How to Outsource HR Services for Small Business in Canada

A guide on outsourcing HR services for small businesses in Canada, with tips on selecting the right provider and streamlining HR functions

Small businesses find it hard to survive in the first couple of years of their existence because of the high load of operational and administrative tasks on a relatively small core team. Regardless of how small your company is, you need to keep payroll, taxation, and employee management under full control and in line with local laws.

If you find day-to-day HR management operations too burdensome or can't find the right talent in the local labor market in Canada, it’s time to consider outsourced HR services for small business. This article will walk you through the main nuances of delegating your HR management tasks to a third party.

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What Are HR Services for Small Business in Canada?

Businesses of any scale and size have to handle a variety of human resources operations on a daily basis. In most cases, they cover compliance, employee management, and talent retention to ensure that a company operates effectively. The typical spectrum of these operations includes:

Staff recruitment and hiring.
Payroll and compensation management with respect tp local laws and taxation.
Employee onboarding and initial training.
Compliance with human resources policies and employment laws of Canada.
Management of employee relations and workplace culture.
Performance monitoring and management.
Correct and compliant handling of employee termination and offboarding.

The best way to handle the entirety of these operations is either to hire a human resources manager in-house or take advantage of outsourced HR solutions for small companies. While the first option may not be that cost-effective, the second one gives you flexibility and access to HR talent without extensive search for qualified professionals in the labor market of Canada.

Why Should You Outsource HR Operations?

Why outsource HR for small business? There are many benefits, including:

Scalability. You won’t face problems and technical friction by scaling your team up and down, as your hired partner will handle the human resources functions without creating an extra burden on your in-house staff.
Increased efficiency. By working with experienced providers of HR services for small business, you can access many years of expertise and attain better operational efficiency without investing a lump sum of money into finding and hiring an in-house expert.
Better employee experience. A reliable provider can optimize all operations, from timely and accurate payroll to comprehensive staff support and benefits management. These improvements are sure to result in higher staff satisfaction and loyalty.
Access to HR expertise and technology. You don’t need to pay a high premium for an advanced-level expert and expensive software when you outsource human resources services for small business. Specialized firms usually have all that and are ready to offer these benefits within a standard outsourcing package.
Regulatory compliance. Canada is a country with a complex web of federal and provincial rules, which may be hard for a small business to navigate. A qualified HR firm helps you ensure adherence to provincial and federal labor laws, such as minimum wage and working hours provisions, overtime payment, and statutory holidays.
Cost savings. The full spectrum of HR services for small business may be too time-consuming and resource-demanding to handle on your own. By hiring an outsourcing provider, you can cut the costs of in-house staff hiring and costly employee management software subscriptions.

This way, by relying on third-party HR solutions for small businesses, you can enjoy all these advantages and streamline your business operations for better productivity.

How to Choose the Right HR Outsourcing Partner in Canada?

As soon as you decide to delegate human resource management for small business to a third-party provider, you need to choose wisely among numerous options available in Canada. The main excellence criteria include:

Range of provided services. It’s important to stay flexible in terms of service scope when using external help. The wider the service range you can choose from, the more beneficial your partnership will be.
Compliance with Canadian law. Staying compliant across a variety of human resources functions is a must for any small business. Thus, your partner should be able to guarantee 360-degree legality for your business operations.
Pricing policy. It’s easier to work with a company that has a transparent, clear pricing structure. It will make your partnership more predictable, thus allowing you to set a fixed HR outsourcing budget.
HR software and technologies. Partnering with a company using the latest software and tech tools is a sure way to stay ahead of competitors and enjoy a higher level of automation.
Industry experience and track record. Experienced partners are more reliable in terms of error avoidance, timeliness of all filings, and in-depth understanding of compliance nuances.

Besides the factors we’ve discussed above, your human resources partner’s expertise in ensuring compliance should be prioritized as a vital selection factor. Canada is a country with a complex, demanding labor law landscape, where federal and provincial requirements overlap to complicate a small business’s operations. Here are a couple of examples of legal challenges your provider of HR for a small business can help you resolve:

Employment standards in Canada (e.g., provincial Employment Standards Acts (ESA)).
Compliant payroll and tax deductions, including the contributions to the Canada Pension Plan (CPP), employment insurance, and federal/provincial income taxes.
Execution of worker compensation premiums in line with province-specific requirements (e.g., WSIB in Ontario and WorkSafeBC in British Columbia, among others).
Submission of timely filings to the Canada Revenue Agency (CRA).
Workplace health and safety regulations (e.g., WSIB and OHS).
Provision of legally compliant employee contracts and contract termination in line with Canadian laws.
Monitoring of business policy’s compliance with the anti-harassment and discrimination policies (e.g., Canadian Human Rights Acts), remote work regulations, and privacy policies (e.g., PIPEDA).

What HR Tasks Can Be Outsourced?

Unfortunately, you can’t outsource all tasks related to human resources for small business. The ones that are fine for outsourcing are:

Payroll processing
Tax filing and withholdings
Employee benefits administration
Recruitment and hiring
Compliance with employment law
Employee training and development
Background checks and pre-employment screening

However, it makes sense to preserve in-house control over the following core human resources functions:

Employee relations and business culture. It’s better to manage employee morale and engagement at the internal level to guarantee that your staff feels the human touch and a personalized approach to their concerns, problems, and internal conflicts.
Performance review and management. Only in-house managers know their subordinates' weak and strong sides, workplace potential, etc. Thus, performance reviews will be more individualized and objective if performed in-house.
Employee terminations and disciplinary action. Fining and firing staff is a sensitive issue that should be managed personally to avoid litigation or ethical issues.
Routine HR support. Your company’s staff should have a reference point inside the company to turn to with their concerns and questions. This way, the process of delivering employee support will be better aligned with the company’s goals and strategy.

By dividing tasks between in-house staff and outsourcing providers, you will balance operational efficiency and cost reduction with a proper degree of control over sensitive HR aspects, such as the company culture, business strategy, and brand identity.

What Are the Best Practices in HR Outsourcing?

If you strive for excellence in organizing your HR functions, focus on the following small business human resources services and best practices when choosing a partner:

Automation of HR functions. It’s best to work with a company that utilizes a state-of-the-art mix of technologies and software tools to streamline and automate the full spectrum of HR functions.
Utilizing cloud-based HR solutions. Cloud-based software is more flexible, scalable, and cost-effective compared to on-premises solutions. Thus, by relying on cloud technologies, you can make HR operations more agile and manageable.
Keeping pace with trends and compliance norms. HR management in Canada is an ever-evolving framework, which requires your constant alertness to changes and updates.

Elevate the Quality of Your HR Management with GEOR

HR management tasks may turn into a real hassle for a small business in Canada. If you feel that the burden is too hard and demanding for your limited in-house resources, partnering with GEOR can relieve the load of daily HR functions from your core staff. GEOR is a reliable and experienced company with a deep, nuanced knowledge of the labor law landscape in Canada. This way, you will keep your business operations compliant across the full spectrum of your HR obligation

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Alexandra Krasnovskaya

Business development manager

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