Employer of record explained for Canada: who employs your hire and what stays with you

An employer of record takes on the employer’s administrative and statutory duties for a person who works for you in Canada. EOR Canada employs the person in that role as employer of record. We issue the employment contract, add the person to our payroll and withhold income tax plus the employee’s Canada Pension Plan (CPP) and Employment Insurance (EI) contributions from every pay.

We also pay the employer’s share. For 2026 that means CPP of 5.95% on pay from CAD 3,500 up to CAD 74,600, the second additional contribution (CPP2) at 4% between CAD 74,600 and CAD 85,000, and EI of 2.282% on insurable pay to a ceiling of CAD 68,900. In Ontario the employer of record’s payroll also carries a WSIB workplace-insurance premium and the Employer Health Tax (EHT). Year-end T4 slips, and the Record of Employment when a job ends, come from the same payroll.

You still find the person, agree the salary and manage the work. The Employer of Record Canada service fills the gap between having a candidate you want and having a Canadian employer set up to pay that candidate.

For a first hire, the practical gain is time. Incorporating, opening a bank account and registering a payroll program account with the CRA all have to happen before a first salary can be paid through a corporation of your own. With an EOR, those registrations already belong to the employer of record.

Once the person starts, a normal month is simple on your side. You tell the employer of record about salary changes, bonuses, leave and any change of address or province. The employer of record runs each payroll, pays the net salary to the employee and bills you for gross pay, employer contributions and the fee on one invoice. Questions about pay slips or deductions go to the employer of record, while questions about the job come to you.

The employer of record is the legal employer. Its name is on the employment contract, its CRA business number and payroll program account carry the deductions, and its workplace insurance account covers the employee. When a regulator or the employee asks who the employer is, the answer is the employer of record.

That has consequences worth understanding before you sign. Canadian employment law is mostly provincial, so the employer of record’s duties come from the province where the person works. In Ontario, the Employment Standards Act (ESA) treats a temporary help agency as the employer of the people it assigns to clients. Whether a longer, open-ended EOR placement counts as a temporary assignment is not addressed in official guidance, so each employer of record has to decide how its own model sits against Part XVIII.1 of the ESA.

Ontario has required temporary help agencies and recruiters to hold a licence since 1 July 2024, and a client must not knowingly use an unlicensed agency. The Ontario licensing guide also describes a public registry. Asking a provider how it handles any licensing rules that apply is a fair opening question.

Being the legal employer does not give the employer of record a say in your business. It holds the employment relationship in its contracts and payroll records. Your company holds a commercial relationship with the employer of record through a services agreement, and that agreement is where fees, liabilities and exit terms are written down.

The client keeps control of the work: who is hired, what they do each day, their objectives, performance reviews, pay rises and the tools they use. The employee normally works inside your systems and reports to one of your managers, and the employer of record does not supervise their output.

Some responsibilities stay with you in a different form. Salary, bonuses and any benefits are funded by you through the employer of record’s invoice. A decision to end the employment starts with you, and so does the cost of the notice that follows. Where Ontario’s temporary help agency rules apply, the client and agency can be pursued together, jointly and severally, for any shortfall in regular wages, overtime or holiday pay. An employer of record shares the weight of employment law with you; it does not lift all of it.

Intellectual property needs a deliberate step. Under section 13(3) of the Copyright Act, copyright in what an employee creates as part of their job belongs first to the employer, unless an agreement provides otherwise. Under an EOR arrangement the employer of record holds that first ownership, so ask how rights in the employee’s work pass to your company and check that the wording covers the work you expect them to produce.

Restrictive covenants follow provincial law as well. Ontario outlawed non-compete clauses in employment contracts made from 25 October 2021 onwards, with narrow carve-outs for executives and certain sales of a business. Clauses protecting confidential information and limiting solicitation of clients remain usable, and they carry most of the protection for an Ontario hire.

Leave entitlements come with the province as well, and your managers plan around them. An Ontario employee earns at least 2 weeks’ vacation a year with 4% vacation pay, and 3 weeks with 6% once they reach 5 years of service. An employee can take as much as 17 weeks of pregnancy leave and 61 or 63 weeks of parental leave; the employer pays for neither, and income support comes from EI benefits. The employer of record tracks these entitlements; you decide how cover for the role will work.

The province of employment decides most of the detail, from minimum wage to sick days, so an EOR hire in Calgary is set up differently from one in Toronto. Payroll withholding follows the CRA’s province-of-employment test: the establishment where the employee reports for work or, for someone working remotely, the one they are reasonably attached to. Ontario is the default in this guide, and the other large provinces differ in ways that affect cost and contract wording.

• Ontario: minimum wage CAD 17.60 an hour, rising to CAD 17.95 on 1 October 2026; 3 job-protected sick days each year, all unpaid; 9 ESA public holidays.
• British Columbia: minimum wage CAD 18.25 from 1 June 2026; after 90 days in the job, 5 sick days with pay plus 3 without; a provincial Employer Health Tax that does not apply at or below CAD 1,000,000 of BC remuneration.
• Alberta: minimum wage CAD 15.00; termination pay starting at 1 week after 90 days; a WCB-Alberta average collected rate of CAD 1.46 per CAD 100 of assessable earnings in 2026.
• Quebec: pension deductions follow the QPP, known in French as the Régime de rentes du Québec, charged at 6.30% to each party; QPIP replaces EI parental benefits, the employee EI rate drops to CAD 1.30 per CAD 100, and the employer communicates with staff in French.

Federal labour standards, such as the CAD 18.15 federal minimum wage and 10 days of paid medical leave, apply to federally regulated sectors only. Provincial statutes govern most private employers, so an employer of record employing your hire in a provincially regulated role works to the provincial rules listed here.

The clearest limit is immigration. The Temporary Foreign Worker Program gives no employer status to a firm that recruits staff on behalf of others, and the LMIA must come from the business that actually hires, sets the terms and pays. The rule is on the ESDC high-wage LMIA requirements page. Intra-company transfer permits need a parent, subsidiary, branch or affiliate relationship, which an EOR provider does not have with your company.

In practice, an EOR suits candidates who already have the right to work in Canada, such as citizens, permanent residents or people on an open work permit. International Experience Canada’s Working Holiday permit is an open permit, so an employer of record can employ its holders with no employer filings.

Termination cost is the second limit. The ESA sets minimum notice, but courts often award common-law reasonable notice well above those minimums unless the contract contains an ESA-compliant termination clause. Having an employer of record as employer leaves that exposure in place, and you normally fund whatever notice or pay in lieu is owed.

An EOR also leaves your commercial position unchanged. It employs one person on your behalf. Selling to Canadian customers, signing leases or holding stock in Canada are separate matters for your own advisers, and the employer of record’s employment of your hire does not settle them.

Scale is a separate question. Once a team grows, or the work becomes a lasting part of your business in Canada, the running cost of an EOR is worth comparing with setting up a corporation. Ontario’s agency rules help here, as those rules do not let an agency prevent its client from later putting an assignment worker on the client’s own payroll. The trade-offs are covered in EOR or Canadian subsidiary.

On an Ontario salary of CAD 85,000 in 2026, the legal employer’s statutory cost comes to CAD 93,029.25 a year, a 9.45% on-cost before any EOR fee. The figure assumes a full calendar year with one employer, vacation paid within salary, no pension or benefits plan, the top 1.95% EHT rate with no exemption, and the WSIB Class L premium of CAD 0.18 for every CAD 100 insured. The employer lines are:

• CPP CAD 4,230.45 and CPP2 CAD 416.00
• EI CAD 1,572.30
• Employer Health Tax at 1.95%: CAD 1,657.50
• WSIB CAD 153.00

EOR Canada bills from USD 560 a month for each employee, about CAD 790.56 at ECB reference rates for 24 September 2026, or CAD 9,486.72 a year. Adding it brings the running cost to CAD 102,515.97 a year, and a one-off set-up fee, stated in your quote, is usually charged at the start. The EHT and WSIB lines rest on assumptions about the employer’s payroll size and the rate class for the role; if the role sat at the WSIB 2026 average rate of CAD 1.23, the premium would rise to CAD 1,045.50.

On the employee’s side, the same salary gives net pay of about CAD 63,679.42 a year for a single person claiming only the basic federal and Ontario amounts. The pricing page shows how the fee is billed, and the EOR process in Canada follows a hire from quote to first pay. If you are comparing providers, choosing an EOR provider in Canada covers licensing, Quebec capability and pricing models.