Canadian employment Q&A
Employing in Canada: fourteen questions employers ask before the first hire
Each answer takes about a minute to read and uses 2026 federal and provincial figures. The link under an answer opens the full article.
Go straight to a topic
1
How can a company abroad hire staff in Canada?
A company outside Canada has three routes. It can incorporate federally or in a province, then open a CRA payroll account and register with bodies such as WSIB. It can engage an independent contractor, which only holds up if the CRA control and risk tests point that way. A third option is an employer of record, where we become the legal employer and run payroll while you direct the work. Many first hires start on the third route and revisit incorporation as the team grows.
Hiring a first employee: steps →2
What will an Ontario employee on CAD 85,000 cost you in 2026?
For 2026, an Ontario employer paying CAD 85,000 in salary carries CAD 93,029.25 a year in total, a 9.45% on-cost. The extra CAD 8,029.25 is CPP (4,230.45), CPP2 (416), EI (1,572.30), Employer Health Tax at 1.95% (1,657.50) and WSIB at the Class L rate (153).
Our fee from USD 560 a month, about CAD 790.56 at ECB rates on 24 September 2026, takes the total to CAD 102,515.97. The employee keeps about CAD 63,679.42 after tax, CPP, CPP2 and EI. EHT and WSIB depend on the employer’s payroll size and rate class.
Full breakdown of employer costs →3
How long before a new hire in Canada can start work?
The start date usually depends on the candidate more than on paperwork. Many people must give notice to a current employer, and anyone who needs a work permit adds time. An EOR cannot apply for an LMIA or an intra-company transfer, so people holding open permits such as IEC Working Holiday are the simplest cases. Your own federal corporation is processed online in 1 business day, but payroll, WSIB and banking set-up come before the first pay.
4
Is a Canadian corporation needed before your first hire?
No. With an employer of record, we sign as employer, so you need no corporation, business number or payroll account of your own. If you want your own company, a CBCA corporation costs CAD 200 to file online, and at least 25% of its directors must be resident Canadians. You then open a CRA payroll account before the first pay. In Ontario a client can be jointly liable for an agency’s unpaid wages, so ask us how the provincial rules apply to your hire.
EOR or a subsidiary? →5
Employee or contractor: how does the CRA decide?
The CRA looks first at what the parties intended, then tests the real working relationship: who controls the work, who supplies tools and equipment, whether the worker can hire helpers, and who carries financial risk and the chance of profit. A contractor label does not help if the facts show employment. An employer that fails to withhold CPP, EI or tax faces a 10% penalty, or 20% for repeated knowing failures, plus arrears and interest.
Contractor or employee: the CRA tests →6
Which terms belong in an Ontario offer letter and contract?
Put the salary, hours, duties, vacation and a termination clause in writing, and draft that clause with care, because it may limit common-law notice. The ESA has no probation concept, although no statutory notice is owed in the first 3 months. Non-competes are void in Ontario for non-executives hired since 25 October 2021, so rely on confidentiality and non-solicitation terms. Employers with 25 or more staff must give written job details before day one.
Contract terms for Canadian staff →7
Which taxes come off a Canadian payslip?
Every pay, the employer withholds income tax, CPP at 5.95% between CAD 3,500 and CAD 74,600 of 2026 earnings, CPP2 at 4% up to CAD 85,000 and EI at 1.63% up to CAD 68,900. It matches CPP and CPP2 and pays 1.4 times the EI premium. Federal tax runs from 14% to 33%, and Ontario adds 5.05% to 13.16% plus the Health Premium. TD1 forms set each person’s credits, and Quebec staff pay QPP and QPIP instead.
How Canadian payroll runs →8
Which minimum wage applies to your hire?
The province decides, not a national figure. The federal rate of CAD 18.15 an hour, from 1 April 2026, covers only federally regulated sectors. Ontario pays CAD 17.60 until 30 September 2026. British Columbia pays CAD 18.25 from 1 June 2026, Alberta CAD 15.00 and Quebec CAD 16.60 from 1 May 2026. Rates change on different dates in each province, so check again before a pay review.
9
How much vacation and parental leave does Ontario give?
Ontario staff earn 2 weeks’ vacation a year, or 3 weeks after 5 years, paid at a minimum of 4% or 6% of gross wages. There are 9 ESA public holidays, including Family Day and Boxing Day. Pregnancy leave lasts up to 17 weeks and parental leave up to 61 or 63 weeks, both unpaid by the employer, while EI pays maternity and parental benefits. Quebec parents claim from QPIP instead, and Quebec has 8 statutory holidays.
10
Who pays for a sick day?
In Ontario, nobody is required to: employees get 3 unpaid, job-protected sick days a year after 2 weeks’ service, and since 28 October 2024 the employer cannot ask for a medical note for them. British Columbia gives 5 paid and 3 unpaid days after 90 days. Federally regulated employees get up to 10 paid days after 30 days’ service. Ontario also allows up to 27 weeks of unpaid long-term illness leave after 13 weeks’ employment.
Sick days by province →11
Where do CPP, EI and payroll levies end up?
CPP contributions go to the Canada Pension Plan; Quebec staff pay into the Quebec Pension Plan (QPP) instead. EI premiums fund Employment Insurance, which pays maternity and parental benefits outside Quebec, where QPIP covers them. Ontario’s Employer Health Tax goes to the Ministry of Finance, and WSIB premiums, averaging CAD 1.23 per CAD 100 of insurable earnings in 2026, fund workers’ compensation. WorkSafeBC averages CAD 1.55 and WCB-Alberta CAD 1.46.
CPP, EI and payroll levies →12
What notice is owed when employment ends?
Under Ontario’s ESA, notice or pay in lieu is 1 week for under a year of service, 2 weeks for 1 to 3 years, then 1 week per year up to 8 weeks. None is due in the first 3 months or for wilful misconduct. After 5 years, severance of 1 week per year (up to 26) is added where the employer’s payroll is CAD 2.5 million or more. Courts can award common-law notice well above these minimums unless the contract limits it.
13
Whose rules cover a remote employee?
Tax is withheld for the province of employment: the establishment a remote employee reports to or is reasonably attached to. Employment standards usually follow the province where the work is done, so a move from Ontario to Quebec can change leave, notice and language duties. Ontario employers with 25 or more staff need written policies on disconnecting from work and on electronic monitoring. Someone working from across the US border needs an arrangement in that country instead.
Remote and cross-province staff →14
What comes off your desk when we employ your hire?
EOR Canada drafts the contract, collects TD1 forms, runs payroll, remits CPP, EI and tax to the CRA, files the annual T4 slips and summary and issues the Record of Employment when employment ends. It also handles EHT and WSIB, or the Quebec equivalents, and tracks leave. Our team answers the employee’s pay questions. You keep choosing the person, setting the work and approving pay rises.
Tasks we take over →Have a province or role we did not cover?
Tell us the province where the person will work and the pay you are offering. We reply with the employer cost for that province, the contract points to watch and our fee from USD 560 a month.