Hiring is complicated enough when you’re only dealing with one country; start crossing borders, and you open your business up to a host of challenges and considerations.

Employment laws vary from country to country and state to state, bringing a number of differences that affect types of contracts, rules on paid leave, termination notices, and requirements for minimum wage and employee benefits. On top of all that, hiring international employees implies a cultural exchange, too. You might encounter language barriers, differences in holidays and etiquette, and even humor gaps.

Fail to “do your homework” when hiring international employees, and you risk misunderstandings at best, legal precarity at worst, and a lot in between. This is true even when you’re thinking about countries as close to home as Canada.


What Makes Hiring Employees in Canada So Different?

Many business leaders make the mistake of thinking of the U.S.’s nearest neighbor as just another state. However, even though there are a lot of similarities between the two territories, there are also many crucial differences when it comes to hiring employees in Canada.

At the highest level, you’ll deal with different sets of employment laws. Canada has provinces (which function like states), and provincial laws are unique to these areas. These laws will influence many employment conditions. For example, employers need to pay Canadian workers the minimum wage set by each individual province, even though the minimum wage is also set federally.

Hiring employees in Canada may also mean awarding more paid leave. Workers in Canada are entitled to at least two weeks of annual leave after working with the same employer for one year. That amount doubles if they’ve been an employee of the same company for 10 consecutive years.

Additionally, unlike the U.S., Canada does not have at-will employment, meaning that employers must give written and sufficient notice before they can terminate a contract.

One more major consideration for employers is health insurance. Canada provides universal healthcare, and employers also tend to offer supplementary healthcare benefits, such as dental and vision support.


9 Important Things to Know When Hiring Employees in Canada

When beginning your journey into hiring Canadian workers, understanding the employment laws and customs of the country is critical. These insights could save you from heading down the wrong path:

1. Jurisdiction.

Both the federal and provincial levels of government have jurisdiction over employment and labor matters for people employed in Canada.

2. Agreements.

Employees must be hired through verbal or written agreements. While verbal agreements can be tricky to defend or prove in a court of law, they do “count” contractually.

3. Termination.

Employers must have “just cause” to terminate employment without notice in Canada. If an employer initiates a contract termination without cause or notice, the employee is guaranteed certain minimum statutory entitlements and may also claim compensation.

4. Conditions.

Conditions of employment in Canada — such as hours of work, overtime pay, minimum wages, holidays, vacations, and employee benefit plans — vary by jurisdiction but are all governed by the Employment Standards Act.

5. Independent contractors.

If you’re considering whether to hire a contingent worker versus a contractor versus an employee in Canada, think about what you need from the relationship. Arrangements with independent contractors must be carefully structured so that they aren’t classified as traditional employment relationships.

6. Employment policies.

Canadian employment law (on a province-by-province basis) requires employers to have policies in place that cover health and safety, human rights, antidiscrimination and harassment, and data privacy, among other categories. Make sure you are maintaining local compliance wherever you are.

7. Tax remittances.

Canadian employers are required to make certain deductions from employees’ compensation, including income tax, Canada Pension Plan, and Employment Insurance. Employers must also contribute to the Canada Pension Plan and Employment Insurance, remitting both the employee and employer portions to the Canada Revenue Agency.

8. Workers’ compensation.

In Canada, workers’ compensation is governed by provincial governments under statutory regulations. An employer must register with the applicable provincial Workers’ Compensation Board. Then, the employer is placed into a rate group and required to contribute the applicable rate for the employer’s industry for every $100 in payroll.

9. Retirement.

It is common, though not legally required, for employers to provide voluntary Registered Retirement Savings Plans to employees to help save for their retirement.

Knowing local employment laws and customs can make all the difference as you try to form successful and compliant employment relationships in Canada. The consequences of not complying with these laws could be costly fines and penalties, not to mention damage to your reputation as an employer and as a brand, making it harder to attract and retain great international talent. By taking care to follow laws and cultural customs, employers can help Canadian employees feel welcome, accepted, and safe.


If you’re interested in expanding your workforce into Canada and beyond, Innovative Employee Solutions can help with our Global Workforce Solutions.


Written by: Helga Venturini Townend, Senior Director of Global Operations of IES

Helga Venturini Townend is the Senior Director of Global Operations of Innovative Employee Solutions (IES), a leading provider of remote and contingent workforce solutions, specializing in global Employer of Record, Agent of Record, and Independent Contractor compliance services in 150+ countries. Founded in 1974, IES is a woman-owned business, certified by the WBENC, and partners with companies to provide compliant employment solutions that empower people’s lives. From her base in the U.K., she has used her expertise in workforce management compliance and risk assessment to set up global contingent workforce management solutions in more than 100 countries.

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