unclear.

At a minimum, include:

• Job title and duties.
• Pay, benefits, hours, location.
• Vacation and leave entitlements.
• Termination conditions.
• Probation period (3-6 months is common; 3 months is standard).

Language requirements follow provincial rules. In Quebec, that often means French. There's no federal language requirement for private contracts. If you want a probationary period, state it explicitly in the contract. Without it, full termination rules apply from day one.

Contractor vs. employee

Misclassification is a real risk in Canada. If you treat a contractor like an employee, you can be liable for back taxes, unpaid benefits, and damages.

The legal test comes down to control. Do you set their hours, tools, and methods? Employees are integrated into your business; contractors run their own. Courts weigh four factors: control, tools and equipment, profit and loss risk, and integration. Federally, the own-use test also applies.

Getting it wrong can mean:

• Back payroll taxes (EI, CPP, income tax).
• Overtime and vacation pay owed.
• Reclassification fines up to $10,000+ per violation provincially.
• Damages for wrongful dismissal if the termination was handled incorrectly.

Non-compete clauses are hard to enforce in Canada. Courts regularly throw out broad ones. If you include one, it needs to be reasonable in scope, limited in time (under 1 year), and tied to a legitimate business interest. On IP, employees own what they create unless the contract says otherwise. Contractors keep their IP too, unless it's explicitly assigned to you.

For most Canadian hires, an indefinite employee contract is the recommended starting point. If you don't have a local entity, an employer of record (EOR) can draft compliant contracts and take on the legal risk for you.

Canada sets the floor at two weeks of paid annual leave, but most employees expect three weeks from day one, plus private health coverage. Knowing what's required and what's expected are two different things.

Time off

Employees get a minimum of two weeks (10 working days) of annual leave after one year. That rises to three weeks after five years and four weeks after 10 years. Provinces vary slightly, but these are the federal baselines you'll encounter across the country.

Leave accrues over a 12-month period, often tied to payroll. You can use daily or weekly accrual if you prefer, as long as you hit the minimums. Vacation pay works out to 4% of gross wages for two weeks, 6% for three weeks, and 8% for four weeks.

There are 10 nationwide public holidays. Most are paid when they fall on a regular workday, and employees keep their job protection.

All leave types

Canada protects most leave types with job security, but whether you get paid depends on the type. Provinces add their own rules on top, so it's worth checking locally too. Here's how it breaks down federally.

All of these come with job protection. EI covers parental pay at 55% of average earnings up to the cap. If you want to be more competitive, you can top that up voluntarily.

Mandatory benefits

As an employer, you're required to contribute to the Canada Pension Plan (CPP), Employment Insurance (EI), and in some cases provincial plans. There's no mandatory private health insurance or extras like meal vouchers. Health care is publicly funded through the provinces.

Rates adjust each year, and 2026 maximums are similar. Quebec uses QPP instead of CPP. Transport allowances aren't required anywhere in Canada.

What people actually expect

Sticking to the legal minimums will make hiring harder, especially in tech, finance, and creative roles. Most candidates expect three to four weeks of annual leave from day one, not after five years of service.

Private health and dental coverage is close to standard. Extended benefits for prescriptions, vision, and paramedical services fill the gaps that public health doesn't cover. Most employers include it, and candidates notice when it's missing.

Remote work is now the norm in many roles. Expect requests for home office stipends in the $500 to $1,000 per year range, or full equipment setups. Flexible hours matter more to most people than a strict 9-to-5.

Parental top-ups are common, with many employers supplementing EI to reach 80 to 100% pay for six to twelve months. RRSP matching at 3 to 5% is also a signal candidates look for. The closer you are to the bare minimum, the longer your hiring process is likely to take.

Firing without documented cause in Canada can be expensive. Courts regularly award common law notice well above statutory minimums, particularly for employees with longer tenure. If you're using an EOR, they'll handle compliance, but you still need to document performance issues carefully to avoid claims.

Firing someone

Canada has strong employee protections, especially in provinces like Ontario. You can terminate for just cause, such as serious misconduct, theft, or gross negligence, without providing notice or severance. Anything short of that threshold puts you at risk of a wrongful dismissal claim.

Unfair dismissal occurs when there's no cause, or when the process touches protected categories: race, gender, disability, age over 40, family status, or union activity. Federally regulated employees with 12 or more months of service can't be dismissed unjustly unless they're covered by a collective agreement. Remedies can include reinstatement or compensation. Provinces follow similar rules through their human rights codes.

Courts look closely at termination clauses. If a clause defines "cause" too broadly, it can be voided entirely, which entitles the employee to common law notice, often around 1 month per year of service. Draft these clauses carefully, aim to limit liability to statutory minimums, and get legal review if you're operating across multiple provinces.

Notice periods

Statutory notice varies by province and the federal code. Employers must give written notice or pay in lieu. The table below shows federal minimums; provinces like Ontario align closely, up to 8 weeks.

No notice is required for just cause terminations, resignations, or fixed-term contracts that simply run their course. Temporary layoffs count as termination unless your contract explicitly allows them and they've occurred before.

Severance

Severance applies after longer service and is paid on top of notice. The federal code requires it for employees with 12 or more months of service in a mass termination involving 50 or more employees within 4 weeks. Ontario mandates it after 5 years if payroll exceeds $2.5M or 50 or more employees are affected.

The statutory formula is 1 week per year of service, up to 26 weeks federally. Common law can add more depending on age, role, and tenure, and there's no cap unless you have an enforceable clause limiting it to statutory amounts. Severance isn't required for just cause terminations or short service.

Calculate total pay including benefits continuation. Always offer a release and set a clear deadline for signing.

Work permits and visas

You can hire foreign nationals through an EOR, but they need to qualify for a work permit first. EORs don't sponsor directly; the employer of record applies as the sponsor through IRCC. Intra-company transfers are an option if you have an entity operating elsewhere.

The main routes are the Temporary Foreign Worker Program, which requires an LMIA to show no Canadian worker is available, and LMIA-exempt categories like NAFTA professionals or spousal permits. Express Entry can lead to permanent residency and an associated work permit. There's no digital nomad visa in Canada as of 2026.

Timelines vary: LMIA processing takes roughly 2 to 6 months, followed by 1 to 3 months for the permit itself. High-skill roles through the Global Talent Stream can move faster, around 2 weeks. Key requirements include a job offer, qualifications that match the relevant NOC code, and proof of funds. An EOR can help with the paperwork, but it can't bypass immigration rules.

A few other things worth knowing

Employee data is governed by PIPEDA federally, plus provincial laws like BC's PIPA. You'll need consent to collect and use employee data, proper security measures in place, and a process for reporting breaches. Fines can reach up to 4% of global revenue.

Around 30% of Canadian workers are unionized, so it's worth understanding organizing rights before you hire. Collective agreements take precedence over individual contracts on things like termination terms. There's no nationwide right-to-work law, and union shops are common in manufacturing.

Some recent changes to be aware of: Ontario added 27-week long-term illness leave for employees with 13 or more weeks of service, a 3-day job-seeking leave for mass terminations, and extended temporary layoffs to 35 or more weeks with approval. Courts are upholding tighter termination clauses when they're ESA-compliant. Keep an eye on AI hiring rules and vacation carryover changes in 2026. Federally, you're required to give 16 weeks' notice for group terminations.