How to Choose an Employee Leasing Company in Canada: Step-by-Step Guide

Staffing is a pressing challenge for any business in Canada. The shortage of local talent, high salary expectations, a complex web of federal and provincial legal provisions, and a lengthy, demanding hiring process turn into staffing complexities.

Such delays in addressing the company’s HR needs may be disastrous for your startup, especially in the fast-moving business landscape. That’s why it makes sense to turn to alternative staffing methods, such as employee leasing solutions. Here is a beginner-friendly introduction to how this employment model works and what benefits you may reap from it.

By definition, employee leasing means the temporary or contract-based assignment of staff members to the client company. While specialists remain employed at the employee leasing company, they are assigned to working tasks of the client firm. In other words, they are "rented" to another company to perform their work for a designated period.

This way, the practice of employee leasing helps your business kill two birds with one stone — grow your staff depending on the contingent staffing needs and business tasks while avoiding the complexities and paperwork of traditional hiring procedures.

The main difference between staff leasing and traditional leasing is the staff’s permanent employment within the leasing provider. When it comes to equipment or rental property leasing, the service user receives the right to long-term rent with subsequent buyout. However, employee leasing firms specialize in renting their human resources for a predetermined period of time and don’t allow client companies to rearrange the employment contract with their staff.


What Are the Advantages of Using a Canadian Employee Leasing Company?

So, if you’re running a business in Canada and want to take advantage of leased staff, it’s time to start looking for an employee leasing agency for a productive partnership. The benefits you’re sure to reap from such an arrangement include:

• Cost savings. Hiring a new full-time staff member is a lengthy and costly process in Canada. You need to finance the recruitment effort, make a lucrative job offer to the new candidate, and provide them with a full package of social benefits in line with your provincial and federal labor laws. A leasing firm assumes all these responsibilities for your leased staff, so you pay only a fixed sum based on your contractual agreement.
• Access to employee benefits. A leasing provider hires its staff full-time and provides the full package of social benefits, paid leave, health insurance, and pension contributions to them. Thus, you can work with the top talent across the globe, knowing that they are satisfied with their employment contracts and fully committed to you as their employer.
• Reduced legal liability. Your leasing partner in Canada assumes full legal responsibility for proper hiring, compensation, and tax reporting for their staff. Thus, you enjoy only a productive work relationship with them instead of handling all the administrative tasks.

As soon as you realize that you need to lease staff, your first instinct may be to Google "employee leasing companies near me." However, the process of leasing partner selection should be much more considerate and careful than that. We recommend focusing on the following criteria when choosing a service provider:

• Legal expertise. The main nuance of compliant, safe staff leasing is in-depth understanding of local labor laws and taxation principles. Thus, it’s vital to choose a legally compliant partner to work with officially employed staff without litigation risks.
• Transparent pricing. A leasing firm should be clear and transparent about its pricing models and approaches to guarantee predictable budgeting for your staffing needs.
• Versatility of talent. You need to double-check whether the leasing firm is able to address all your staffing needs within the set budget. Thus, it’s best to work with companies that have large, international talent databases and can provide leased staff of any tech stack needed.

By using employee leasing services, you can expand your business operations beyond Canada without diving into the expensive and time-consuming process of establishing legal entities abroad. The problem of employee misclassification is a source of risk for any business entity, so your business reputation, legal standing, and financial health depend on the correct organization of employment arrangements.

A leasing partner can thus become your trusted companion in quick, flexible staff upscaling and downscaling depending on the business needs and market opportunities. The international scaling potential of leasing firms comes from the following benefits:

• Access to the global talent pool. You can hire the needed staff internationally without bothering about setting up a legal entity at every new labor market.
• Quick, streamlined hiring. While recruitment in Canada may take months to fill one vacancy, leasing can help you find the needed staff within one week.
• Compliance guarantees. You won’t face misclassification penalties or risks in Canada and abroad because your leasing partner is the official employer of leased staff.
• Staffing flexibility. You can scale the team up and down without costly hiring and termination procedures.

As with other staffing services, leasing may be priced using a fixed fee per employee or using the payroll percentage model. As a rule, the leasing company will set the specific percentage of markup on the leased staff’s gross payroll depending on the number of employees, their payroll size, industry risks, and benefits included in their salary packages (typically from 3% to 10%+). The fixed employee leasing cost per employee usually includes all fees and is more intuitive for clients. Some companies employ hybrid models that cover a base fee and a percentage of the payroll to give clients more flexibility in hiring.