Are you looking to hire in Canada? You’re certainly not alone. Canada boasts a highly skilled and educated talent pool filled with fresh perspectives. Canada’s workforce is growing, too, particularly in the tech sector. Canada is home to five of North America's top 20 tech talent cities, including two in the top 10.
When you hire from Canada, you’re expanding your team with highly educated, and skilled professionals. According to the OECD, Canada is actually the most educated country worldwide.
However, as a Japanese company hiring in Canada, there are certain things to be mindful of. Japan and Canada are two very distinct countries with different approaches to hiring and work. So, let’s get into the nuances of expanding your team with Canadian talent.
How to Get Started
Before hiring in Canada, there are three different routes you can take. Make sure to choose the one that best suits your company’s needs.
Engage Independent Contractors
Onboarding independent contractors in Canada is a common practice, but there are important points to consider.
- Independent contractors have flexibility in choosing work hours, taking on other clients (including competitors), and subcontracting.
- This setup might not replicate a traditional employer-employee relationship that comes with permanent roles.
- Misclassifying contractors as full-time employees can lead to higher taxes and legal consequences.
Set Up a Foreign Entity in Canada
Another option is setting up a local subsidiary in Canada to directly hire employees.
- This approach gives Japanese employers control over various aspects like hiring, payroll, and creating a physical presence.
- Establishing a foreign entity requires extensive legal knowledge and strategic planning.
- Professional advice from experts in compliance laws can guide you through this process.
Partner with an Employer of Record (EOR)
Partnering with an EOR service provider, like Borderless, is a cost-effective and compliant option.
- EORs act as legal entities, ensuring adherence to local labor laws.
- They take care of employment contracts, payments, payroll and income tax, employee benefits, contributions (Canadian Pension Plan, employment insurance), and more.
- This approach minimizes tax and labor law compliance concerns, allowing you to focus on growing your business and managing employees effectively.
Know Where to Look for Talent
If you're a Japanese company aiming to hire in Canada, knowing where to look is key. Canada's tech scene has been on the up and up, making it a hot spot for companies looking for talent. Here are some standout tech hubs to consider:
Toronto: Canada's largest city has become a global tech hub with giants like Microsoft and Google. The city's atmosphere also makes it a haven for startups, playing a key role in nurturing exceptional tech talent.
Montreal: Known for AI research and cultural richness, Montreal attracts tech giants like Microsoft and Samsung. Its gaming industry and aerospace tech are also thriving sectors.
Ottawa: Canada's capital is home to a growing tech sector with a focus on cybersecurity, software development, and telecommunications. Its close proximity to government agencies also fosters innovation in government tech solutions.
Kitchener-Waterloo: Surprisingly dynamic, this region hosts accelerators and tech giants like Google. It's an incubator for innovation and startup growth.
Vancouver: With rapid tech job growth, Vancouver excels in gaming and cloud computing. It's a top North American tech hub after Toronto.
These Canadian tech hubs provide great options for Japanese companies hiring in Canada. But remember, these are just a handful of places to hire from in Canada. The country is home to a number of cities and towns ripe with talent.
Things to Keep in Mind
When hiring in Canada, it's important to be aware of key factors that influence the employment landscape and the implications of the Canada Labour Code in each provincial and federal jurisdiction. You want to go into the experience armed with as much information and insight as possible, like the typical notice period in Canada, what an Employer of Record can offer, and more. It’ll help you gauge how much hiring in Canada will cost and ensure you don’t run into any legal hurdles.
Let’s get into it.
Language
English and French are the primary languages in Canada. French is the primary language used in Quebec, while English is primarily spoken elsewhere in the country.
Currency
Transactions and payments are conducted in Canadian dollars (CAD).
Payroll
Wages are typically paid bi-weekly, on the 15th of the month and end of the month.
Minimum Wage
The minimum wage varies by province in Canada and is usually updated to account for inflation and economic conditions. The current federal minimum wage is $16.65 per hour. However, what you pay employees will depend on their roles and responsibilities, which should be stated in their employment contract.
Employer Taxes
Employer taxes are a crucial component of the compensation framework in Canada. For areas outside Quebec, employers are obligated to contribute 8.23% of an employee's salary as taxes.
However, the scenario differs within Quebec due to various factors influencing tax rates.
Employer Costs & Taxes Outside of Quebec
For provinces excluding Quebec, distinct percentages correspond to specific employer tax categories:
- 2.28%: Employment Insurance (EI): Employers contribute to the Employment Insurance fund, ensuring employees have support during unemployment or leave.
- 5.95%: Canada Pension Plan (CPP): This contribution funds the Canada Pension Plan, which provides retirement, survivor, and disability benefits.
Employer Costs & Taxes in Quebec
In Quebec, a unique set of employer taxes is in place, each serving specific purposes:
- 1.27%: Employment Insurance (EI): Similar to other provinces, this contribution supports the Employment Insurance fund.
- 6.40%: Canada Pension Plan (CPP): Within Quebec, this contribution sustains the Canada Pension Plan.
- 0.692%: Quebec Parental Insurance Plan: This plan caters to parental leave benefits within the province.
- 1.25% - 4.26%: Health Services Fund: Contributions to this fund contribute to healthcare initiatives.
- 0.06%: Labour Standards: This contribution aids in enforcing labor standards to safeguard worker rights and well-being.
Gaining a clear understanding of these employer taxes is vital for businesses in Canada. These contributions play a significant role in supporting employees and maintaining a strong workforce.
Employers must factor these costs into their financial planning and employee compensation strategies. By staying informed about tax rate changes and requirements, businesses can ensure they remain compliant and uphold responsible employment practices.
Leave Entitlements
Leave entitlements for employees in Canada can vary based on their location and circumstances. Understanding these entitlements is crucial for Japanese employers looking to operate in Canada. Let's explore some of the key leave categories:
Vacation Leave: Employees in Canada need time to relax and recharge outside of work. The number of vacation days varies based on the region in Canada and how long employees have been with your company. More years usually mean more vacation days.
Sick Leave: When employees aren't feeling well, sick leave lets them take time off and still get paid. Some areas in Canada require a specific number of paid sick days, while others leave it to the company to decide.
Maternity and Parental Leave: If employees in Canada are becoming parents through childbirth or adoption, they are legally allowed to take time off to care for their new family members. The length of leave and pay can differ by province or territory.
Compassionate Care Leave: If a family member of an employee in Canada is seriously ill and may not recover, compassionate care leave allows the employee to take time off to be with them. It's often unpaid but helps protect their job.
Bereavement Leave: When employees in Canada experience the loss of a loved one, bereavement leave gives them time off to grieve. The duration can vary by location.
Public Holidays: Canada observes the following 13 public holidays, the exact count varying by province.
- New Year: January 1
- Good Friday: April 7
- Easter Monday: April 10
- Victoria Day: May 22
- Saint-Jean-Baptiste Day: June 24
- Canada Day: July 1
- Civic Holiday: August 7(excluding Quebec)
- Labour Day: September 4
- National Day for Truth and Reconciliation: September 30
- Thanksgiving Day: October 9
- Remembrance Day: November 11
- Christmas Day: December 25
- Boxing Day: December 26
Family Responsibility Leave: Unexpected situations like family emergencies can arise for employees in Canada. Family responsibility leave permits unpaid time off to manage these situations.
Personal Leave: Everyone needs personal time for appointments or family events, including employees in Canada. Some regions offer personal leave, which can be paid or unpaid.
Jury Duty Leave: If employees in Canada are called for jury duty or other legal obligations, they can usually take time off work without negative consequences. Employers can't penalize them for fulfilling their civic duty.
Remember, rules can differ by location in Canada. To create fair and supportive leave policies for your employees, it's important to check local laws and stay updated on changes in your province or territory.
Overtime
Navigating overtime pay rules in Canada can be tricky for foreign businesses with Canadian employees. While federal overtime rules exist, most employment laws fall under provincial control. This means that understanding overtime payments involves grasping the specific regulations set by the ten provinces and three territories in Canada.
Overtime, in Canada, refers to working beyond standard hours, generally 8 hours a day or 40 hours a week. But remember, the rules can differ by province.
The Canada Labour Code (CLC) applies to federally regulated employees in areas like the federal government, telecommunications, and more. Other employees fall under provincial laws. Some workplaces may follow both federal and provincial rules.
While managers usually don't get overtime under the CLC, definitions can vary per province. Specific jobs like truck drivers might have different overtime rules.
It's important to know overtime rules to fairly compensate employees and stay compliant. Foreign businesses with Canadian employees are required to understand overtime rules in the province or territory where employees work. This will help ensure you meet legal obligations and maintain strong relationships with your Canadian team members.
Termination
Getting a handle on how things work when employees transition in Canada means understanding termination and severance rules, which are different in each province. It’ll help you avoid mistakes and ensure you stay on the right side of the law in Canada.
Processes Across Provinces
In Canada, termination procedures differ among provinces, leading to varying notice periods that range from 2 weeks to 1 month. These notice periods provide employees and employers time to prepare for the transition, ensuring fairness and readiness.
Notice Period
When terminating an employee's employment, the employer must give a minimum of two weeks' written notice to adhere to the Canada Labour Code’s law surrounding the notice period in Canada. Alternatively, the employer can provide the employee with two weeks' wages at the regular rate in lieu of written notice.
Severance Pay
Severance pay, a financial support mechanism during transitions, varies based on jurisdiction and an employee's service length. Businesses need to adhere to these regulations to provide proper compensation.
No At-Will Termination in Canada
Like Japan, Canada doesn’t support at-will employment except during the probation period. Termination requires just cause, such as mutual agreement, misconduct, or contract expiration.
Additional Protections in Quebec
Quebec offers enhanced protections to employees with over two years of service, prioritizing their job security and well-being. Employers need to be aware of these additional safeguards, especially in the province of Quebec.
Understanding termination and severance rules is essential as Japanese companies expand into Canada. Having a handle on notice periods, severance pay, and the fine print surrounding termination ensures you comply with laws and treat your Canadian team members fairly. This aligns with Canada's commitment to strong employment standards and employee rights.
Borderless Benefits Packages in Canada
Borderless understands the importance of staying ahead in the global market. Our benefits packages in Canada are designed to attract and retain top talent. Our comprehensive offerings include medical, dental, and vision insurance, ensuring your employees' well-being.
Our Employer of Record services also offer life insurance and retirement contributions to provide your team with financial security for the future. With Borderless, you provide more than just a job – you offer peace of mind and a thriving work environment.
How Do I Maintain Compliance in Canada?
Maintaining compliance in Canada can be tricky. If you do it on your own, you need a solid understanding of the notice period in Canada, local laws, employment regulations, and more. This includes understanding leave entitlements, benefits, and taxes. Plus, getting employee classification rights is essential to avoid legal troubles.
When you partner with an EOR, Canada is your oyster. An Employer of Record like Borderless, will help you sidestep potential fines and legal penalties. We’ll work with you to ensure you align with local regulations in Canada every step of the way. With our intuitive platform and team of experts, you can focus on making your mark in the Canadian job market while building a global workforce.
We’ll handle the paperwork and fine print involved in onboarding, managing and paying your new Canadian team members. Book a demo today.
Disclaimer: Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
