Expand your business into Canada, without a local entity
Expanding a business into Canada can be potentially very lucrative, but complex. Navigating the unique set of federal laws, as well as individual provincial regulations, can be a long and confusing process.
At New Horizons, we offer a full suite of business services to help organizations expand into Canada. Our professional employer organization (Canada PEO & Canada Employer of Record), payroll, and employ of record services give you the ability to outsource all the difficult administration and compliance work so you can focus your efforts on a successful expansion.
With a dedicated in-house recruitment team, we can also help you to find, hire, and onboard new employees in Canada. If you don’t have an established entity, you can even use our local subsidiary as your Canada employer of record, giving you all the benefits of hiring in Canada without any of the complex administration.
Our outsourcing services could cut your expansion costs by thousands of dollars and give you greater flexibility for your Canada expansion.
Our Canada PEO simplifies your expansion
New Horizons enables your business to expand its operations into Canada – without setting up a legal subsidiary.
Labour Laws in Canada
Canada employment contracts
There are both federal and provincial employment laws in Canada, so you will need to be familiar with everything that is relevant to your location. A formal contract is not required, but we strongly recommend that you use one to determine the details of any employment arrangement. Such as benefits, salary/wages, vacation allowance, and so on.
As Canada is bilingual, with both English and French being used widely. In every province except Quebec (where French is the official language), English is the most common language for employment contracts and would generally be expected.
By partnering with our Canada PEO & Employer of Record, New Horizons’ team of local experts can provide assistance for drafting strong employment contracts that are compliant with local regulations.
Working hours in Canada
In general, most employees work a standard five-day week from Monday to Friday. Provincial legislation determines the rules around working hours in each location. For example, in Ontario, the most populous province, the maximum working hours are 48 per week, although extended limits can be arranged via Employment Standards officials, and some industries have different rules. The other provinces operate similarly, but you will need to understand the law in the area you are employing.
For overtime, the rules are also set provincially, with rates generally equalling around 1-1.5x normal pay.
Public holidays in Canada
Canada has a number of public holidays for employees. Exceptions are made in industries such as hospitality. The following holidays are celebrated in Canada, although some only provincially.
Employment benefits in Canada
It’s important to understand what benefits your employees in Canada are legally entitled to or will expect to receive.
Vacation in Canada
Almost every employee in Canada has the legal right to paid vacation as part of their employment arrangement. Two weeks of vacation are required in Ontario, Quebec, Manitoba, Alberta, and British Columbia following one year of employment. The other provinces vary slightly in their regulations, however, most employers across the entire country will offer between two and four weeks in addition to any public holidays. Employees can also carry unused vacation days into following years upon negotiation with employers.
Sick leave in Canada
There is national-level legislation, laid out in the Canada Labour Code, guaranteeing five days of sick leave to employees, including three days paid leave after three months of employment. Additional days may be covered but this depends on the provincial laws.
Maternity and paternity leave in Canada
Women who have worked for at least six months continuously can access paid maternity leave of up to 17 weeks upon submission of a medical note for proof. This period of leave can start up to 12 weeks before the birth date. Additionally, both parents can access unpaid parental leave of 37 weeks, or unpaid standard leave of 61 to 63 weeks (depending on province).
Employee severance and terminations in Canada
When terminating employees in Canada, employers are required to adhere to a ‘reasonable’ notice period, or a payment in place of notice. The minimum notice period varies by location, and may be stipulated in an employment contract. Several factors may be considered when determining a ‘reasonable’ notice period, such as the age of the employee, the nature of their role, and so on.
Additionally, employees who are terminated without proper cause can be entitled to severance pay. At a federal level, employees who have worked for more than one year continuously are entitled to either two days of wages per year of employment, or five days wages (whichever is greater).
Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time. New Horizons’ Canada PEO can mitigate risk for foreign companies and provide guidance through this process.
Taxation in Canada
Taxation in Canada is complex and it is another area where federal and provincial laws both affect the system.
Canada operates a prgressive tax model, with higher earners paying a higher percentage in taxes. There is a federal rate, which varies from 0% to 33% as of 2020, which includes a portion for pension plans and employment insurance, and an additional provincial rate, which can vary significantly depending on income level and location.
In addition to the federal pension and employment insurance, other tax-funded social programs are run on a provincial basis, with funding taken from income tax and varying by location.
Health insurance in Canada
Canada has a social healthcare system which covers residents and workers with most of their necessary healthcare. The level of coverage varies by province, and some offer more comprehensive cover (such as drug cost and dental), but core medical expenses are covered nationwide by taxes.
It is relatively common, but not necessary, for employers in Canada to provide extra health-related benefits, such as dental, life insurance, and so on.