Canadian Employer of Record Solutions: A Complete Guide to EOR Services

Unlike an actual employer, an employer of record is a nominal company that acts as your staff’s official employer in the target jurisdiction. This service comes in handy when the company wants to employ a new specialist or a team of experts for contractual or full-time work from abroad without undergoing the lengthy and cumbersome process of registering a legal entity in that location.

This way, you don’t need to set up a legal entity in every country from which you hire remote and part-time employees. You can resort to EOR solutions to delegate the payroll, benefits administration, and compliance with taxes, labor laws, and other legal aspects to the EOR provider, while the staff they hire will complete your work tasks.

The EOR company typically covers the following aspects:

• Legal employment of the worker on your behalf.
• The completion of regular payroll, tax payments, and benefits administration in line with the local law.
• Compliance monitoring for your employment contract in line with local regulations.
• HR support for the hired staff in terms of onboarding, contract termination, or contractual terms’ renegotiation.

Employment of record services are suitable for companies that hire globally and don’t want to limit their recruitment efforts to specific locations. This way, one small Canadian company can partner with employees from 10+ countries, and setting up a legal entity in each jurisdiction for the sake of 1-2 employees is an economically unreasonable strategy. Besides, EOR solutions give startups the flexibility of business expansion and growth without the need to spend large sums of money on legal arrangements in the target countries of staff hiring.

As the global workforce becomes increasingly accessible, many companies face challenges hiring staff internationally due to misclassification risks and penalty hazards. The same goes for Canada, a country with a complex and nuanced labor law framework that combines federal and provincial regulations to make hiring and worker classification problematic.

The same complexities are awaiting Canadian businesses wishing to expand internationally in every target country. Whether you’re planning to hire staff in the USA, Latam, or Western Europe, each jurisdiction will pose unique legal challenges in terms of registering that employment arrangement. Not all work contracts can be classified as independent contractor work, so your company may need to register the employee in full line with local labor laws and taxation requirements.

This is where the global employer of record comes in handy. Canadian EOR service providers are well-versed with the local regulatory landscape’s complexities and have a thorough understanding of the international labor laws, thus being able to help you find and hire new talent in any target location without compliance risks.

As a Canadian business using EOR services, you can access a long list of benefits when managing your international team.

Expanding to New Countries without a Legal Entity
Businesses that target international operations can start their sustainable expansion efforts with hiring staff in those locations. It’s much easier to enter the new market smoothly if you already have a comprehensive idea of how things work in that jurisdiction, which is attainable by means of finding staff in that country and working with new employees with a focus on growing the local presence. That’s why Canadian businesses should choose a global employer of record services, thus accessing new markets with a solid legal and regulatory support of experts.

Enjoying Simplified Payroll & Tax Compliance
The provider of EOR services handles all payroll-related tasks, such as salary payments, tax withholdings, pensions, and benefits. These procedures are organized by local accounting staff with proper regard for the local labor laws and regulations. That’s why you can rest assured that your employees are treated fairly and compliantly, with no legal risks or tax penalties for your company.

Risk Management
By partnering with global EOR companies, you avoid all potential worker misclassification risks because you aren’t an official employer of the hired staff. While a regular contract for independent contractor work may sometimes do, many countries classify such arrangements as full-time employment. Canadian companies fall prey to a poor knowledge of local laws. With the assistance of EOR providers, you will never incur fines for misclassification because the EOR staff handles all paperwork and bears legal liability for misclassification in case it really happens.

Fast, Cost-Effective Hiring
International hiring is a complicated, lengthy process in most industries. You will need a separate recruitment team and an extensive HR department to address all business staffing needs on your own. What should startups on a budget do to avoid those expenditures? Employer of record providers can render these services by assuming full responsibility for candidate screening, selection, and interviewing. You only need to confirm the candidates' suitability at the final stages of recruitment, thus getting a qualified new employee on board with minimal input on your part.

Comprehensive Benefits Administration
Employee benefits differ by jurisdiction, and an international business may find it hard to navigate all the local nuances and complexities of benefits administration. In some states, the employer is responsible for health insurance and paid leave for all employees, while in others, only retirement plans and social security contributions are mandatory. Thus, it’s important to partner with an experienced EOR provider to manage all benefits in compliance with local laws and attract the top talent with appealing, comprehensive benefits packages.

Spotting the first-best employer of record services is not the wisest solution for your long-term business goals.

• Compliance measures and legal expertise. The main strength of any employer of record is the company’s expertise in local labor laws and tax regulations. You use this service to ensure legal, compliant hiring, so the provider’s ability to manage employment contracts, terminations, and payroll tax filings is the most important hallmark of competence.
• Global coverage and local support. As you expand to new countries and hire staff in other locations, you don’t want to limit your opportunities with one or two target locations. That’s why it’s worth checking whether your employer of record provides global coverage. The more jurisdictions, the better.
• Payroll and tax management services. The mechanics of payroll processing and salary disbursement are the EOR’s primary responsibilities. Thus, it has to be competent in this area and technically capable of disbursing salaries in the local currency, producing payroll reports, and submitting timely tax filings.
• Employee benefits and HR support. As the employer of record will be your staff’s official employer, they need to be able to provide competent and timely HR support to local staff. Besides, the benefits package coming with the salary offer should be locally competitive and attractive.
• Compliant termination and risk management. Contract termination and severance are as important in labor law as compliant hiring. That’s why your employer of record should be fully versed with the local termination and severance laws, rules, and deadlines. They should handle all risk mitigation routines competently to avoid employee dissatisfaction or litigation on their part.
• Cost structure and transparency. It’s always easier to work with an employer of record with a clear and intuitive cost model. Companies that offer complex, cumbersome cost calculations often include hidden charges in the contract, which is always a negative experience for the partnering business. Thus, we recommend choosing an EOR partner with clear prices, transparent service tiers, and a partner-friendly contract.
• Technologies and software used. EORs typically provide a functional employee management platform to enable your interaction and collaboration with the hired staff. You should double-check whether these technologies and software are GDPR-compliant and can address all remote employee management needs.
• Reputation. Last but not least, the EOR’s reputation and publicity in the market play a vital role in your ultimate experience. That’s why it makes sense to contact the company’s previous or current clients and to ask for first-hand reviews before signing the contract with it.

Use this checklist to screen every employer of record you’re considering for a partnership, and you’re sure to spot the best variant possible.

How much do the services of an employer of record cost? In practice, EOR global providers adopt one of the two options when calculating the cost of their services:

• Flat fees per employee.
• Percentage-based fee calculations.

Each of these models suits specific staffing cases, and you need to clarify your expectations first to find the right EOR partner. For instance, the flat fee suits businesses who want to hire lower-salary staff and strive for a predictable pricing model, while percentage-based fees are more flexible for high-salary staff hiring.

Let’s take a look at our service packages to understand the nuances of employer of record pricing. GEOR has three pricing plans developed in the best interests of our clients:

As you can see, the costs differ depending on the range of services you get for every hired employee.

GEOR can become your dedicated provider of global EOR services and assume responsibility for all operations on organizing your international hiring and HR management. Instead of waiting for months to set up a legal entity in several target jurisdictions, you can concentrate on business tasks and priorities. GEOR’s extensive database of 40,000+ tech specialists in all corners of the world reduces the hiring turnaround to 1−2 weeks, thus meeting the most pressing deadlines and allowing you to reach new business heights without downtime and staffing shortages.