How to stay compliant

Employer-of-Record (EOR) in Canada: Do You Need One?

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How to stay compliant

Employer-of-Record (EOR) in Canada: Do You Need One?

So you want to hire someone in Canada. Problem is, your company is located somewhere else.  

If you’ve done some research, you’ve probably been told you should be using an Employer-of-Record (EOR). Why? Well, if your company isn’t located in Canada, using an EOR can help you bypass the traditional obstacles to hiring full-time employees.  

But there’s a catch: EOR solutions in Canada are expensive—usually at least $500 per month per employee—and can take time to set up. And because you’re complying with a different set of labor laws, logistics and benefits can end up costing you lots of time and money. While they will save you time from setting up your own entity, they’re rarely cheap or fast.

The good news? There’s another way to hire remote workers in Canada, and it doesn’t involve forking out huge amounts of money for an EOR.  

The solution: Hire your teammates in Canada as contractors. If you’re hiring remotely and your teammates have autonomy, there’s a good chance you can make compliant contractor hires. You still have to use locally-compliant contracts, but the process is a lot easier, more affordable, and faster.

We built Thera to help you make contractor hires, in 150+ countries (like Canada). So you can hire the people you want on your team, without paying thousands for an EOR. You can get set up in a couple of clicks—and you’ll only pay $49 per contractor per month.  

It’s just as easy as it sounds. No catch. Here’s what Thera looks like vs. an EOR in Canada:

Everything you should know about using an EOR in Canada

Are you a business owner or manager considering hiring independent contractors abroad? If you're looking to expand your business into Canada, you may be wondering about the best way to hire employees. One option is to use an Employer of Record (EOR) service. In this post, we'll break down what an EOR is, how it works in Canada, and why it may or may not be the best choice for your business.

What is an EOR?

An Employer of Record (EOR) is a third-party service that acts as the employer of record for your employees. This means that the EOR takes care of all the administrative tasks associated with employment, such as payroll, taxes, and benefits. As the employer of record, the EOR is responsible for complying with all employment laws and regulations in the country where the employee is located.

How does an EOR work in Canada?

In Canada, an EOR is known as a Professional Employer Organization (PEO). A PEO is a company that provides employment services to businesses, including payroll, benefits administration, and HR support. When you use a PEO, the PEO becomes the employer of record for your employees in Canada. This means that the PEO is responsible for complying with all Canadian employment laws and regulations.

Legal and regulatory conditions in Canada

Canada has strict employment laws and regulations that must be followed when hiring employees. Some of the key legal and regulatory conditions that must be considered when using an EOR in Canada include:

1. Employment Standards: Employers in Canada must comply with federal and provincial employment standards, which cover areas such as minimum wage, hours of work, and overtime pay.

2. Payroll Taxes: Employers in Canada are required to deduct and remit payroll taxes, including federal and provincial income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums.

3. Workers' Compensation: Employers in Canada are required to provide workers' compensation coverage for their employees.

4. Benefits: Employers in Canada are required to provide certain benefits to their employees, such as health insurance and retirement savings plans.

Why hiring an independent contractor might be easier

While using an EOR can be a good option for some businesses, it may not be the best choice for everyone. One alternative to using an EOR is to hire independent contractors. Hiring independent contractors can be easier and less expensive than using an EOR, as you don't have to worry about complying with all the employment laws and regulations in the country where the contractor is located.

However, it's important to note that there are also legal and regulatory conditions that must be followed when hiring independent contractors in Canada. For example, independent contractors must be classified correctly, and they must be paid in accordance with Canadian tax laws.

What if I accidentally misclassify my contractors?

We’ve got two pieces of good news for you. For one, if you’re hiring remotely, it’s unlikely you’ll misclassify your contractors. Many of the things that qualify people as employees, such as company equipment and set working hours, don’t typically apply to remote work.

Still, it’s helpful to have the comfort of knowing you’re not at risk for misclassification. That’s why, at Thera, we’ve launched Misclassification Assurance: so you can hire contractors abroad, worry-free. Learn more about hiring with Thera below.

Hiring contractors? Thera can save you a ton of time

If you’re hiring contractors, you’re probably spending too much time on their payroll, contracts, and tax documents. Which is why we built Thera, which saves you 90% the time you spend on contractor paperwork each month.

With Thera, you can compliantly hire your contractors in 150+ countries, onboard them in minutes, and pay them all at once (in a click). It’s global contractor payroll, finally simplified.

Sound interesting? Click here to book a demo and see the platform firsthand

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