Employer of Record in Canada

An Employer of Record, or EOR, is a company that legally hires employees on your behalf in Canada. This means you can build a Canadian team without setting up a local entity. The EOR handles all the legal and administrative tasks of employment. This includes payroll, taxes, benefits, and employment contracts, ensuring you comply with local employment laws.

You still manage your team's day to day work. An EOR simply takes care of the complex HR responsibilities. For a provider that can help you with this, consider Rivermate.

How an Employer of Record (EOR) Works in Canada

Using an EOR in Canada simplifies your expansion. You find the talent, and the EOR takes care of the rest. Here is how it usually works:

• You Find the Candidate: You recruit and select the person you want to hire in Canada.
• The EOR Hires the Candidate: The EOR legally hires the employee through a local, compliant employment contract.
• Onboarding: The EOR manages the entire onboarding process. This includes everything from paperwork to setting up benefits.
• Payroll and Benefits: The EOR processes payroll, withholds taxes, and administers benefits according to Canadian regulations.
• Ongoing HR Support: The EOR provides continuous HR support to both you and your employee. They manage any issues that may arise.
• You Manage Your Employee: You direct your employee's day-to-day work and responsibilities. The EOR handles the administrative side of employment.

Why use an Employer of Record in Canada?

Start sooner. Hire in days, not months. No entity or registrations required. We align start dates to common bi-weekly payroll cycles so day one runs smoothly.

Less admin, fewer risks. We run payroll, CPP/QPP and EI, and handle workers’ compensation setup. You lead the work; we handle the paperwork.

Province-proof compliance. Rules differ in Ontario, Québec, and beyond. We issue the right contract, holiday schedule, and overtime rules from day one.

Stronger offers. Extended health, dental, and a simple RRSP match are what candidates expect. These can be added easily through Rivermate.

Predictable cost. One monthly fee. No setup surprises.

Real example: Keeping key talent in Canada

IT Svit, a European IT services company, faced losing a valued employee when he relocated to Canada for personal reasons. Without a Canadian entity, they had no way to employ him directly. By partnering with Rivermate, IT Svit was able to set up compliant employment in the right province, keep the employee on its team, and stay fully aligned with Canadian labor laws. The employee reported a smooth transition, while IT Svit avoided the cost and complexity of opening a Canadian office.

“Rivermate's flexibility and proactive approach set them apart in the EOR market. They didn’t just meet our expectations; they consistently overdelivered.”
— Anastasiia Drozd, Legal Counsel @ IT Svit

PEO vs. EOR in Canada: What’s the Difference?

Choosing between a Professional Employer Organization (PEO) and an Employer of Record (EOR) in Canada comes down to one main question: who is the legal employer?

An EOR becomes the legal employer for your workers. This is the best choice if you want to hire in Canada without setting up your own local entity. The EOR takes on all legal responsibility for payroll, benefits, taxes, and compliance with Canadian employment laws. You manage your team's day-to-day work, while the EOR handles the rest.

A PEO, on the other hand, enters a co-employment relationship with you. You must have your own legal entity in Canada to use a PEO. With a PEO, you remain the legal employer and share the responsibilities. The PEO supports you with HR tasks like payroll and benefits, but you keep the legal liability.

Here is a simple breakdown:

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Canada includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Canada.

Hiring in Canada has its own set of rules, and it’s important to get them right. The country has a strong economy and a skilled workforce, making it a great place to grow your team. But Canadian labor laws can be complex, with rules set at both the federal and provincial levels. This means you need to pay close attention to the specific regulations in the province where you're hiring.

Employment contracts

While not always required to be in writing, a formal contract is strongly recommended. It prevents misunderstandings and protects both sides. At a minimum, contracts should cover:

• Job title and responsibilities
• Salary, bonuses, and benefits
• Hours of work and how overtime is paid
• Termination and notice periods
• Confidentiality and data protection clauses
• Probationary period, if applicable

Pro Tip: In Quebec, employment contracts must be available in French. Even if you provide an English version, the French contract is the legally binding one. Using an EOR ensures your contracts are drafted and signed in the correct language.

Probation periods

Most contracts include a probationary period, usually three months. This must be written into the contract. During probation, ending the relationship is easier, but employers still need to act in good faith and give the employee a fair chance to demonstrate their abilities.

Working hours & overtime

Standard hours are 8 per day, 40 per week, but overtime thresholds differ by province:

• Ontario and New Brunswick: after 44 hours per week
• Québec and British Columbia: after 40 hours per week
• Alberta: after 8 hours per day or 44 per week

Overtime pay is usually 1.5 times the employee's regular wage. Some employees, like managers and certain professionals, may be exempt from overtime pay.

Public & regional holidays

There are five nationwide statutory holidays (New Year’s Day, Good Friday, Canada Day, Labour Day, and Christmas Day). Other holidays depend on the province. For example, Family Day in Ontario and Alberta, or St. Jean Baptiste Day in Québec. Employees are entitled to a paid day off or premium pay if they work.

Hiring contractors in Canada

Independent contractors are common, especially in tech and creative industries. However, the line between contractor and employee is closely monitored by the Canada Revenue Agency (CRA). Misclassification can lead to back taxes and penalties.

Rivermate helps companies navigate these rules by issuing compliant contracts, applying the right provincial standards, and advising on correct worker classification. This reduces risk and gives employees a clear, professional start.

Insights from Rivermate’s Global HR Experts

Which company profiles benefit most from an Employer of Record (EOR)?

An EOR helps a wide range of companies hire internationally. You can get the talent you need without the headache of setting up a local legal entity. This makes an EOR a strong option for many business types.

Here are a few examples of companies that see the most benefit:

• Startups: You need to move fast and be smart with your money. An EOR lets you hire top talent from anywhere in the world without the high costs and long delays of establishing a legal entity in every country. This means you can build a global team from day one and focus your resources on growing your business.

• Your First Hire in a New Country: Expanding into a new market is a big step. An EOR makes it simple and less risky. You can hire your first employee in a new country in a matter of days, not months. The EOR handles all the local legal and HR complexities, so you can test the waters without a major investment.

• Contractor-to-Employee Transitions: Converting a contractor to a full-time employee, especially in another country, can be complicated. An EOR manages this transition smoothly. It ensures you comply with local labor laws, reducing the risk of misclassification penalties. This gives your new employee the security and benefits of a full-time role while keeping things simple for you.

• Pilot Teams: When you want to explore a new market, you need to be agile. An EOR is perfect for hiring a small "pilot team" to test a new region. You can quickly build a local team to gather market intelligence without committing to a permanent presence. This lets you learn and adapt before making a larger investment.

Paying your team in Canada involves understanding rules at both the federal and provincial levels. This means you need to navigate different regulations depending on where your employees live. We break down the essentials to help you get it right.

Payroll cycles & wage structure

You can pay employees on a regular schedule, such as weekly, bi-weekly, or monthly. Each paycheck must clearly show all earnings, including wages, overtime, and any other pay. An employee's total pay before any deductions is their gross pay. From this, you subtract mandatory deductions to get their final take-home pay.

Overtime & minimums

Federal law sets the standard for overtime at 1.5 times an employee's regular pay for any work beyond 40 hours a week. Canada also has a federal minimum wage. However, many provinces and territories have their own minimum wage rates, and you must pay the higher of the two.

Employer taxes and contributions

As an employer, you must pay several taxes and contributions on behalf of your employees. These payments fund national programs for retirement, employment insurance, and provincially-managed healthcare and workers' compensation.

Pro Tip: Many U.S. companies expanding into Canada underestimate the cost of workers’ compensation. Premiums vary not only by province but also by industry classification. An EOR keeps you aligned with the correct provincial rates from day one.

Employee taxes and deductions

You must withhold taxes and deductions from your employees' paychecks and send them to the government. These deductions fund public services and social security programs.

Employee benefits in Canada combine government programs with employer-provided perks. Federal and provincial laws set the baseline, but most companies go beyond the minimum to attract and retain talent.

Statutory Leave

Canadian law requires employers to provide various types of job-protected leave. These entitlements ensure employees can take time off for rest, family responsibilities, and personal health without risking their employment.

• Vacation Leave: You are generally entitled to two weeks of paid vacation after one year of service with the same employer. This increases to three weeks after five years of continuous service. Some provinces have more generous minimums. For example, in Saskatchewan, you get three weeks of vacation after one year.
• Sick Leave: If you work in a federally regulated industry, you are entitled to 10 days of paid medical leave per year. Provincial sick leave entitlements vary. For instance, British Columbia provides five paid sick days, while Quebec offers two.
• Maternity and Parental Leave: Mothers can take up to 15 weeks of maternity leave. Following this, either parent can take parental leave. Standard parental leave is up to 40 weeks, but can be extended to 69 weeks at a lower benefit rate. These leaves are unpaid by the employer, but you can receive payments from the Employment Insurance (EI) program.
• Personal Leave: You can take up to five days of personal leave each year for things like caring for a family member or attending your citizenship ceremony. For federally regulated employees, the first three days are paid after three months of continuous employment.
• Bereavement Leave: If an immediate family member passes away, you are entitled to a period of unpaid leave. The length of this leave can vary by province.

Public Holidays & Regional Holidays

Employees are entitled to paid time off on statutory holidays. If they work on these days, they must receive premium pay. In addition to five nationwide holidays, provinces add their own. For example:

• Family Day in Ontario, Alberta, and several other provinces
• St. Jean Baptiste Day in Québec
• Louis Riel Day in Manitoba

Typical Supplemental Benefits

Many employers offer benefits beyond the legal requirements to create a more attractive compensation package.

How an EOR Can Help with Setting Up Benefits

Rivermate enrolls employees into compliant benefits packages that include both the required coverages and competitive extras. We manage the administration, renewals, and contributions, so you can focus on building your team.

When an employee leaves, the process has to be handled with care. In Canada, you cannot simply let someone go “at will.” Each step is guided by federal and provincial rules that protect both you and the employee. Done right, offboarding is more than a legal requirement. It is a chance to leave on good terms, protect your reputation, and reduce the risk of disputes.

Notice periods

If you terminate someone without cause, you must either provide notice or pay in place of notice. The amount of notice depends on two things: the province where the employee works and how long they have been with your company.

Here is the general framework most provinces follow. Always check the local standard:

For mass terminations, where 50 or more employees are terminated within a four-week period, different rules apply. In these cases, you must provide a longer notice period to the affected employees and also notify the appropriate government body.

Severance pay

Severance pay is separate from termination pay (pay in lieu of notice). It is compensation for a long-term employee's loss of seniority and other benefits when their job is terminated. Not every employee is entitled to severance pay. It is typically for employees with longer service.

In Ontario, for example, an employee may be entitled to severance pay if they have worked for the employer for five or more years and the employer has a global payroll of at least $2.5 million. Severance pay is calculated based on the employee's regular wages for a regular work week and their years of service.

Factors that can influence severance pay amounts include:

• Length of service
• Age of the employee
• The type of work they performed
• The availability of similar employment

It's a common misconception that employees with short service are not entitled to any severance. Depending on the circumstances, even employees with a few months of service may be entitled to some pay.

Pro Tip: Severance is often confused with termination pay. In Canada, severance is additional compensation for long-service employees and is calculated separately from notice pay. An EOR ensures the right formula is applied so you avoid costly disputes.

How Rivermate handles compliant exits

At Rivermate, we manage the entire offboarding process to ensure it is handled correctly and respectfully. We understand that every exit is unique, and our process is designed to be clear and compliant with local laws.

Our process includes:

• Clear Documentation: We prepare and provide all necessary documentation, including the termination letter. This letter clearly states the reason for termination and the effective date.
• Compliance with Local Laws: We stay up-to-date with Canadian employment laws to ensure every termination is compliant. This includes managing notice periods and calculating severance pay correctly.
• Final Pay and Benefits: We handle the final payroll, ensuring the departing employee receives all outstanding wages, vacation pay, and any other owed benefits. We also manage the closure of benefits plans and provide necessary tax documents.
• Structured Offboarding: We follow a comprehensive checklist to manage all aspects of the offboarding process. This includes knowledge transfer, return of company property, and revoking access to company systems.
• Respectful Communication: We believe in handling terminations with professionalism and respect. Our process is designed to minimize negative impacts and treat the departing employee with dignity.

Getting permission to work in Canada can feel overwhelming. There are different routes, each with its own rules. The two most common are:

• Employer-specific work permits: Tied to one employer and location. Think of it as a dedicated pass for a single job.
• Open work permits: Less common and usually available only in special cases, such as spouses of skilled workers or recent Canadian graduates. These allow more flexibility to work for different employers.

How an EOR supports visas and sponsorship

An Employer of Record (EOR) like Rivermate can simplify the process. We take care of payroll, benefits, and compliance, and in many cases can also sponsor work permits for foreign employees. We manage the paperwork and coordinate with immigration experts so applications move faster and with fewer mistakes.

That said, there are limits. Canada’s rules and quotas apply to every employer, including EORs. For example, the standard employer-specific permit often requires a Labour Market Impact Assessment (LMIA), which proves there’s a need for a foreign hire and no Canadian is available. This step cannot always be skipped, even with an EOR involved.

Common visa pathways

• Employer-Specific Work Permits: The standard route, usually linked to an LMIA.

• Global Talent Stream: A fast-track program for in-demand tech and highly skilled roles, sometimes approved in as little as two weeks.

• Open Work Permits: Available in limited cases, such as spouses or recent graduates.

Rivermate helps you choose the right path, prepare documents, and stay compliant with Canadian immigration law.

Business travel compliance

Sometimes, you just need to visit Canada for a short business trip. For this, you don't need a work permit. You come as a business visitor. This status is for international business activities, not for entering the Canadian job market.

You can come to Canada as a business visitor to:

• Attend meetings, conferences, or trade shows.
• Meet with clients or partners.
• Get training from a Canadian parent company.

Key rules for business visitors:

• You cannot enter the Canadian labor force.
• Your main place of business and source of income must be outside Canada.
• You typically can stay for less than six months.

Depending on your country of citizenship, you will need either a visitor visa (also called a Temporary Resident Visa or TRV) or an Electronic Travel Authorization (eTA) to enter Canada. You must prove to the border officer that your visit is temporary and that you have enough money for your stay. Always be clear about the purpose of your visit to avoid problems.