In this article, we explain what an employment of record (EOR) is, as well as the most common services provided and the key benefits.
Many companies around the world — and especially those based in the U.S. — want to tap into Canada’s highly-educated and relatively cost-effective labour market. And with the rise of remote work over the last few years, this interest and demand has become even more intense.
However, for these companies onboarding Canadian workers is not a simple process. Like Canadian companies, they must adhere to a range of legal and compliance regulations, such as administrating employee benefits packages and remitting mandatory employer-related costs to the CRA (e.g., EI, CPP, income tax, etc.). Errors can lead to time-consuming audits and significant fines.
Fortunately for these companies, there is a proven and practical way to get Canadian employees on their roster, but without facing the added human resource management-related costs, challenges, and risks: take advantage of an EOR in Canada.
What is an EOR?
An EOR is a legal arrangement where a third-party entity hires Canadian employees for an organization based outside Canada. The EOR takes on all responsibility and accountability for meeting legal and compliance obligations, while the organization maintains a regular day-to-day management relationship with the team member.
In the context of an EOR arrangement, we refer to an “organization” rather than an “employer” based outside Canada. This distinction is because the EOR legally employs each team member hired through the arrangement (many organizations outside Canada onboard dozens or even hundreds of Canadian workers through an EOR).
However, as noted, the organization continues to handle and manage the team members. For instance, if a team member hired through an EOR arrangement has questions about their role and responsibilities or needs to discuss an issue with a colleague or customer, they bring these matters directly to the appropriate individual in the organization — just as if the organization had hired them directly.
Regarding HR-related questions, team members can simply email or call a designated specialist at the EOR service provider. Similarly, organizations can contact a specialist if they have questions or issues regarding any aspect of the arrangement.
What Does an EOR Do?
EOR arrangements are customizable to fit the specific needs of each organization. There is no generic, one-size-fits-all service model or offering. However, generally speaking, most EOR arrangements include the following core tasks and responsibilities (some of which we have already referred to above):
Full-Service Employee Management
- Customized employment documentation, including offer letters that match the organization’s corporate strategy.
- HR support and advice regarding full-cycle employment, from onboarding to termination — onboarding can be done is as little as 48 hours.
- Canadian phone number for employees to call with banking or health and safety questions.
Administering Employee Benefits
- Providing team members with access to extensive health benefit packages, including health and dental, group RSP, as well as short and long-term disability coverage.
Payroll Management
- Direct deposit and emailed pay slips to Canadian employees.
- Payment and filing for all applicable payroll taxes.
- Organizations do not need to open a Canadian bank account. Payroll funds can be wired to in CDN or USD.
Ongoing Service and Support
- Organizations get a direct line to dedicated Payroll and HR Specialists who manage the account throughout the relationship.
- Team members get a direct line to dedicated Payroll and HR Specialists to answer their questions and handle their issues — the organization does not have to provide this support, even if it currently does so for local hires in its respective country/state.
- Each Specialist is further supported by a team of seasoned professionals who can handle payroll and HR questions at all levels.
Is an EOR Right for Your Strategy?
For many companies based outside of Canada, an EOR arrangement is a smart, strategic, and highly successful way to tap into Canada’s coveted labour market, but without facing the legal complications, regulatory obligations, and ongoing administrative burden of hiring employees directly (which, among other requirements, involves setting up a legal entity in Canada which can take 6+ months and significant fees).
If you think that an EOR might be the right strategy for your company, then simply complete the brief form below and click submit. An EOR Specialist will promptly reach out, answer all of your questions, and provide additional. Your consultation is completely free and will give you the solid foundation you need to determine the best direction for your company.
Sources:
Quickbooks – How to Prepare for Payroll Tax Audits