Employer of record in Canada: costs, rules and how to hire

Three things catch out foreign employers in Canada, and the first is the provider's own licensing rather than anything about your hire. The other two are the start-date checks and the policies that follow employer size. Each is cheaper to settle before signature.

Confirm the provider's employing arrangement

An Ontario temporary help agency must hold the required licence and clients must not knowingly use an unlicensed agency, and the agency employs its assignment workers, so ending a client assignment does not itself end employment: specific assignment-ending notice and other agency rules can apply. A Quebec personnel placement agency needs a valid CNESST licence, the agency and client must respect applicable worker protections, and a lower hourly rate cannot be justified solely by agency status where the client's employees perform the same tasks in the same establishment.

Ask who signs the employment contract, which business runs payroll and which licences apply, and where the provider uses an agency model check both the commercial assignment and the employee's continuing employment rights. Cancelling your service agreement is not a complete employee-exit process.

Complete the hiring checks before the start date

Give the EOR the employee's work location, role, proposed salary, hours, start date and benefit choices, then confirm right to work, compliant written terms, payroll details, required registrations, coverage and employee information before work begins. Ask for a start date built on those checks and the payroll cut-off.

Agree how changes and remote work will be handled

Ontario employers with 25 or more employees on 1 January generally need a written policy on disconnecting from work, though the policy requirement does not itself create a universal right to disconnect or a new hours limit. Ask which employer-wide policies cover the hire and how overtime and availability will be managed.

Document the working schedule, overtime approvals, equipment, expenses and contact outside normal hours, tell the EOR before changing pay, duties, work location or working time, and keep a clear process for absence, employee requests, health and safety, and payroll corrections.

Written terms should identify the legal employer, role, location, pay, hours, benefits and lawful termination arrangements, though the formal requirement varies: CNESST explains that Quebec contracts may be verbal or written while recommending writing, and Ontario agency workers have specific written-information rights. A generic global offer letter often misses what a province requires. What decides the content is the jurisdiction of work and, in an agency model, the assignment rules on top.

What to put in the employment contract

Agree whether the role is indefinite or for a defined term, recording the reason and end arrangements for a fixed term, and include gross pay, pay frequency, work location, hours, vacation, benefit eligibility, reporting arrangements, confidentiality and intellectual property. Have the EOR assess any early-termination clause before it is used.

Ontario assignment employees have specific information rights when they join the agency and when an assignment is offered, covering the agency or client, the work, wages, hours and assignment terms.

Probation and early termination

Do not use one Canada-wide probation rule, because a contract's trial period removes no statutory protection and does not automatically eliminate notice obligations. Ontario's ordinary statutory termination entitlement generally starts after three months of continuous employment, while Alberta's notice exemption applies to employment of 90 days or less.

Use the trial period to set expectations and assess performance, and ask the provider to review any decision before an end date is communicated, especially where sickness, pregnancy, protected leave, discrimination or a workplace complaint may be involved.

French-language documents and restrictions

Quebec's French-language requirements affect employment offers, individual contracts and workplace documents, so ask the EOR to prepare compliant French documentation and assess any permitted use of another language; requirements on language skills and the employer's francisation process need a separate check.

On restrictions, Ontario generally prohibits entering into employee non-compete agreements from 25 October 2021, with defined executive and business-sale exceptions. That is an Ontario rule rather than a nationwide one, so have confidentiality, non-solicitation and other restrictions assessed separately. A local review of the contract is also the moment to confirm which collective terms, workplace policies or regulated-occupation requirements apply.

Misclassification risk, and how to get it ruled on

Canada will give you a binding answer if you ask for one, which makes guessing the worse option. The revenue authority works in two steps: first the intention of the parties when they entered the working arrangement, then a set of questions to verify whether that intention is reflected in the facts. All the facts, including the actual terms and conditions of employment, determine a worker's employment status, not just the intention. Source: canada.ca, RC4110 employee or self-employed, archived capture 13 September 2026.

The factors are concrete and worth testing your own arrangement against: the level of control the payer has over the worker's activities, whether the worker or the payer provides the tools and equipment, whether the worker can subcontract the work or hire assistants, the degree of financial risk the worker takes, the degree of responsibility for investment and management the worker holds, the worker's opportunity for profit, and any other relevant factors such as written contracts. Each is considered separately and then together. Source: canada.ca, RC4110, archived capture 13 September 2026.

Either side can request a ruling on whether a worker is an employee or self-employed and whether the employment is pensionable or insurable, through the business or personal tax accounts or by completing Form CPT1, and there is a deadline: a ruling can be requested by June 29 of the year following the year the question relates to. That deadline is the reason to ask in the first year rather than the third. Source: canada.ca, RC4110, archived capture 13 September 2026.

Payroll frequency and variable pay

Payroll frequency is jurisdictional too. Ontario requires an established regular pay period and payday, British Columbia requires payment at least twice monthly with pay periods no longer than 16 days and wages generally due within eight days after the period, and Alberta permits regular pay periods up to one month with payment within ten consecutive days after the period.

Specify when salary, commissions and bonuses are earned and paid, make sure the employee can read gross pay, pension and insurance deductions, income tax and net pay on the payslip, and include any promised bonus or additional salary payment in the budget and terms, checking the applicable vacation-pay treatment.

Employer CPP is 5.95% between the C$3,500 exemption and C$74,600, to a maximum of C$4,230.45, with CPP2 adding 4% from C$74,600 to C$85,000 up to C$416, and employer EI normally runs at 1.4 times the employee premium. Quebec runs its own QPP, EI rate and QPIP, which is the main reason a Quebec quote does not compare directly with an Ontario one. What decides the total is coverage, pay frequency, taxable benefits and any approved reduced EI rate.

Employee income tax

The 2026 federal marginal rates run from 14% to 33%, with provincial or territorial income tax on top.

Credits, deductions, residence and payroll withholding rules all affect take-home pay, and a marginal rate is not a single percentage of the whole salary. Payroll withholding and the employee's final annual assessment are different calculations, so ask the EOR to confirm the province-of-employment treatment for remote work and have the employee complete the applicable tax-credit forms.

Work permits and immigration

Confirm the person's right to work before setting a start date. An employer-specific permit needs a job offer and may need a Labour Market Impact Assessment, while open permits are available only in qualifying situations, and an EOR contract creates no permission: the provider must confirm whether its employing arrangement supports the particular route before anyone promises relocation. Existing work permission may carry employer, occupation or location conditions, and changing the legal employer or job can require a fresh immigration assessment.

Other things to agree with the EOR

Set responsibility for employment records, tax reporting, benefits, occupational health and safety, employee-data handling and contract changes, and keep evidence of employee information and consent where required. Your commercial agreement should explain how incidents, disputes and requests are escalated and who can make employment decisions.

General hourly minimums in effect on 13 September 2026 range from C$15.00 in Alberta to C$20.17 in Nunavut, with the federal rate at C$18.15 from 1 April 2026 and a higher provincial or territorial rate taking priority for covered federal employees. That spread is the clearest illustration of why the province comes first. Several jurisdictions also have announced increases from 1 October 2026, which must be distinguished from the rate payable before that date.

Working hours and overtime

Overtime starts in different places in different provinces, and a salary does not make anyone exempt by itself.

These are general rules, subject to occupation, averaging and other exceptions, so check any technology, management or professional exemption against the actual duties. Ontario's general daily limit is eight hours or the established longer regular workday with a 48-hour weekly limit, and qualifying written or electronic agreements can permit additional hours. Agree rest periods, time recording and how additional hours are approved before setting a schedule.

Vacation entitlement and vacation pay are two separate obligations, and paying the percentage does not generally remove the duty to provide the time off. Both scale with service and both differ by province: two weeks and 4% is the common starting point, rising to three weeks and 6% at five years in most jurisdictions. What decides your number is the province of work and any better contractual term.

Annual vacation and vacation pay

Budget for the time and the pay that goes with it.

The qualifying wage base, reference year, timing and partial-service calculation all differ, so apply any more favourable contract or collective terms and record the leave balance and vacation-pay balance separately.

Public holidays

There is no single paid-holiday calendar for Canadian employees: Ontario lists nine public holidays, Alberta nine general holidays and British Columbia eleven for 2026, with eligibility, holiday work, substitute days and pay calculations all depending on the applicable rules.

Ontario's general list is New Year's Day, Family Day, Good Friday, Victoria Day, Canada Day, Labour Day, Thanksgiving, Christmas and Boxing Day. British Columbia adds B.C. Day, National Day for Truth and Reconciliation and Remembrance Day but does not make Boxing Day statutory, and Alberta includes Remembrance Day while excluding Boxing Day from its nine. Federal office closures are not a national employee entitlement, so confirm the employee's actual calendar and eligibility.

Short sickness absence and longer illness

Short-absence entitlements are small and differ by province, while longer illness has its own protected leave.

For longer illness, Ontario provides eligible employees with at least 13 consecutive weeks of service up to 27 unpaid weeks in a 52-week period for a certified serious condition, British Columbia also has up to 27 weeks in 52, and Alberta's entitlement rose to up to 27 weeks per calendar year from 1 January 2026, generally after 90 days of service. Eligible workers unable to work for medical reasons can receive up to 26 weeks of EI sickness benefit at 55% of insurable earnings, capped at C$729 a week in 2026, which is separate from employment-law leave protection and any employer sick-pay plan. None of this promises full salary during an absence.

Maternity, paternity and parental leave

Leave protects the time away from work; EI or, in Quebec, QPIP decides the income replacement, and an employer top-up is a separate commitment.

Outside Quebec's separate scheme, eligible workers can receive 15 maternity weeks at 55% of insurable earnings capped at C$729 weekly in 2026, with standard parental benefits of 40 shared weeks and a maximum 35 per parent at the same rate and cap, or extended benefits of 69 shared weeks and a maximum 61 per parent at 33% capped at C$437 weekly. Check notice, benefit-plan contributions, sharing rules and any extensions before confirming the schedule.

Other leave and benefit choices

Family-care, bereavement, domestic-violence and other protected leaves depend on the jurisdiction and circumstances, so ask the EOR to assess the actual request rather than fitting it into annual vacation or ordinary sick leave. Agree health and dental cover, disability and life insurance, retirement savings, equipment and any other benefits in the offer, including eligibility and who pays the premium.