CANADA GUIDE
EMPLOY IN CANADA WITH EASE
- Access and hire global talent & deploy them anywhere in the world
- Remove restriction from only hiring from local markets
- Enter any international market without the requirement of opening a local entity
Global expansion is a step to make for any business, regardless of what you wish to achieve. The opportunities that can come with an expansion can be both incredibly exciting as well as intimidating and confusing, especially when you consider all of the registration procedures that needs to be done and documentation required.
Expanding to countries such as Canada – which is characterized by a highly-talented and diverse workforce, multilayered employment and tax laws, a robust infrastructure network with leading sectors in manufacturing, services, agriculture, natural resources, technology, and mining – can bring both excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigorous legal structures and laws.
Ensuring compliance without the sufficient knowledge of the country’s laws also adds to the stress of getting your new entity off the ground and ready to test new markets. Going at it without the proper support can increase the costs, time and risks involved.
Each new markets bring new challenges, and these can be worked through more efficiently and cost-effectively with the support of an International Professional Employer Organization (PEO) such as Bradford Jacobs, especially through our Employer of Record (EOR) framework. This can be best utilized when businesses are just beginning their expansion process and require more information before committing to incorporating an entity and fully establishing themselves in that market.
An EOR or Employer of Record is a service that provides companies (of any size) that want to expand to Canada with our global entity network, where we become your international employees’ Employer of Record, whilst they are working remotely. This means that we take full responsibility for the employees’:
- Labor contracts
- Compliance with their local laws
- Tax contributions
- Payroll
Whilst all of this is taken care of by us, you will be in control of the employees’ day-to-day tasks and activities. All we do is take full legal responsibility of employing and paying your international employees in Canada, whilst you can choose to place or hire employees anywhere in the world, at any time, without the risk of not meeting the required compliance needs. Our team of HR, payroll, and international legal experts can set up an EOR within days, not months.
You can utilize our existing entities all over the world, saving you time and money from the start, whilst you focus on your global expansion strategy.
This guide will over some key facts about the market and culture of Canada, providing a holistic overview of the country and its economic opportunities, as well as how our team’s expertise and global knowledge can guarantee a successful expansion.
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Canada – The Economy
The economy of Canada is a highly developed market economy. It is the 9th largest GDP by nominal and 15th largest GDP by PPP in the world. As with other developed nations, the country’s economy is dominated by the service industry which employs about three quarters of Canadians. Canada has the third-highest total estimated value of natural resources, valued at Int$ 29.98 trillion in 2019.
It has the world’s third largest proven oil reserves and is the fourth largest exporter of crude oil. It is also the fifth largest exporter of natural gas. Canada is considered an “energy superpower” due to its abundant natural resources and a relatively small population of 38 million inhabitants, in relation to its land area.
Canada is perceived as one of the least corrupt countries in the world and is one of the world’s top ten trading nations, with a highly globalized economy. Canada historically ranks above the United States and most western European nations on The Heritage Foundation’s index of economic freedom, while experiencing a relatively low level of income disparity.
The country’s average household disposable income per capita is “well above” the OECD average. The Toronto Stock Exchange is the eighth-largest stock exchange in the world by market capitalization, listing over 1,500 companies with a combined market capitalization of over US$3 trillion.
In 2021, Canadian trade in goods and services reached CA$2.016 trillion. Canada’s exports totaled over CA$637 billion, while its imported goods were worth over CA$631 billion, of which approximately CA$391 billion originated from the United States, CA$216 billion from non-U.S. sources.
Canada is unusual among developed countries in the importance of the primary sector, with the logging and energy industries being two of Canada’s most important. Canada also has a sizable manufacturing sector, based in Central Canada, with the automobile industry and aircraft industry being especially important. With the world’s longest coastline, Canada has the 8th largest commercial fishing and seafood industry in the world. Canada is also one of the global leaders of the entertainment software industry.
It is a member of the APEC, G7, G20, OECD and WTO, and was formerly a member of NAFTA until the USMCA came into force in 2020. Canada is also part of several major international and intergovernmental institutions or groupings including the United Nations, NATO, the G7, the Group of Ten, the G20, the Organization for Economic Co-operation and Development (OECD), the World Trade Organization (WTO), the Commonwealth of Nations, the Arctic Council, the Organization internationale de la Francophonie, the Asia-Pacific Economic Cooperation forum, and the Organization of American States.
Small and Medium-Sized Companies
SMEs are a driving force in Canada’s economy. A total of 99.8% of all Canadian businesses are small- to medium-sized firms with less than 500 employees. In Canada, small businesses are categorized as firms with less than 100 paid employees and medium-sized businesses are categorized as firms with 100 to 499 paid employees.
As of December 2019, there were 1.23 million employer businesses in Canada. Of these, 1.2 million (97.9 percent) were small businesses, 22,905 (1.9 percent) were medium-sized businesses and 2,978 (0.2 percent) were large businesses.
Small-to medium-sized businesses contribute to approximately 38.4% of Canada’s gross domestic product (GDP).
More than half of Canada’s small employer businesses are concentrated in Ontario and Quebec (440,306 and 249,685, respectively).
| Country | Canada |
| Capital | Ottawa |
| No. of States/Provinces | 10 provinces |
| Principal Cities | Toronto, Montreal, Calgary, Ottawa, Edmonton, Mississauga, Winnipeg, Vancouver, Brampton, Québec |
| Language(s) | English & French |
| Local Currency | Canadian Dollar (CAD) |
| Major Religion | Christianity |
| Date Format | YYYY-MM-DD |
| Time Zone | Depends on location. Time Zones include: Newfoundland Daylight Time (GMT-2:30); Atlantic Daylight Time (GMT-3); Eastern Daylight Time & Atlantic Standard Time (GMT-4); Eastern Standard Time & Central Daylight Time (GMT-5); Central Standard Time & Mountain Daylight Time (GMT-6); Mountain Standard Time & Pacific Daylight Time (GMT-7) |
| Country Dial Code | +1 |
| Population | 38.3 million |
| Border Countries | Land Borders: Alaska (West), United States (South); Maritime Borders: Greenland (an autonomous territory of Denmark), Saint Pierre and Miquelon. |
| Tax Year | January 1 – December 31 |
| VAT % | 5% |
| Minimum Wage | $15.00 an hour (now), $15.50 an hour (Oct. 2022) |
| Taxpayer Identification Numbers | Social Insurance Number (SIN) Business Numbers (BN) Goods and Services Tax Number (Provincial) |
| Leading Sectors | manufacturing, services, agriculture, natural resources, technology, and mining |
| Main imports | Cars, Vehicle Parts, Delivery Trucks, Broadcasting Equipment, and Gold |
| Main exports | Crude Petroleum, Cars, Gold, Vehicle Parts, and Sawn Wood |
| Main trading partners | United States, China, United Kingdom, Japan, Mexico, European Union, and Japan |
| Government Type | Federal Parliamentary Constitutional Monarchy |
| Current Prime Minister/President | Elizabeth II (Monarch), Justin Trudeau (Prime Minister) |
The Main Sectors of the Australian Economy
Canada focuses on the following key sectors, which all have a significant impact on the country’s economy:
- Services – This sector accounts for 75% of Canadian jobs and 78% of the country’s GDP. Canada’s service industry includes the following sectors: transportation, economic, health care, construction, banking, communication, retail, tourism, and government.
As a vital part of the Canadian economy, the most popular sector is retail, with some big franchise names including Walmart and Future Shop.
- Manufacturing – Manufacturing in Canada accounts for approximately $174bn in the GDP, more than 10% of the total GDP of the entire country. Thanks to this, 1.7 million jobs are kept and maintained through many of the main manufacturing industries in Canada.
Manufacturing industries themselves have become more industrialized over the years, with higher technologies and innovations brought to the sector with the help of researchers, programmers, engineers, and tradespeople.
- Agriculture – When it comes to wheat and grains, Canada has it covered. Canada is one of the largest suppliers of agricultural products in the world. Due to its strategic location, Canada exports most of its crops to its big brother of the south, America.
As part of the World Trade Organization (WTO), Canada practices fair trading and ensures that whatever is put on the market agriculturally doesn’t have any influence on the price of crops in other countries.
Canada’s agricultural sector is steadily growing every year and accounts for 8% of the country’s Gross Domestic Product.
- Natural Resources – As the second-largest country in the world, Canada is largely underpopulated and offers a vast source of natural resources. The sector is driven largely by forestry, fishing, agriculture, mining, and energy sectors.
Canada is the world’s 8th largest exporter of agricultural products including grains, oil seeds, and specialty crops. Government spending in support of research and development in this sector has increased in recent years.
The oil and gas markets in Canada are a lucrative business, with the world’s 3rd largest proven crude oil reserves and 18th largest proven natural gas reserves at their disposal. 35% of the world’s oil and gas companies reside in Alberta, Canada.
Forests are a major source of wealth for Canadians, providing a wide range of economic, social, and environmental benefits.
In 2013, production in the forest sector contributed $19.8 billion—or 1.25%—to Canada’s real gross domestic product (GDP). In a global context, Canada has the world’s largest forest product trade balance—C$19.3 billion (2013)—a position it has held for as long as trustworthy trade statistics have been compiled. - ICT and Technology – Canada is home to the world’s largest tech hubs, growing and attracting innovative talent from across the globe. There are over 43,000 tech companies registered in Canada, which contribute around 1.65 million jobs.
The ICT sector contributes substantially to Canada’s GDP. In 2020, the sector’s GDP was $96.8 billion (in 2012 constant dollars), accounting for 5.1% of national GDP, continuing a trend of taking a higher share of national GDP. The ICT sector is also responsible for 27.2% of national GDP growth between 2015 and 2020.
The Toronto-Waterloo Corridor is also the largest tech cluster in North America outside of Silicon Valley. - Mining – The mining industry in Canada has grown exponentially in recent years, with many job opportunities opening up to local and foreign workers. There are currently over 800 mines across Canada, employing more than 363,000 workers. The country ranks as the top producer of potash and uranium, with a ranking in the top 5 for nickel and diamonds.
The mining industry now accounts for 5% of the country’s GDP and relies heavily on the continuous improvement of machinery and practices in the sector. Cutting edge technology is developed on a constant basis, ensuring that Canada is at the forefront of the mining industry on a global scale.
Compliance Highlights
- Canada Revenue Agency – Administers tax laws for the Government of Canada and for most provinces and territories. They also administer various social and economic benefit and incentive programs delivered through the tax system.
- Employment and Social Development Canada (ESDC) – works to improve the standard of living and quality of life for all Canadians. They also have a Labor Program, which is responsible for protecting the rights and well-being of both workers and employers in federally regulated workplaces. We work closely with the following parties to promote fair, safe, and productive workplaces, and collaborative workplace relations:
- provincial and territorial governments
- unions
- employers
- international partners
- other stakeholders
Labor Contracts Law
International companies hiring employees as part of their expansion into Canada must comply with federal regulations, as well as those applying in Canada’s 10 provinces and three territories. Legally, employment contracts can be verbal or in writing, but written versions are advisable in dealing with complex terms covering such as pensions, compensation and benefits, or any confidentiality or intellectual property issues.
Contracts are generally full-time /open-ended, although fixed-term agreements are allowed, but can come with fewer guarantees such as terms of notice.
Canadian employment laws protect all workers, including foreign employees whose terms of employment must comply with what is permitted in their visa or work permit.
Federal, provincial, and territorial rules cover payroll, tax, social insurance, and benefits including minimum wages, working hours, overtime, and maternity leave. Statutory minimums apply in most case, at federal and regional levels.
The contracts
Formal, written contracts are not required under Canadian law but are recommended when the employer/employee relationship involves such as compensation, termination provisions and personal benefits.
Different interpretations can apply between the provinces and territories. In Ontario, for example, the Employment Standards Act sets the minimum regulations in employer/employee relationships. Common law and case history also play a role in the interpretation of employment contracts.
However, ‘employment policies’ play an important role and cover employees in some general areas. Employers are expected to provide their health and safety policy in a written form for their workforce. Some provinces and territories require similar policy documents to be posted in the workplace covering harassment, anti-discrimination, and bullying.
In drawing up employment contracts or agreements for employees in Canada, general points include:
- Legally, employment contracts can be verbal or in writing. Written contracts are advisable where complex terms apply to such as compensation, benefits and pensions and must comply with provincial and territorial laws
- Employees cannot contract out of their minimum entitlements under federal, provincial or territory laws, or under basic requirements of employment regulations
- Contracts can be fixed term or indefinite
- Any restrictions on confidentiality or intellectual property rights must be covered in the contract
- Foreign workers’ contracts must comply with representations made in the work permit application
Payroll – Tax Contributions and Benefits
Income Tax:
Canada’s income tax system is graduated, meaning low-income earners are taxed at a lower percentage than high earners. Canadian residents are taxed on their worldwide income.
Taxpayers pay income tax to the federal government and to the government of the province/territory where they live. In all provinces/territories, except Québec, the federal government collects the provincial/territorial tax and passes it to those authorities to fund various programs. The provinces and territories apply their own tax rates and bands.
In Canada, taxpayers pay income tax to the federal government and to the government of the province/territory where they reside. The government collects both federal and provincial taxes on behalf of the Canada Revenue Agency.
The tax year ends on December 31 and under the self-assessment system returns are due by April 15. In all provinces/territories, except Québec, the federal government collects the provincial/territorial tax and gives it back to them in the form of various programs.
Healthcare and Social Security: Health, education, unemployment, family and child assistance, old age, disability, and survivors’ benefits are all covered by the Canadian social security and social assistance programs. Canada Pension Plan (CPP) and Québec Pension Plan (QPP) are compulsory, earnings-related social insurance programs providing income for retired and disabled workers and their survivors. Their benefit formula also contains significant flat-rate categories for the disabled and survivors under the age of 65.
All Canadian employers and employees must pay into the Employment Insurance (EI) fund, which provides income for workers who lose their jobs, and into the Canada Pension Plan (CPP). Québec has its own pension plan, the QPP.
Employee EI contributions were 1.58%, up to a maximum employee premium of CAD 889.54 (US$706) in 2021 and CAD 952.74 (US$756) in 2022. Employer EI contributions are 2.212% to a maximum of CAD 1,245.36 (US$989) in 2021 and CAD 1,333.84 (US$1,058) in 2022.
The CPP rate is 5.25% for both employers and employees with maximum pension contributions capped at CAD 55,900 (US$44,406). There are also tax brackets and credits applying to Canada’s 10 provinces and three territories complementing federal arrangements.
Sick Leave: Federal Employment Insurance (EI) sickness benefits allow for up to 15 weeks’ allowances at 55% of salary to a maximum of CAD 595 (US$472). Certification is required to prove inability to work due illness, injury, quarantining, or any other designated condition. Arrangements can differ between Canada’s 10 provinces and three territories.
Paid Vacations: Federally regulated employees receive two weeks’ paid vacation for a completed ‘year of employment’, with an increase to three weeks after five years with the same employer and four weeks after 10 years’ employment.
The employee’s qualifying ‘year of employment’ begins on the date they were hired, or a 12-month period decided by the employer within parameters of the Canada Labor Standards Regulations. Arrangements can differ between Canada’s 10 provinces and three territories.
Public Holidays: Not all public holidays are celebrated throughout Canada so employers and employees should check with each province or territory. Most employees who qualify are entitled to take these days off work and be paid public holiday pay.
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