Employer of Record (EOR) in Canada
An EOR in Canada allows businesses to enter the market quickly and help maintain compliance with federal and provincial laws, all while reducing the overhead costs of establishing a local entity. Atlas HXM offers a seamless EOR service that handles all aspects of employment from payroll processing to compliant administration across all Canadian provinces.
Partner with Atlas HXM for a cost-effective, compliant solution to hire and manage your workforce in Canada.
Quick Overview of EOR in Canada
Expanding into Canada doesn't have to mean drowning in paperwork or hefty setup costs. With an Employer of Record (EOR), you can bypass the complexities of federal and provincial regulations and quickly hire employees, all while maintaining compliance with Canada's labour laws.
From payroll processing and tax compliance to benefits management, an EOR takes care of the legal details such as CPP contributions and Employment Insurance, so you can focus on growing your business without the need to set up a costly local entity.
The EOR model offers a low-risk, cost-effective alternative to setting up a subsidiary. Establishing a local entity in Canada can cost anywhere from $5,000 to $12,000 USD (approx. $6,800 to $16,400 CAD) plus the cost of maintaining human resources (HR), legal assistance, accountants and more. It can also become highly administrative.
By partnering with an EOR, you can avoid these setup costs and enter the market faster, avoiding the overhead of a physical office. This is especially beneficial for startups, SMEs, and businesses testing new markets that need to act quickly and comply with complex federal and provincial regulations.
How an EOR Works
Atlas HXM provides EOR services that ensure your business remains compliant with Canada's labour laws while you focus on growing your operations, free from administrative and legal burdens.
Candidate Selection
Atlas HXM does not recruit candidates, but will check the employment setup for compliance around new hires such as validating work eligibility/authorization, reviewing contract terms against Canadian rules, and configuring payroll and statutory obligations correctly. EOR providers in Canada, including Atlas HXM, can assist with work permit applications and Labour Market Impact Assessments (LMIA) when required for foreign nationals.
Employment Contracts
Atlas HXM drafts and administers employment contracts in compliance with Canadian federal and provincial employment standards. In the contract, Atlas HXM clearly outlines employment terms to reduce the risk of future disputes, such as:
Job title and responsibilities
Salary, benefits, and working hours
Leave entitlements and notice periods
Payroll & Benefits Management
Payroll is processed in Canadian dollars (CAD), including:
Accurate tax withholdings, CPP, and EI contributions
Statutory benefits such as Workers' Compensation
The EOR also helps maintain compliance with mandatory benefits, so employees are protected under Canada's laws.
Work Permit Compliance
In Canada, EOR providers can assist with work permit applications, including LMIA processing when required. Atlas HXM manages compliant employment, payroll, CPP, EI, and statutory obligations in alignment with federal and provincial regulations.
Ongoing HR Support
Atlas HXM provides HR support, including: leave management, employee relations and regulatory updates throughout the employee's tenure. This allows businesses to focus on core operations, while Atlas HXM handles ongoing compliance.
What to Choose: EOR vs PEO
Work Life in Canada
Canada's employment framework is designed to balance operational needs with employee protections. Here's what you need to know:
Employment Types:
Permanent: Ongoing employment with full statutory benefits.
Fixed-Term: Hired for a specific project or defined duration.
Temporary: Short-term assignments; entitled to statutory benefits like leave and overtime.
Probation Periods: Probation is not itself a statutory requirement. Most provinces instead set a threshold, typically 3 months (90 days), below which no statutory notice is owed if an employee is terminated, with a small number of jurisdictions extending that no-notice window to 6 months. Beyond that threshold, contractual probation periods are not capped by statute, though excessively long periods can be challenged as unenforceable. These periods allow employers to assess employee suitability before offering permanent employment, and the EOR ensures that all probation terms and notice obligations are compliant with federal and provincial employment standards.
Working Hours & Overtime: In Canada, the standard workweek is 40 hours, with a maximum of 8 hours per day. Employees must receive a break after working a certain number of consecutive hours as per provincial requirements. For eligible employees covered by employment standards, overtime is paid at 1.5x the basic hourly rate after 40-44 hours per week depending on the province, and the EOR ensures that all overtime is calculated correctly and that employee work hours comply with local regulations.
Leave Entitlements
Leave Type | Eligibility / Duration | Payment / Notes |
|---|---|---|
Annual Leave | Starts at 2 weeks (1st year), increases to 3 weeks after 5 years | Paid by employer; 4% vacation pay (2 weeks), 6% after 5 years |
Maternity Leave | Up to 17 weeks federally, 16-19 weeks provincially | EI benefits at 55% of earnings up to $729 CAD/week |
Parental Leave | 35 weeks standard or 61 weeks extended | Shared between parents; EI benefits available |
Sick Leave | Varies by province, ranging from none (Ontario, Alberta) to 5 paid days (BC) | Paid sick leave in some provinces; medical certification required |
Public Holidays | All statutory holidays | Paid; premium pay for working holidays |
Vacation Leave | As per provincial standards | Paid; unused leave typically paid out upon termination |
Payroll & Benefits: Wages are calculated based on skills and provincial minimum wage requirements, with minimum wages ranging from $15.00 to $19.75 CAD per hour. Atlas HXM manages payroll in CAD, CPP/QPP contributions (employer and employee), EI premiums, statutory benefits, bonuses, and private health insurance. Supplemental benefits can include dental, vision, wellness programs, and professional development options.
Atlas HXM can help you manage these aspects and can help ensure that employees are supported and compliant with Canada's labour laws while businesses can focus on operations without administrative burdens.
What to Choose: Indirect vs Direct EOR
Taxes & Compliance
Canada operates on a calendar-year tax system, running from January 1 to December 31. Employers must submit payroll tax remittances by the 15th of the following month for regular remitters, distribute T4 slips to employees by February 28, and file T4 Summary with Canada Revenue Agency by February 28. Corporate tax returns are due within six months of the company's financial year-end.
Category | Details |
|---|---|
Employer Payroll Tax | CPP contributions: 5.95% on earnings between CAD $3,500-68,500 CAD, plus a new CPP2 second tier of 4% on earnings between $74,600 and 85,000 CAD
|
Employee Payroll Tax | Federal: progressive income tax 15%-33%
|
Pension System (CPP/QPP) | Mandatory retirement savings scheme
|
GST/HST & EOR Costs: Canada applies a 5% Goods and Services Tax (GST) federally, with some provinces adding Provincial Sales Tax (PST) or combining into Harmonized Sales Tax (HST) at 13-15%. EOR services are generally subject to GST/HST, either included in quoted fees or added separately. Businesses may claim input tax credits if registered and meeting turnover requirements.
Atlas HXM handles tax compliance, including progressive income tax calculations, CPP/QPP contributions, EI premiums, year-end filings, and expatriate tax coordination, ensuring businesses remain compliant with federal and provincial laws while minimizing administrative burden.
Termination
Employers must provide written notice of termination, with statutory minimum notice periods generally ranging from 1 week to 8 weeks depending on the employee's length of service and the governing province. Most provinces require no notice during the first 3 months of employment, after which notice obligations begin to accrue. Severance pay is separate from notice and varies significantly by province. Ontario, for example, requires statutory severance pay of one week's wages per year of service, up to a maximum of 26 weeks, but only for employers with a payroll exceeding CAD 2.5 million or in mass-termination situations. Other provinces have their own distinct severance rules, so entitlements should be confirmed against the employee's specific jurisdiction. The EOR helps ensure that notice periods, severance entitlements, final wages, and required documentation such as the Record of Employment (ROE) are calculated correctly for the applicable province.
Visas & Work Permits
In Canada, foreign nationals must hold valid work authorization such as an employer-specific work permit or open work permit, depending on their role and eligibility. Most employer-specific work permits require a Labour Market Impact Assessment (LMIA) to demonstrate that hiring a foreign worker will not negatively impact Canadian workers.
EOR providers, including Atlas HXM, can assist with work permit applications, LMIA processing, and ongoing compliance with Immigration, Refugees and Citizenship Canada (IRCC) requirements. Once authorization is in place, Atlas HXM can employ the individual under the EOR model and manage payroll, CPP, EI, benefits, and compliant employment administration.
5 Things to Look for in an EOR Provider in Canada
Local expertise and knowledge of federal and provincial labour laws, CPP/QPP contributions, and Employment Insurance requirements.
Advanced technology for payroll, reporting, and HR system integration across multiple provinces.
Experience in your industry and handling work permit management and LMIA applications.
Strong compliance track record and relationships with government agencies and legal advisors.
Global presence to support multi-country expansion, with verified security and compliance standards (ISO 27001/27017/27018, GDPR).
Atlas HXM provides direct EOR services, managing payroll, compliance and benefits efficiently across all Canadian provinces. Atlas HXM's unified platform automates HR, payroll, and compliance tasks, while offering premium employee support, global benefits, and access to 9,000+ learning courses. Recognized by Everest Group PEAK Matrix 2025 and NelsonHall NEAT Assessment 2026, Atlas HXM combines compliance, technology, and global expertise.
FAQs
How quickly can I hire employees in Canada through an EOR?
With Atlas HXM, you can typically hire Canadian employees within 1-2 weeks once candidates are selected, significantly faster than the 6-12 months required to establish a Canadian entity.
What's the difference between federal and provincial employment law in Canada?
Federal employment law applies to approximately 10% of Canadian workers in federally regulated industries, while provincial law governs the remaining 90%. An EOR ensures compliance with the applicable jurisdiction.
Can I hire employees in multiple Canadian provinces through one EOR?
Yes, a qualified EOR like Atlas HXM can manage employees across all Canadian provinces and territories, handling varying employment standards and tax rates.
What are the CPP contribution rates for employers?
Employer CPP contribution rate is 5.95% on earnings between $3,500 and $68,500 CAD, with a maximum annual contribution of $3,867.50 CAD.
How does an EOR handle employee terminations in Canada?
The EOR manages all aspects of termination including calculating appropriate notice periods, severance pay, final wages, and issuing Records of Employment (ROE) for Employment Insurance purposes.
Can employees work overtime without limits in Canada?
Overtime is regulated with specific payment requirements at 1.5x the basic rate after 40-44 hours per week depending on the province, with maximum weekly hours typically limited to 48 hours.