Canada, eh?
If your global expansion plans include the Canadian market—with good reason,
as there are many advantages to doing business in Canada —there also are a host of factors to consider before establishing a presence in the country, from cultural to legal.
Where do you start? We’ll take a look at three of the most important
considerations for a foreign company doing business in Canada. Here’s what you
should know.
1. Canada’s official languages
Although Canada’s Official Languages Act stipulates that English and French
are the legal workplace languages in the country’s federal institutions, it’s
a good model for companies to follow when doing business as well.
Canada’s language act includes the following:
Respect employees’ language-of-work rights. If an employee only speaks
French or English—but not both—an employer must respect the employee’s primary
language.
Foster a truly bilingual workplace in bilingual regions. Some regions in
Canada are more bilingual than others. In 1969, Canada established official
bilingualism , providing legal protections for French and English speakers.
If you focus on hiring in Quebec, for instance, hiring employees fluent in
both languages can help you provide adequate support to any Canadian resident.
A company operating in Canada should also consider offering language learning
opportunities for employees who wish to learn French or English. While
companies can’t require employees to learn another language, offering language
learning resources can significantly support Canadian professional
development.
2. Entity establishment
Part of the evaluation on entering the Canadian market should include weighing
whether you’ll establish an entity —which can be a lengthy and costly process. If the
Canadian market is critical to your growth plan and you’d like to begin hiring
workers sooner than an entity can be registered, an employer of record
(EOR) is
a good option for getting started in the country.
An employer of record already has an in-country entity and the infrastructure
in place to hire local workers—and it can usually do so quickly. You can
partner with an EOR to hire the workers you need to begin operations in Canada
while you work to set up your entity in parallel. Or you can employ them
directly through the EOR if you decide entity setup isn’t the right path for
your organization.
3. Human resources requirements
If you plan to hire in Canada, it’s important to understand the country’s employment laws and benefits requirements to ensure compliance and fair treatment of workers.
Labor laws
Some of the Canadian labor laws to keep in mind include:
Working hours. Employees are entitled to eight-hour days, 40-hour weeks,
and at least one full day of rest per week.
Overtime. Employees who work more than 40 hours per week are entitled to
either time-and-a-half pay per hour of overtime or time-and-a-half paid leave
per hour worked. Employees also have the right to refuse overtime requests to
attend to family matters or to ensure the education of family members under 18
years of age.
Wages. Canada’s nationwide minimum wage
is $15.55 per hour. But if a province stipulates a higher province-wide
minimum wage, the higher of the two minimum wages will apply. Each year, the
federal minimum wage may increase to account for inflation.
Workers’ compensation. Canadian businesses and foreign companies working
in Canada must provide workers' compensation
insurance to employees. You can streamline your workers’ compensation process
by using an employer of record.
Employee onboarding
As you hire new employees in Canada, you’ll also need to ensure that your
employee onboarding and training standards are in line with Canadian laws.
Regulations to note include:
Collecting and securing employee data. Before collecting any personal
information from employees, Canadian employers must disclose which data they will collect, the data’s intended purpose, and what efforts they will make to protect that data.
Reporting. Canadian businesses must file annual reports
to the Labour Program that
detail their industry, the number of employees on staff, and the number of
employees hired per province.
Payroll tax payments and reporting
Canadian employers must remit payroll taxes to the Canadian government. Some provinces require
additional payroll taxes to fund local healthcare infrastructure and other
provincial government initiatives.
Your tax withholding, payment and reporting requirements will depend on the following
characteristics of your business:
- Company size
- Legal status or business structure (e.g., whether the business is a sole proprietorship or incorporation)
- The types of employees you hire
Businesses hiring Canadians must also account for the Canadian Pension Plan
(CPP) , a government-operated, employee-paid retirement fund for
employees in most industries. While not all employers must provide the
infrastructure for employees to pay into the CPP, you should create a
compliance plan and standard operating procedure (SOP) to accommodate the
program and provide resources to employees who wish to pay in.
Benefits administration
The Canada Labour Code entitles Canadians to a variety of benefits that their employers are legally obligated to provide. Some of these benefits include:
Employment insurance (EI). Employees fund their EI benefits
,
which Canadians may receive when they resign, are fired from a job, or take
leave for medical issues.
Paid and unpaid leave. Employees may be entitled to leave benefits
for
maternity, illness, bereavement or personal leave.
Vacation time. After 12 months of consecutive employment, Canadian
employees receive two weeks of vacation time.
Paid federal holidays. Paid federal holidays in Canada include:
- New Year’s Day
- Good Friday
- Victoria Day
- Canada Day
- Labour Day
- National Day for Truth and Reconciliation
- Thanksgiving Day
- Remembrance Day
- Christmas Day
- Boxing Day
Termination regulations
Your company’s termination policy should comply with Canadian termination
regulations stipulating:
Documentation. Canadian employers must document incidents and official
warnings leading up to employee termination. The documentation process
protects both employers and employees from legal action.
Notice. Employers must provide Canadians with at least two weeks’ notice
of their termination before dismissing them.
Severance pay. Canadians who have worked for at least 12 consecutive
months are eligible for mandatory severance pay.
Layoff policies. In Canada, a layoff does not constitute termination.
Specific laws stipulate how employers should handle a layoff, and businesses
should ensure compliance with national laws before instituting a layoff.
Group terminations. Canadian businesses planning to terminate more than 50
employees at once must provide notice 16 weeks in advance to Canada’s Head of
Compliance and Enforcement.
Unjust dismissal protections. Like many other nations, Canada offers
unjust dismissal protection to employees to prevent illegal termination.
In-country HR expertise for foreign companies doing business in Canada
Remaining compliant with Canada’s employment laws is a critical component of
doing business in the country. A Canada employer of record not only can help
you get to market faster by eliminating the need for an entity, but it can
also help with the all-important HR component, providing local HR support to
ensure compliant contracts and onboarding, benefits administration and
payroll.
Learn more about how an employer of record can help your company do
business in Canada by speaking with a global solutions advisor today.
Schedule a free consultation
Meet with one of our payroll experts to discuss your current business challenges and how our solutions can help.