Best Employer of Record in Canada

Federal: Under Canada Labour Code s. 253.2, federally regulated employers must provide each new employee with a written employment statement within 30 days of hire. The statement must include the information prescribed by the Canada Labour Standards Regulations (s. 3.1), covering the names of the parties, job title and duties, place of work, commencement date, hours of work, wage or salary rate, overtime rate, pay day frequency, and mandatory deductions. A written contract is not itself mandated, but a written statement is. The statement must be updated within 30 days of any material change. Ontario: Under the ESA 2000 (as amended effective July 1, 2025), employers with 25 or more employees must provide each new employee with specified written employment information before the first day of work (or as soon as reasonably practicable thereafter). Required information includes the employer legal name, contact information, anticipated work location, starting wage rate, pay period and pay day, and anticipated initial hours. Ontario does not require a written employment contract per se; terms may be oral, but all terms must meet or exceed ESA minimum standards. Any clause purporting to contract out of ESA minimums is void. Quebec: No provincial statute mandates a written employment contract. However, the Charter of the French Language (C-11, s. 41) requires that any individual employment contract entered into in writing must be drawn up in French. A non-adhesion contract may be drafted in another language at the express mutual wish of both parties after reviewing the French version. The Act respecting labour standards (N-1.1) sets the floor for all working conditions regardless of contract form or language. British Columbia: No statutory requirement for a written employment contract in general. Domestic workers are the exception and require a written agreement. Employers should communicate specific terms and conditions in writing. All employment agreements must meet ESA minimum standards; terms below those minimums are void. Alberta: No statutory requirement for a written employment contract. Employers are advised to put terms in writing to avoid misunderstanding. The Employment Standards Code sets minimum standards that apply regardless of what the contract says; any term below the statutory floor is unenforceable.

Federal (Canada Labour Code s.230): Federally regulated employers must give written notice or wages in lieu at the employee's regular rate for regular hours, scaling with tenure: 2 weeks (3 months to under 3 years), 3 weeks (3 to under 4 years), 4 weeks (4 to under 5 years), 5 weeks (5 to under 6 years), 6 weeks (6 to under 7 years), 7 weeks (7 to under 8 years), 8 weeks (8 or more years). The employer must also provide a written statement of vacation benefits, wages, severance pay, and other benefits on or before the last day of employment. The Canada Labour Code does not contain a separate statutory severance pay concept analogous to Ontario; the notice/wages-in-lieu scale is the sole statutory minimum for most federal employees (unjust dismissal remedies under CLC Part III apply separately to employees with 12 or more months of service). Ontario: Two distinct and cumulative obligations exist under the ESA 2000. (1) Termination pay (ESA ss.54-62): employees with 3 or more months of continuous service are entitled to written notice or pay in lieu on the following scale: less than 1 year = 1 week; 1 to under 3 years = 2 weeks; 3 to under 4 years = 3 weeks; 4 to under 5 years = 4 weeks; 5 to under 6 years = 5 weeks; 6 to under 7 years = 6 weeks; 7 to under 8 years = 7 weeks; 8 or more years = 8 weeks. Mass termination (50 or more employees in a 4-week period at one establishment) triggers higher entitlements: 50-199 employees = 8 weeks; 200-499 = 12 weeks; 500 or more = 16 weeks. Pay in lieu equals regular wages for a regular work week multiplied by the required notice period; vacation pay accrues on the termination payment. (2) Statutory severance pay (ESA ss.64-66) is a separate and additional entitlement: an employee qualifies only if (a) they have 5 or more years of service (continuous or non-continuous) AND (b) the employer's Ontario payroll is at least $2.5 million OR the employer has severed 50 or more employees within a 6-month period due to permanent closure. The calculation is: regular weekly wages multiplied by (completed years of employment + completed months of employment divided by 12 for any incomplete year). Maximum statutory severance is 26 weeks. Severance pay is payable in addition to termination pay; one cannot be used to offset the other. Quebec: A single notice regime applies under Act respecting labour standards s.82. The employer must give written notice before terminating employment or laying off for 6 months or more: less than 1 year of uninterrupted service = 1 week; 1 to under 5 years = 2 weeks; 5 to under 10 years = 4 weeks; 10 years or more = 8 weeks. Employees with less than 3 months of uninterrupted service are not entitled to notice. If notice is not given or is insufficient, the employer must pay an indemnity equal to regular wages (excluding overtime) for the period or remaining period of notice owed (s.82.1). Quebec does not have a separate statutory severance pay concept equivalent to Ontario's ss.64-66; the notice indemnity is the sole statutory floor. Employees with 2 or more years of service have a separate unjust dismissal recourse under s.124 of the Act, which is a reinstatement/damages remedy rather than a severance payment. British Columbia: BC ESA s.63 establishes compensation for length of service: after 3 consecutive months = 1 week; after 12 consecutive months = 2 weeks; after 3 consecutive years = 3 weeks, plus 1 additional week per additional year, to a maximum of 8 weeks (reached at 8 or more years). The amount is calculated on the average of the employee's regular weekly wages over the last 8 weeks. The employer may give written notice, pay compensation, or combine both. BC ESA s.64 requires written notice to affected employees, any applicable union, and the minister when 50 or more employees at a single location are terminated within a 2-month period; group termination notice is in addition to the individual s.63 entitlement. BC does not have a separate statutory severance pay concept; s.63 compensation is the sole statutory floor. Alberta: Employment Standards Code Part 2, Division 8 (ss.54-60): termination notice scale by length of service: 90 days or less = no notice; 91 days to under 2 years = 1 week; 2 to under 4 years = 2 weeks; 4 to under 6 years = 4 weeks; 6 to under 8 years = 5 weeks; 8 to under 10 years = 6 weeks; 10 or more years = 8 weeks. The employer may give working notice, pay termination pay in lieu, or combine both to meet the required period. Group termination of 50 or more employees at a single location in a 4-week period requires written notice to the minister. Alberta has no separate statutory severance pay concept; severance beyond the ESC minimum is contractual or arises under common law reasonable notice principles.

Federal (Income Tax Act and Regulations): A foreign employer with employees working in Canada risks creating a permanent establishment (PE) in Canada, which would subject the foreign employer to Canadian corporate income tax on business income attributable to that PE. The definition of PE for federal income tax purposes derives from Income Tax Regulations s.400(2) (C.R.C., c. 945): a PE is a fixed place of business of the corporation, including an office, a branch, a mine, a factory, a workshop, or a warehouse. A corporation is also deemed to have a PE where it carries on business through an employee or agent established in a location who has general authority to contract on behalf of the corporation or who maintains employer-owned merchandise inventory. Independent agents, brokers, or offices used solely for purchasing merchandise do not create a deemed PE. Obligation absent a PE: regardless of whether a PE is created, a foreign employer whose employees perform duties in Canada is subject to payroll withholding obligations. Income Tax Regulations s.102 requires employers to deduct and remit Canadian income tax on remuneration attributable to duties performed in Canada, even where the employer is non-resident. CPP and EI deductions also apply to employment income earned in Canada. There is no minimum threshold; a single day of Canadian work can trigger the withholding obligation in principle. Treaty relief (Canada-US Tax Convention, Art. V): Under the Canada-United States Tax Convention (as consolidated to 1997), Article V defines PE as a fixed place of business through which the business of a resident of a Contracting State is wholly or partly carried on. PE examples include a place of management, a branch, an office, a factory, and a workshop. Activities excluded from PE include use of facilities solely for storage, display, or delivery of goods; maintenance of a stock of goods for storage or processing; purchasing goods or collecting information; and advertising and preparatory or auxiliary activities. A person habitually exercising authority to conclude contracts on behalf of the enterprise creates a dependent-agent PE. Independent agents acting in the ordinary course of their business do not. Treaty relief under Article XV (employment income) exempts a US-resident employee's Canadian remuneration from Canadian tax if: (a) the remuneration does not exceed C$10,000 in the calendar year, or (b) the employee is present in Canada for fewer than 183 days in any 12-month period and the remuneration is not paid by or on behalf of a Canadian resident employer and is not borne by a PE in Canada. OECD 2025 Update (remote work PE analysis): The OECD November 2025 update to the Model Tax Convention introduces a revised framework for remote work under Article 5. A temporal test applies first: if an employee works from a home office or other non-company location for less than 50% of total working time over any 12-month period, no PE is generally created solely on that basis. If the 50% threshold is met, a commercial reason test applies: whether the employer has a genuine business reason for operating in that jurisdiction. Merely retaining an employee or reducing office costs does not satisfy the commercial reason test. This OECD framework is persuasive for interpreting Canada-treaty PE provisions but does not directly amend the Canada-US Treaty, which requires separate renegotiation. EOR mitigation: when a foreign employer engages workers through a Canadian EOR, the EOR is the registered employer of record, holds the Canadian payroll account, and remits CPP/EI and income tax as a Canadian entity. The foreign employer does not itself become a Canadian employer for payroll tax purposes. Whether the EOR arrangement eliminates PE risk depends on whether the employees, in substance, are exercising contract authority or carrying on the foreign employer's business in Canada in a way that creates a fixed place or dependent-agent PE. A properly structured EOR arrangement where the EOR controls employment terms and the foreign employer gives only operational instructions materially reduces PE exposure, but it does not eliminate the risk where workers are habitually concluding contracts on behalf of the foreign enterprise. Foreign employers with Canadian remote workers should obtain specific tax advice, especially if employees have title or authority to bind the foreign business.