Hire & Pay Employees in Canada 🇨🇦
With PamGro, your business can easily hire employees in Canada. No more worrying about local laws, complex tax systems, or managing international payroll.
CapitalOttawa
Currency Canadian Dollar (CAD)
LanguagesEnglish, French
GDP per Capita$54,233.87
Payroll FrequencyHourly, Weekly, Bi-weekly, Monthly, or Bi-Monthly
Employer TaxVaries on Provinces & Territories
Overview
Traverse Canada's Recruitment Market with ease.
Usually, to hire in Canada, your business needs an entity. That means a local office, an address registered as a subsidiary, and an account with a local bank. All of this, plus navigating regional benefits, payroll, tax, and HR laws, can take months.
PamGro lets you hire employees in Canada quickly, easily, and compliantly. We even automate tax document collection, payroll, benefits, and more. For your existing direct employees, we can manage your entire payroll operation from end-to-end.
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Benefits of hiring in Canada
Canada stands out as a top destination for businesses seeking a conducive environment for growth and expansion. With its innovative business ecosystem and vast natural resources, Canada offers unparalleled opportunities for international appeal and market access. Moreover, its competitive corporate tax rate and low business costs in various sectors make it an attractive destination for investment. The country’s extensive transportation networks and strategic location further enhance its connectivity to global markets. With a reputation for political stability and safe banking practices,
Canada provides investors with confidence and security. However, navigating the diverse regulatory landscape across its 10 provinces requires careful consideration. Despite the complexity of tax procedures, Canada’s strong trade relationship with the United States offers promising avenues for business growth, albeit with associated economic risks.
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Challenges when expanding into Canada
While Canada offers numerous advantages, businesses face certain challenges when operating in the country. Navigating the intricate tax procedures, which require considerable time and resources, can be burdensome for employers.
Moreover, Canada’s dependence on the U.S. market exposes businesses to fluctuations in economic trends, necessitating cautious strategic planning. Additionally, the decentralized governance structure across its provinces requires businesses to adapt to varying regulatory frameworks, adding complexity to operations. Despite its welcoming business climate, cultural nuances and preferences in negotiation styles may pose challenges for businesses accustomed to high-pressure tactics.
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Cultural Nuances
While Canadian colleagues may initially appear reserved, they warm up as relationships develop, fostering a collaborative work environment. However, high-pressure negotiation tactics are generally discouraged, with Canadian professionals preferring calm discussions and consensus-building approaches. Establishing clear boundaries between personal and professional lives is crucial, as Canadians value professionalism in workplace interactions.
Despite the absence of strict hierarchies based on age or gender, experience often dictates managerial positions, with middle management acting as a crucial filter. Overall, understanding and respecting these cultural nuances are integral to building strong professional relationships and thriving in the Canadian business landscape.
Employment Contracts in Canada
Employment Agreements
Employment contracts serve as vital agreements between employers and employees, outlining crucial terms and conditions of employment. While verbal agreements are valid, written contracts are recommended to avoid misunderstandings.
Key clauses to include
- cover termination procedures,
- probationary periods,
- working hours,
- salary, and leave entitlements.
Employers are permitted to conduct background checks on prospective employees, focusing on areas such as criminal history, education, and employment records.
Working Hours
The standard work period in Canada is 40 hours a week or eight hours a day over five days. The maximum number of hours an employee can work in a week is 48. This can be exceeded in certain circumstances.
Overtime Pay
Overtime is capped at eight hours a week or 150 hours a year and is paid at 125% of the standard rate.
Minimum Wages and Salaries
As of April 1, 2022, the federal minimum wage in Canada stands at $15.55 per hour, with provincial rates varying. Provinces retain the authority to set their own minimum wage rates, often exceeding the federal standard. While the federal rate acts as a baseline, provinces may establish higher hourly wages to reflect local cost of living and economic conditions.
Termination Requirements/ Severance Pay
In Canada, employers are required to give employees two weeks’ written notice of termination, with the option to pay two weeks’ wages in lieu of notice. Exceptions to this notice requirement include cases where the employee has not completed
- three consecutive months of employment,
- resigns,
- is dismissed for work-related misconduct, or
- reaches the end of a contracted position.
Employees with five or more years of service are entitled to severance pay, generally calculated at one week’s pay per year of service, up to a maximum of 26 weeks. However, severance amounts may vary based on factors such as employment agreements, bargaining agreements, and provincial laws.
Probation Period
In Canada, probation periods are discretionary, with no mandatory duration. Employers may implement probation periods of up to 90 days (3 months) to assess new hires’ suitability for the role
Everything you need to hire in Canada
Leave Policy
Annual Leave:
Employees in Canada accrue paid vacation leave based on years of service. After 12 months of consecutive employment, employees are entitled to two weeks of paid vacation, increasing to three weeks after five years, and four weeks after ten years. This progressive approach rewards long-term commitment and incentivizes employee retention.
Maternity/Paternity Leave
Female employees in Canada are entitled to 17 weeks of unpaid maternity leave, extendable in certain circumstances. Additionally, the employment insurance program offers up to 15 weeks of maternity benefits. Both parents can access up to 63 weeks of unpaid parental leave, with the option to share the leave between them. Quebec offers its unique parental insurance program, providing maternity, paternity, and adoption benefits with distinct eligibility criteria.
Sick Leave:
Canada’s approach to sick leave varies between federally regulated and provincially regulated industries. Federally regulated employers, particularly in sectors like transportation and banking, are mandated to provide paid sick leave, with a minimum requirement of 10 days for companies with 100 or more employees. Provincially regulated sick leave entitlements vary widely, ranging from three days to 26 weeks, with most provinces offering unpaid leave.
Statutory Time Off
In Canada, the public holidays are:
- New Year’s Day
- Good Friday
- Easter Monday
- Victoria Day
- Canada Day
- Labour Day
- Thanksgiving Day
- Remembrance Day
- Christmas Day
- Boxing Day
Canada’s provinces may have additional public holidays.
Competitive Benefits Package in Canada
PamGro allows you to provide localized benefits for employees in Canada within minutes.
Health Insurance
Vision Insurance
Pension or 401(K)
Dental Insurance
Life and Disability Insurance
Payroll & Taxes in Canada
Employer Payroll Contributions
The employer cost is roughly estimated between 8.23% and 14.63% depending on employee’s province of residence
This is the employer cost for Ontario:
- Quebec Pension Plan (Quebec only) – 6.40%
- Quebec Parental Insurance Plan (Quebec only) – 0.69%
- WSDRF – Workforce Skills Development and Recognition Fund (Quebec Only) – 1.0%
- Canada Pension Plan (excluding Quebec) – 5.95%
- Employment Health Tax – 1.95% – 4.26% depending on provincial government
- Employment Insurance – 2.28%
- Worker’s Compensation – 0.18%-1.28% depending on provincial government
- Mandatory Private Health Insurance – CA$124- CA$420
- Health Insurance admin fee – USD 15
Optional Costs:
If the Optional Pension Plan is offered to employees, the following monthly fees will apply:
- Service fee for the Optional Pension Plan: USD 10
- Additional service fee for Employer Contribution to the employee’s Optional Pension Plan (if applicable): USD 15
Taxes in Canada
In Canada, individuals are deemed residents if they reside in the country for a minimum of 183 days annually, as per federal regulations.
Canadian residents must adhere to legal requirements and pay taxes on their global income, irrespective of its source.Conversely, non-residents are solely taxed on income earned within Canada, excluding income generated elsewhere.
As of 2023, the Canadian federal income tax brackets are:
- Up to CAD 53,359: 15%
- CAD 53,359 to CAD 106,717: 20.5%
- CAD 106,717 to CAD 165,430: 26%
- CAD 165,430 to CAD 235,675: 29%
- Above CAD 235,675: 33%
Income tax brackets also vary by Canadian province.
Calculate the payroll of an employee in Canada?
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