Employer of Record in Canada

How an Employer of Record works in Canada

An Employer of Record (EOR) in Canada is a legal employer that can hire employees on behalf of international companies. They do this through their established local Canadian entity. The EOR onboards the employee and handles all employment compliance.

In Canada, Rivermate provides EOR services with the support of HR experts who understand local laws and our network partners, which allow us to offer competitive employee benefits. We make it easier to hire quickly and compliantly in any province in Canada using the Rivermate platform, which manages every aspect of the employment relationship.

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Canadian labor market: At a glance

The hiring market
Greatest hiring activity:	Montréal: Sales roles Toronto: Management, engineering and C-suite roles Vancouver: Technology roles
Recruitment timelines:	Junior roles: 14-21 days Senior/specialist roles: 25 - 65 days Executive/C-suite: 60-120 days
Onboarding timelines:	1-3 weeks
In-demand sectors:	Management, technology, sales, engineering
Sectors with skills shortages:	Construction, engineering, knowledge-based services

The salary market
Currency:	Canadian dollar (CAD/C$)
Employer tax contributions:	Federal: Canadian Pension Plan (CPP) Additional CPP (CPP2) Employment Insurance (EI)
	Provincial: Quebec pension plan (QPP) Quebec additional CPP (CPP2) EI rate for Quebec Quebec Parental Insurance Plan (QPIP): Quebec Health Services Fund Quebec WSDRF Workers’ compensation: Rates vary per province Employer Health Tax: British Columbia, Ontario
HAPSET: Newfoundland and Labrador
Minimum wage:	Each province sets its own minimum wage
Average annual salary:	C$109,797 as per Statistics Canada
Income tax rates:	Each province sets its own tax rates

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What will it really cost to hire in Canada?

Where you employ workers in Canada makes a big difference to total employment costs.

Canada has 10 provinces and 3 territories, and each sets its own minimum wages, taxes and mandatory employer contributions. If you want to hire employees in different provinces, this can become a complicated task and increases the risk of payroll errors. Below you can find the basic guidelines for understanding total employment costs in Canada.

Base salaries

Current average annual salaries vary by province, industry and job title. These figures serve as a helpful starting point for salary calculations.

Province/Territory	Average annual salary in CAD
Newfoundland and Labrador	119,658
Prince Edward Island	68,787
Nova Scotia	82,941
New Brunswick	75,439
Quebec	91,742
Ontario	104,102
Manitoba	83,388
Saskatchewan	104,177
Alberta	135,849
British Columbia	104,209
Yukon	144,892
Northwest Territories	191,095
Nunavet	125,596

Employer taxes and contributions

Employer taxes and contributions in Canada depend on the province where your employee will be located. Quebec has the greatest statutory payroll and employer contributions in Canada, but the exact percentage fluctuates depending on the company’s total payroll.

Statutory source	Employer contributions
Federal	Canada Pension Plan (CPP): 5.95% on earnings between C$3,500 and C$74,600 with a maximum contribution of C$4,230.45
	Additional CPP (CPP2) for earnings between C$74,600 and C$85,000: 4% with a maximum contribution of C$416.00
	Employment Insurance (EI): 1.63% with a maximum contribution of C$1572.30
Provincial	Quebec pension plan (QPP): 5.3% on earnings between C$3,500 and C$74,600 with a maximum contribution of C$3768.30
	Quebec additional CPP (CPP2) for earnings between C$74,600 and C$85,000 with a maximum contribution of C$416.00
	EI rate for Quebec: 1.30% with a maximum contribution of C$1,253.98
	Quebec Parental Insurance Plan (QPIP): maximum contribution of C$620.06
	Quebec Health Services Fund: varies according to payroll
	Quebec WSDRF: 1% of payroll if it is greater than C$2 million
	Workers’ compensation: Rates vary
	Employer Health Tax: British Columbia, Ontario; varies according to payroll
	HAPSET: Newfoundland and Labrador, Payroll tax of 2% on payroll above C$2 million

The Canada Revenue Agency administers taxes, benefits and related government programs under federal and provincial laws in Canada.

The hidden cost for employers: Employee mandatory rights

Canadian employment law requires employers to give all workers certain job-protected leave allowances. These mandatory rights, while not directly part of the monthly payroll, create financial liabilities you must understand because they may require a future payout (e.g., accrued annual leave when an employee resigns or is terminated).

• Annual leave: Mandated at a minimum of two weeks' leave in the first year of employment, increasing to three weeks after five years. Saskatchewan differs slightly, providing three weeks of annual leave in the first year.
• Sick leave: In federally regulated industries (banking, telecommunications and interprovincial transportation), employees are entitled to 10 days' sick leave per year. Provincial sick leave entitlements vary by province.
• Maternity leave: Mothers can take up to 15 weeks of maternity leave. The Employment Insurance fund pays 55% of earnings for up to 15 weeks.
• Parental leave: Either parent may take up to 40 weeks of leave, which can be extended to 69 weeks at a lower benefit rate. Employment Insurance pays 55% of earnings for up to 40 weeks and 33% up to 69 weeks.
• Personal leave: 5 days per year. For federally regulated employees, the first three days are paid but only after three months of employment.

Supplementary benefits that attract talent in Canada

Employers may have heard that Canada's public health insurance system provides comprehensive coverage, but it doesn’t. To attract top talent (including specialists and executives), you can offer additional private healthcare. This additional benefit gives employees access to better medical, dental and vision coverage. Employees also favor packages that include increased maternity/paternity leave and paid time off (PTO).

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Employee cost calculator

Use our employee cost calculator to get a more accurate reflection of total employment costs in Canada

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How Rivermate helped a European company to keep a valued employee in Canada

In 2023, 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 couldn't employ him directly.

Instead of using an informal arrangement to keep their employee, they wanted to employ him through the right structure in Canada. This is when they turned to Rivermate EOR services.

By partnering with Rivermate, which became the legal Canadian employer, IT Svit kept the employee on its team and stayed fully aligned with federal and provincial compliance. The employee reported a smooth transition, while IT Svit avoided the cost and complexity of opening a Canadian office. Since then, IT Svit has employed three additional employees through Rivermate’s EOR services.

“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

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What hiring in Canada really looks like

Market condition	Current reality
Overall outlook	🟡 Moderately challenging
Employment legislation and regulation	🔴 Complex
Provincial variation	🔴 Significant
Talent availability	🟡 Moderate
Specialist talent	🔴 Competitive
Immigration	🟡 Selective
Remote hiring	🟢 Common

The impact of provincial employment legislation

Provincial and territorial employment legislation regulates everything from employment contracts to termination rules in Canada. For first-time employers, these provincial differences create a challenging hiring environment, and it's easy to make payroll, tax and statutory benefits errors. Companies sometimes overcome this obstacle by partnering with an Employer of Record (EOR), Professional Employer Organization (PEO), or a payroll processing service.

Talent hubs

For global hiring, certain provinces in Canada have deeper talent pools because major companies are concentrated there. Many businesses also concentrate their activities in specific cities near the American border. These cities have strong talent pools in logistics, supply chain, technology, and senior management.

City	Best for hiring
Toronto	Finance, technology, professional services, AI professionals, and sales managers
Vancouver	Technology, AI, gaming, engineering and tech sales specialists
Montréal	Software, aerospace, gaming, finance, English/French sales professionals
Waterloo	AI, software and cybersecurity professionals
Quebec	Manufacturing, logistics and engineering experts
Halifax	Logistics, shipping and technology specialists

Immigration slowdown

Canada has historically been a popular hiring destination for both North America, Europe and Asia. Global companies from the USA, UK, Japan, Germany, France, China and the Netherlands have established businesses in Canada and hired both local and foreign nationals. Since 2025, however, Canada’s economic reforms are focused on protecting local workers, and immigration has slowed as a result, with the government reducing permanent and temporary resident visa targets.

Remote hiring in Canada

Remote hiring is very common in Canada, but it can also be tricky. This is because the employment legislation in the province they live in applies to their employment contract, even if you have a business in another province. For example, if you have a business in Quebec and hire an employee in Ontario, the Ontario Employment Standards Act will apply to the employee.

Another scenario that could apply to international employers is when an employee initially lives in Ontario and then permanently relocates to Quebec; the employment agreement will need to be reviewed.

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Expand internationally with confidence.

Enter new markets quickly, build your business and manage international teams with the support of Rivermate’s global consulting services. We combine local legal, tax, and HR expertise to ensure your structure supports compliance and long-term growth.

View our global consulting services

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Canadian compliance risks employers should know about

Most employers focus on finding good Canadian talent and understanding what it will cost, but they also face important compliance risks from day one. Here we discuss three compliance risks with serious financial implications for employers.

Compliance risk	Why this poses a risk for employers
Work misclassification	Calling a worker a contractor when their hours, duties and reporting obligations resemble those of a full-time employee can trigger a government audit. If the employee is reclassified as a full-time employee, you are liable for backdated wages and statutory contributions, and you will pay a fine. Contractors are self-employed individuals who must maintain business autonomy and pay their own taxes.
Terminations	Terminations are not ‘at-will’ in Canada. Notice periods apply, and in certain situations you must pay severance. All employees are entitled to a final settlement, including unused annual leave and pro-rata payments. An invalid or unlawful termination can trigger severance obligations of up to 24 months.
Probation periods	Probation periods are not required by law, but if you choose this route, it must be written in the employment contract. Standard probation periods last up to 90 days, but can be extended up to 6 months. You cannot extend the probation period after the employee has agreed to it. Notice periods may still apply if you terminate employees with probation periods longer than three months. Provincial employment laws should be consulted.
Ontario’s 2026 salary transparency law	From January 2026, employers with 25 or more employees must disclose salary, AI hiring methods and hiring timelines in job postings.

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Benefits of hiring employees through Rivermate Canada

Hiring through an Employer of Record, like Rivermate, is a strong option if you don't want to establish your own legal entity in Canada or handle the compliance burden. For most standard hires, we can onboard your employee within one or two weeks, sometimes less depending on whether we receive all the required documentation.

If your needs fall into one or more of these categories, you will benefit from our services:

• Startups that need to hire quickly and scale without high costs.
• Companies relocating an employee to Canada.
• Businesses making their first hire in Canada or testing the Canadian market.
• Employers making contractor-to-employee transitions.

Other benefits of hiring through Rivermate include:

• Employment contracts in French where needed.
• Timely remittance of payroll taxes to authorities.
• Correctly classifying workers as either full-time employees or contractors.
• Correct termination procedures and severance payments.
• We stay up to date with local employment law changes, and if your employee moves to a different province, we will alert you to any changes in employment law.

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Ready to hire in Canada?

Hiring in Canada involves more than finding the right candidate. Rivermate handles the complexities of provincial employment legislation so you can hire with confidence.

Talk to a Canadian Hiring Expert

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Sources:

CPP contribution rates, maximums and exemptions – Calculate payroll deductions and contributions - Canada.ca
Québec Pension Plan