- Overview: Canada
- Global PEO and Payroll
- Global HR Compliance
- Work Permit for Hiring Expats via Global EOR
- Expand without a company set up
- Contractor vs. employee: which is better?
Are you looking to engage and pay Independent Contractors in Canada?
Find out how you can decide whether you should engage and pay employees or independent contractors using our free ‘Employee vs. Independent Contractor’ Checklist.
Designed to be used by companies engaging the remote workforce in Canada, the checklist is the best way to define why and in what cases companies should onboard new hires or convert existing contractors/freelancers into employees without missing any crucial aspects.
From Independent Contractors to Full-Time Employees: the Benefits of a Global EOR Service Provider
Expanding a business overseas can be an exciting endeavor but comes with many challenges. As companies expand their global footprint, one of the challenges they face is determining the best way to hire talent overseas. While independent contractors may seem like an attractive option, they can pose significant risks for employers, including employee misclassification, tax compliance issues, and intellectual property rights disputes.
More companies increasingly turn to Global Employer of Record (EOR) solutions to mitigate these risks and improve employee retention. These services help companies hire and pay employees in compliance with local labor laws without establishing a legal entity in the country.
By using a Global EOR, companies can ensure that their workers are properly classified and compliant with local labor laws and their intellectual property rights are protected. In addition, hiring and paying employees via a global EOR is about 30% cheaper than engaging in-house, allowing companies to focus on their core business operations while the Global EOR takes care of administrative tasks. Overall, using a Global EOR is an effective way for companies to expand their global presence while mitigating risks and improving employee retention.
Employee Misclassification Risk Prevention with a Global Employer of Record in Canada
Employee misclassification is a significant risk that global employers face when hiring workers overseas. Misclassification occurs when a worker is classified as an independent contractor when they should be classified as an employee. This can lead to legal and financial consequences, including fines, penalties, and legal action.
A Global EOR acts as an intermediary between the client company and its employees. The EOR will handle payroll, benefits, taxes, and compliance with local labor laws. It allows you to focus on your core business operations while the EOR takes care of this administrative burden for you—and that's important because it keeps you out of costly legal battles resulting from employee misclassification by ensuring that your workers are properly classified and compliant with local labor laws.
Permanent Establishment (PE) Risk Prevention in Canada
When expanding overseas, global employers must also consider the risk of creating a Permanent Establishment (PE) in the foreign country. A PE is a fixed place of business that is deemed to have a taxable presence in a foreign country. Creating a PE can result in additional tax liabilities and compliance obligations.
Using a Global EOR can help prevent Permanent Establishment risk by ensuring that the company is not creating a taxable presence in a foreign country. The Global EOR acts as the employer of record, handling all payroll and benefits administration. This allows the company to focus on its core business operations and avoid creating a PE in a foreign country.
Intellectual Property Rights (IPR) Protection in Canada
When expanding overseas, global employers must also consider the protection of their Intellectual Property Rights (IPR). IPR protection varies by country, and failure to protect IPR can lead to lost revenue and damaged reputation.
Using a Global EOR can help protect IPR by ensuring that all employment contracts contain confidentiality and non-compete clauses. Additionally, the Global EOR can handle all legal and compliance requirements for IPR protection in a foreign country.
The Case of an IT Freelancer You Most Certainly Want To Avoid in Canada
Let's consider the case of an American company that worked with a Slovakian IT freelancer for approximately three years. The American HR director contacted Acumen International to employ the freelancer so that they would be in compliance with labor laws and avoid future misclassification issues.
However, the finance department of this US company did not approve of the offer made by Acumen International, as it seemed higher than what they were currently paying the freelancer. At that time, an employee misclassification case did not seem imminent, so they decided not to act.
Half a year later, the same company contacted Acumen International to employ the Slovakian freelancer. Although the offer was approved, the freelancer refused to sign the employment agreement. During that time, the relationship between the freelancer and the US company went sour, and the freelancer decided to go to the labor authorities instead.
The ultimate verdict was never communicated to Acumen International. Still, according to the HR director, the US company risked owing social security taxes, vacation, severance payment, and additional fines totaling about seventy thousand euros. This is a case that any employer running international operations would want to avoid.
The Sources of Employment Law in Canada
Employment contracts generally guide work-related relationships in the Canadian legislation system. In Quebec, it is also the Civil Code. In Canda, employment and labor cases are resolved mostly jurisdictionally, province to province, with a federal predominance in several industries (transport, banking, trade, telecommunications, and indigenous Territories.
What Our Clients Are Saying?
I’d like to share my experience dealing with Acumen International company.
Speed & responsiveness: Very prompt in response from my first enquiry about converting contractors into employees to follow up questions.
Completeness of information: I like how detailed the estimates and the transparency makes us feel more confident in knowing where the money goes to.
Overall experience: I am pleased and impressed with how fast they respond to my enquiries. We can trust the company to employ the contractors we want to keep.
Quah Shen Dee, People Success Officer
I always found Acumen International very supportive, professional and helpful. They pay salary on time and are always ready to sort out any issues that arise.
I must admit I truly enjoy my time as an Acumen International employee and feel like they care about me as an individual. I have my own dedicated manager that provides me with detailed explanations when it’s needed. Payments are always prompt and the entire team does its best to respond to any of my questions.
I highly recommend Acumen International to anyone that requires their services.
Andrew Yanchurevich, COO
5 Benefits of Hiring and Payrolling Foreign Employees vs Independent Contractors in Canada via a Global Employer of Record
1. Save Time and Effort
Engaging and paying foreign talent via a global EOR solution is about 30% cheaper than engaging in-house. This is because global EOR providers have established relationships with local vendors, allowing them to offer cost-effective solutions for payroll, benefits administration, and other HR services.
2. Reduce Cost
Saves around 50% of costs compared to working and paying through your legal entity. Establishing a legal entity in a foreign country can be a time-consuming and expensive process. Companies can avoid these costs by using a global EOR provider and focusing on their core business operations.
3. Increase Employee Retention
With the help of a Global EOR, employee loyalty grows by 47%, which is why you can retain the top minds long-term. By providing employees with a secure and stable work environment, companies can foster loyalty and build long-term relationships with their staff.
4. Achieve HR and Txx Compliance
Official foreign employment eliminates 95% of legal, financial, and business risks. Global EOR providers handle all legal and tax compliance issues, reducing the risk of employee misclassification and other legal disputes.
5. Flexibility and Immediate Start of Operations
Using the Global EOR solution, you can get flexibility and take up more projects of different duration. You can start a bare-bones operation in Canada with just one or a couple of employees and easily add any headcount as you move along. This flexibility is especially valuable for companies that need to quickly scale up or down their operations in response to changing market conditions.
Download your free copy of the ‘Employee vs Independent Contractor’ Checklist