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May 24, 2024

Startup's Guide to Hiring Employees in Canada with an Employer of Record (EOR)

Tap into Canada's growing talent pool while avoiding the lengthy procedures surrounding company incorporation.

Startup's Guide to Hiring Employees in Canada with an Employer of Record (EOR)

Akhil Reddy

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Canada has become a magnet for global talent. Many bright minds choose to stay and make Canada their home. With a diverse population and the highest percentage of post-secondary graduates globally, Canada offers a wealth of talent across various industries, particularly in engineering and technology.

But tapping into this incredible talent pool is incredibly difficult, especially for emerging businesses. The complexities of international hiring, from navigating legal requirements to managing payroll and benefits, can be a significant barrier to entry.

That's where an Employer of Record (EOR) comes in. By partnering with an EOR, you can effortlessly access Canada's top talent without the headaches of setting up a local entity or dealing with the intricacies of cross-border employment.

Let's explore how you can leverage an EOR to hire Canada's best and brightest minds for your business.

What is EOR in Canada?

An Employer of Record (EOR) in Canada is a third-party organization (such as Thera) that serves as the legal employer for workers in Canada on behalf of another company. The EOR takes on the legal responsibilities and liabilities associated with employment, allowing companies to hire Canadian workers without setting up a local entity or navigating complex employment laws and regulations.

Here's how the EOR model works:

  1. Legal employment: The EOR becomes the legal employer of record for your Canadian workers, providing a local employment contract that complies with Canadian labor laws.
  2. Payroll and taxes: The EOR handles all aspects of payroll processing, including calculating and withholding income taxes, social security contributions, and other mandatory deductions, as well as issuing pay slips and year-end tax forms.
  3. Benefits administration: The EOR can manage employee benefits such as health insurance, pension plans, and vacation leave, ensuring compliance with Canadian regulations.
  4. HR Compliance and Support: The EOR ensures all employment practices comply with Canadian and provincial laws. They maintain compliant employment contracts, policies, and record keeping. The EOR will advise on HR best practices and help resolve any employee issues. They often provide HR support services to employees.
  5. Onboarding and offboarding: The EOR can assist with onboarding new hires, including collecting necessary documentation and setting up payroll. They can also manage the offboarding process when an employee leaves the company.

Your role as the client company is that you select the candidates to hire and determine their compensation (with EOR guidance). The employees work under your direction and integrate with your team. You set the employees' duties, and goals, and manage their performance. Your company pays the EOR for the employees' compensation plus their service fees.

Situations Where an Employer of Record (EOR) Makes Sense for Canadian Hiring

An Employer of Record (EOR) in Canada can be a game-changer for your company if:

  1. You're testing the waters: If you're dipping your toes into the Canadian market and want to hire a small team without committing to a full-blown subsidiary, an EOR is your secret weapon.
  2. You're on a tight timeline: When you need to hire Canadian talent yesterday, an EOR can help you skip the bureaucratic obstacle course and get your team up and running in no time.
  3. You're watching your wallet: Setting up a Canadian entity can be a money pit. An EOR allows you to tap into top-tier talent without breaking the bank on legal fees and infrastructure costs.
  4. You're not a legal eagle: If navigating Canadian employment law makes your head spin, an EOR can be your compliance compass, ensuring you stay on the right side of regulations.
  5. You're a lean, mean startup machine: Wearing multiple hats is par for the course when you're running a startup. An EOR can take the HR hat off your head, freeing you up to focus on what you do best - growing your business.
  6. You're a remote work trailblazer: If you're building a distributed team and want to hire the best Canadian talent, regardless of location, an EOR can be your passport to seamless cross-border employment.
  7. You're in it for the short haul: When you need Canadian expertise for a specific project or a limited time frame, an EOR can help you assemble a dream team without a long-term commitment.
  8. You're a global player: If you're an international company looking to establish a Canadian presence, an EOR can be your local ally, helping you navigate cultural nuances and build a strong employer brand.

If you find yourself saying "yes" to most of these questions, then partnering with an EOR might be the way to go. Companies that can benefit from an EOR include:

  • Startups and small businesses looking to expand into Canada quickly and cost-effectively
  • International companies testing the Canadian market before committing to a permanent presence
  • Businesses with limited HR and legal resources to manage Canadian employment compliance

Strategic Questions to Ask Before Choosing Your EOR Platform

An EOR is going to be handling some of the most critical aspects of your Canadian operations, from onboarding your new hires to managing payroll and benefits. So you have to make sure that you're partnering with the right platform. You want to find a partner that not only checks the compliance boxes but also aligns with your company's unique needs, budget, and goals.

How do you separate the top-tier EORs from the rest?

It's all about knowing what to look for and asking the questions that matter most. To help you navigate this process, we've put together a list of strategic questions to ask when evaluating EOR providers in Canada:

Legal entity and compliance

  • What specific licenses and registrations do they hold to operate as an EOR in Canada?
  • How do they ensure compliance with both federal and provincial employment standards, tax laws, and labor regulations across Canada?

Partnership structure:

  • Do they have their own entity in Canada, or do they rely on third-party partnerships?
  • If they work with third-party partners, how do they ensure consistent quality of service and compliance across all partners?
  • How do they handle communication and issue resolution when multiple parties are involved in the EOR relationship?

Employee onboarding and experience:

  • What specific steps are included in their onboarding process, and how do they ensure a smooth transition for new hires?
  • What communication channels and support do they offer to employees throughout their employment lifecycle?
  • How do they measure and track employee satisfaction, and what processes do they have in place to address any concerns or issues that arise?

Technology and data security:

  • What specific certifications and audits do they undergo to ensure the security and privacy of sensitive data (e.g., ISO 27001, SOC 2)?
  • How do they handle data storage, backup, and recovery to ensure business continuity in case of unexpected events?
  • Can their technology platforms integrate with your company's existing HR and payroll systems, and how seamless is the integration process?
  • Are their technology systems user-friendly and accessible for both your company and your employees?

Scalability and flexibility:

  • What is the largest number of employees they have onboarded for a single client in Canada, and how did they manage the process?
  • Do they offer flexible solutions and customization options to meet your specific needs?
  • How quickly can they adapt to changes in your hiring needs, such as sudden increases or decreases in headcount?

Did You Find a Great Candidate in Canada?

Bring them onboard with Thera. Thera's EOR service ensures full compliance with Canadian laws, regulations, and tax requirements. The platform also comes with:

  • Features like instant payouts, the best exchange rates, and support for multiple payout methods (Payoneer, Wise, bank transfer, etc.)
  • A user-friendly interface and an expert support team to make your global payroll easier than ever.
  • Prices starting at just $199, Thera offers the most affordable EOR product on the market.
Thera cost comparison
Thera cost comparison

We are the most contractor-friendly payroll platform around. We know that any deduction in a contractor’s pay seriously affects their morale. To ensure contractors get the best foreign exchange rates possible, so we work with 3 foreign exchange providers to ensure contractors always get the best possible rates.

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If you're ready to take your Canadian hiring to the next level and give your global team the experience they deserve, it's time to take action. Schedule a demo with Thera's team to see the platform in action and ask any questions you may have.

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Elizabeth Wellington

Liz writes about business, creativity and making meaningful work. Say hello on Twitter or through her website.

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