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Canada Employer of Record (Canada EOR)

In this article, we will explore the merits of international companies choosing to hire employees in Canada through a Canada Employer of Record (Canada EOR) solution.

As the world becomes more interconnected, international businesses are increasingly recognizing the advantages of recruiting talent in Canada. With its diverse pool of skilled professionals, strong economy, and favorable business climate, Canada offers numerous benefits for companies seeking to expand their global footprint.

Key Takeaways

  • A Canada Employer of Record (EOR) helps international companies to hire employees in Canada.
  • A Canda EOR takes over employment compliance, payroll and HR, leaving client companies to focus on core business.
  • The Best 3 Canada EOR companies are Horizons, Pivotal and Deel. 

What is a Canada Employer of Record?

A Canada Employer of Record (Canada EOR) is a company or organization that acts as the legal employer for workers in Canada on behalf of another company.

When a foreign company wants to hire employees in Canada but doesn’t have a physical presence or legal entity in the country, they can utilize the services of a Canada Employer of Record. The EOR becomes the employer of record for administrative and legal purposes, handling tasks such as payroll processing, tax withholding, benefits administration, and compliance with employment laws and regulations.

By partnering with a Canada Employer of Record, companies can effectively outsource the employer responsibilities and administrative tasks associated with employing workers in Canada. This allows them to focus on their core business operations without the need to establish a legal entity or navigate the complexities of Canadian employment laws and regulations.

Sometimes Canada EOR solutions are similar to Canada Professional Employer Organization (Canada PEO) solutions, with the difference that the Canada PEO acts as a co-employer of the client company’s employees. 

Best Canada EOR Companies

Horizons

Horizons is a leading global Employer of Record, operating in 180+ locations around the world. With Horizons support, companies can hire, onboard and pay employees in any location in Canada. This saves companies money and time, and ensures full legal compliance in all Canadian provinces and territories.  

Pivotal

Pivotal (Pivotal Integrated HR Solutions) provide a full range of HR services in Canada, from EOR, to PEO, to payroll outsourcing and permanent and temporary recruitment. Pivotal are the only EOR on this list that is actually headquartered in Canada, and have four decades of Canada outsourcing experience.  It is fair to say that Pivotal have unrivalled knowledge and experience in Canada employment services. For companies in need of genuine Canada employment experts, Pivotal is a leading choice. 

Deel

Deel is another prominent employer of record in Canada, specializing in global employment solutions. Their platform simplifies the complexities of international hiring and compliance, making it easier for companies to expand their workforce into Canada. Deel offers a range of services, including payroll management, contractor compliance, and benefits administration. Their user-friendly platform provides transparency, automation, and legal compliance, enabling companies to navigate the intricacies of employment regulations in Canada. Read more in our 2023 analysis of Deel’s EOR offerings.

Canada Employer of Record Services

A Canada Employer of Record (EOR) provides a range of services to companies looking to employ workers in Canada. Here are some of the key services typically offered by a Canada EOR:

Payroll Processing

The EOR handles payroll administration, including calculating and disbursing employee wages, managing deductions and withholdings, and ensuring compliance with Canadian tax regulations.

Employee Benefits Administration

The EOR may offer benefits packages to employees, including health insurance, retirement plans, and other benefits. They handle the administration of these benefits, enrollment, and ongoing management.

HR Administration

The EOR takes care of various human resources tasks, such as onboarding new employees, managing employee records, handling employment contracts, and providing support for HR-related inquiries.

Compliance and Legal Support

The EOR ensures compliance with Canadian employment laws and regulations. They stay up-to-date with changes in labor legislation, handle statutory filings, and assist with matters related to employment contracts, terminations, and severance.

Tax Withholding and Reporting

The EOR manages tax withholding for employees, including income tax, employment insurance (EI), and Canada Pension Plan (CPP) contributions. They also handle tax reporting and remittance to the relevant authorities.

Employment Contracts and Documentation

The EOR assists in drafting employment contracts and other necessary documentation, ensuring they comply with Canadian employment laws and address specific requirements.

Risk Management and Insurance

The EOR may provide risk management services, including workers’ compensation coverage and general liability insurance, to protect both the employer and the employees.

Employee Support

The EOR often serves as a point of contact for employee inquiries, addressing concerns, and providing assistance on employment-related matters.

Termination and Off-boarding

When an employment relationship ends, the EOR handles the necessary termination processes, such as finalizing employee payments, issuing necessary documents, and ensuring compliance with termination laws.

The specific services offered by a Canada Employer of Record may vary depending on the provider and the needs of the client company. It is important to discuss and clarify the scope of services with the EOR to ensure they align with your requirements.

Canada Employer of Record Benefits

Engaging a Canada Employer of Record (EOR) offers several benefits for companies looking to employ workers in Canada. Here are some key advantages:

Local Expertise and Compliance

EORs have in-depth knowledge of Canadian employment laws, regulations, and compliance requirements. They stay up-to-date with any changes, ensuring your business remains compliant and avoids legal pitfalls.

Streamlined Employment Process

EORs handle administrative tasks such as payroll, benefits administration, and tax withholding, streamlining the employment process. This allows you to focus on your core business activities and saves you time and effort associated with complex HR and payroll management.

Access to Talent

Engaging an EOR enables you to tap into the Canadian talent pool without establishing your own legal entity or physical presence. You can hire employees locally, allowing for better cultural understanding, language proficiency, and local market expertise.

Flexibility and Scalability

EORs offer flexibility in workforce management. You can easily scale up or down your workforce as needed, adjusting the number of employees without facing the challenges of hiring and firing within a foreign jurisdiction.

Cost Savings

Engaging an EOR eliminates the need to establish a legal entity in Canada, which can be costly and time-consuming. You avoid expenses related to setting up and maintaining a local infrastructure, hiring HR personnel, and managing payroll and benefits administration internally.

Risk Mitigation

EORs help mitigate employment-related risks. They ensure compliance with employment laws, handle statutory filings, and manage payroll taxes and employee benefits. This reduces the risk of penalties, fines, and legal issues associated with non-compliance.

Employee Support and Benefits

EORs often provide employee support services, including onboarding assistance, HR guidance, and benefits administration. This enhances the employee experience and helps attract and retain top talent.

Global Expansion

If your company plans to expand globally, partnering with an EOR in Canada can serve as a stepping stone for future international expansions. EORs often have networks and partnerships in other countries, simplifying the process of expanding your workforce globally.

It’s important to note that the specific benefits may vary depending on the EOR provider and your business needs. Conduct thorough research and consider your unique requirements to determine if engaging a Canada Employer of Record is the right solution for your company’s expansion or hiring needs in Canada.

The Benefits of a Canada EOR
The Benefits of a Canada EOR

Disadvantages of a Canada Employer of Record?

While engaging a Canada Employer of Record (EOR) offers numerous benefits, there are also some potential disadvantages to consider:

  1. Less Control over HR Functions: By outsourcing your employment functions to an EOR, you relinquish a certain level of control over HR processes. Decision-making regarding HR policies, employee management, and other HR-related matters may be influenced or limited by the EOR’s policies and practices..
  2. Dependency on a Third Party: Relying on an EOR means relying on a third-party provider to manage critical employment functions. If the EOR encounters financial difficulties, operational issues, or fails to meet your expectations, it could have a negative impact on your employees and business operations.
  3. Limited Flexibility in HR Policies: EORs typically offer standardized HR policies and benefit plans that may not fully align with your company’s specific culture or employee preferences. Customizing HR policies and benefits to match your organization’s unique needs may be more challenging with an EOR.
  4. Additional Costs: While engaging an EOR can provide cost savings compared to setting up a legal entity in Canada, there are costs associated with their services. EORs charge fees for their administrative support, which can impact your overall employment costs. It’s important to carefully evaluate the costs and ensure they align with the value provided.

It’s important to thoroughly evaluate these potential disadvantages against the specific needs and circumstances of your business. Conduct due diligence, research multiple EOR providers, and clearly communicate your expectations to ensure that engaging a Canada Employer of Record aligns with your company’s overall goals and HR strategies.

How to engage a Canada Employer of Record

To engage a Canada Employer of Record (EOR), you can follow these general steps:

  1. Research and Identify Potential EORs: Start by researching and identifying reputable EORs in Canada. Look for companies that specialize in providing EOR services and have experience in your industry or the specific needs of your business.
  2. Assess Your Requirements: Determine your specific requirements and expectations from an EOR. Consider factors such as the number of employees you plan to hire, the duration of the employment, the level of support needed, and any industry-specific compliance requirements.
  3. Contact and Evaluate EORs: Reach out to the shortlisted EORs to discuss your needs and evaluate their services. Inquire about their service offerings, pricing structure, expertise, technology platforms, and customer support. Request references or case studies to gauge their track record and client satisfaction.
  4. Clarify Terms and Contracts: Once you’ve identified a suitable EOR, carefully review and clarify the terms and conditions of the engagement. This includes the scope of services, pricing structure, contract duration, termination clauses, confidentiality agreements, and any other relevant details. Seek legal advice if necessary.
  5. Due Diligence and Compliance: Ensure that the chosen EOR is compliant with all relevant laws and regulations in Canada. Verify their credentials, certifications, and any industry affiliations. Confirm that they have a solid understanding of Canadian employment laws and a track record of compliance.
  6. Onboarding Process: Work with the EOR to complete the necessary onboarding process. This typically involves providing employee details, establishing payroll and benefits arrangements, and sharing relevant company policies and procedures.
  7. Establish Communication and Reporting Channels: Establish clear lines of communication and reporting with the EOR. Ensure that you have access to the necessary reports, data, and documentation related to your employees, payroll, and compliance.
  8. Ongoing Collaboration: Maintain regular communication and collaboration with the EOR to address any emerging needs, changes in employment circumstances, or updates in regulations. Stay informed about the performance of the EOR and provide feedback to ensure a successful engagement.

It’s important to note that engaging a Canada Employer of Record requires careful consideration and due diligence. Each engagement may vary based on your specific requirements and the terms offered by the EOR. Taking the time to select a reliable and experienced EOR will help ensure a smooth and compliant employment process for your business in Canada.

Engage a Canada Employer of Record — our take

Engaging a Canada Employer of Record (EOR) can provide numerous benefits for companies looking to employ workers in Canada. It offers local expertise, streamlined employment processes, access to talent, flexibility, cost savings, risk mitigation, and employee support. However, it’s important to consider the potential disadvantages, such as reduced control over HR functions, dependency on a third party, limited flexibility in HR policies and additional costs. 

Canada Business Guides

FAQs

A Canada EOR and a staffing agency or recruitment firm serve different purposes in the employment process. While both can help you find and hire employees, their roles and responsibilities differ.

A staffing agency or recruitment firm specializes in sourcing and screening candidates for specific job positions. They assist in the recruitment process, helping you find suitable candidates for your company's needs. However, once the hiring is complete, the responsibility for managing the employees' employment, payroll, benefits, and compliance typically falls on your company.

On the other hand, a Canada EOR takes on the role of the legal employer of record for the employees. They handle the administrative and legal aspects of employment, such as payroll processing, benefits administration, compliance with employment laws, and tax withholding. 

Read more in our guide to the differences between EOR services and staffing agencies

Yes, a Canada EOR can be a suitable solution for short-term or project-based employment needs. Engaging an EOR allows you to hire employees in Canada without the need to establish a legal entity or navigate complex employment processes. This flexibility makes it easier to manage temporary or project-based staff without the long-term commitment or administrative burdens.