How to Hire Employees in Canada: Costs, Provincial Rules and EOR Options
What a hire in Canada costs in 2026 under CPP, CPP2 and EI, which rules each province sets, why common law notice decides dismissal costs, and how an employer of record compares with a subsidiary or a contractor.
By Fourteen rulebooks, one payroll, and a notice bill set by judges
Canada has no national employment code for most jobs. Each of the ten provinces and three territories writes its own employment standards, and only federally regulated sectors such as banking, telecoms and interprovincial transport fall under the Canada Labour Code. A foreign company can run payroll as a non-resident employer, open a subsidiary, or use an employer of record. For one to ten hires spread across provinces, an EOR is usually the right route, because it carries the provincial registrations and drafts termination clauses that hold up in court.
Statutory payroll cost is low by international standards: employer CPP at 5.95% up to $74,600, CPP2 at 4% between $74,600 and $85,000, and EI at 2.282% up to $68,900, all in 2026. Provincial payroll taxes such as Ontario’s Employer Health Tax only bite above a $1 million exemption. The larger, less visible cost is dismissal: without an enforceable termination clause, courts award reasonable notice that can run to many months, and that liability does not show on any payslip. See the EOR vs entity setup data for the subsidiary comparison.
Employment terms and working conditions
Most rules below come from Ontario’s Employment Standards Act, 2000 (ESA), the province our cost cards use; a hire in British Columbia, Alberta or Quebec follows that province’s statute, and a bank or telecoms employer follows the Canada Labour Code.
Cost of employing someone in Canada
Every federal contribution has an annual ceiling, so employer cost peaks as a share of pay around $55,000 a year and then falls fast: a $216,000 salary costs under 3% on top.
At $54,000 a year the employee sits below both the EI ceiling and the CPP ceiling, so every dollar attracts both contributions. CPP is charged after a $3,500 annual basic exemption. CPP2 does not start until $74,600.
At $78,000 a year two ceilings are passed: EI stops at $68,900 and base CPP at $74,600. The $3,400 above the CPP ceiling falls into CPP2 at 4%, worth $136 for the year. In practice EI maxes out by about October.
All three contributions are capped, so the employer pays a fixed $6,219 for the year whatever the salary above $85,000. Because payroll runs per pay period, the cost lands early in the year: a $216,000 earner hits every ceiling by May.
Ontario employee, 2026 rates, monthly figures are annual amounts divided by 12. CPP: employer 5.95% of earnings between the $3,500 basic exemption and the $74,600 Year’s Maximum Pensionable Earnings, maximum $4,230.45 (Canada Pension Plan; CRA 2026 figures). CPP2: employer 4% of earnings between $74,600 and the $85,000 Year’s Additional Maximum, maximum $416. EI: employer pays 1.4 times the employee rate of 1.63%, so 2.282% on insurable earnings up to $68,900, maximum $1,572.30 (Canada Employment Insurance Commission, 12 September 2025). From 1 January 2027 EI is 2.296% up to $70,800 (CEIC, 14 September 2026). Ontario Employer Health Tax: rates run from 0.98% to 1.95%, but eligible employers with Ontario payroll under $5 million owe nothing on the first $1 million, so a first hire falls below it (Employer Health Tax Act; ontario.ca). WSIB is left out of the totals because the rate depends on the industry class, and a few industries such as banks and insurers can opt out; when we checked the 2026 WSIB rate table in October 2026, class L (professional, scientific and technical) was $0.18 per $100 of payroll up to $121,700, about $12 a month on the Mid-level salary. Quebec differs: QPP at 6.30% instead of CPP, QPP2 at 4%, a reduced EI employer rate of 1.82%, QPIP at 0.602% up to $103,000, and Health Services Fund and CNESST contributions, so a Quebec hire costs more. Compare payroll taxes elsewhere with our employer payroll tax rates by country.
Price your hire, line by line
Pick a country and a salary. Every statutory contribution, ceiling and accrual is applied separately, so the total is close to what a provider will actually invoice.Compare other countries
Costs most calculators leave out
Private health cover, equipment stipend, meal or transport allowance.
Typically $0 to $2,000 depending on provider and country.
Refundable, but it ties up cash. Most providers hold one to two months.
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Total employer cost, per employee per month
Monthly breakdown
Upfront and one-time costs
EOR or your own entity
Statutory rates current as of . Exchange rates indicative as of . Contribution ceilings, regional variation, employee age and collective agreements all shift the real figure. Use this to build a budget, then validate against a written quote.
Four ways to hire in Canada
Canada lets a foreign company run payroll without a subsidiary, so the real choice is who carries the CRA account, the provincial registrations and the dismissal risk.
Misclassification risk. The CRA and the courts apply the Supreme Court’s test from 671122 Ontario Ltd. v. Sagaz Industries (2001 SCC 59): whose business is it, who controls the work, who owns the tools and who carries the risk of loss. If the CRA rules the contractor an employee, the payer owes both halves of CPP and EI with penalties and interest, and the worker can claim ESA vacation pay, overtime and common law notice. Read how to convert a contractor to an employee through an EOR.
Statutory leave and benefits
Canadian leave is long but mostly unpaid by the employer: Ontario gives 17 weeks of pregnancy leave and up to 63 weeks of parental leave, and the federal EI fund pays the benefit, so the employer’s cost is the job held open, not the salary.
Ontario Employment Standards Act, 2000: vacation s.33 to s.36, public holidays Part X, sick leave and family responsibility leave Part XIV, long-term illness leave in force 19 June 2025, pregnancy leave s.46, parental leave s.48. Sick note ban in force 28 October 2024. EI benefits under the Employment Insurance Act; 2026 maximum weekly benefit $729 (ESDC). Federal sector: Canada Labour Code Part III, including 10 days of paid medical leave and pregnancy loss leave from 12 December 2025. Quebec: Act respecting labour standards, with QPIP paying parental benefits instead of EI. A competitive Canadian offer usually includes an extended health and dental plan, which is a contractual cost, not a statutory one.
Termination and offboarding
Canada is not at-will, and the deciding factor is the contract: a valid written termination clause limits the bill to ESA weeks, while a missing or defective one exposes the employer to common law reasonable notice measured in months.
Ontario ESA s.54 and s.57 (notice table), s.64 and s.65 (severance), with mass termination notice of 8, 12 or 16 weeks when 50, 200 or 500 employees are dismissed within four weeks. Termination and severance pay are due 7 days after employment ends or on the next regular pay day, whichever is later, and benefit contributions continue through the notice period. Common law: Bardal v. Globe and Mail (1960) factors are age, length of service, character of the job and availability of similar work; Waksdale v. Swegon North America (2020 ONCA 391) voids every termination term if one breaches the ESA; Baker v. Van Dolder’s Home Team (2026 ONCA 568) says the contract is read as a whole. Federal sector: Canada Labour Code s.230 gives 2 to 8 weeks of notice since 1 February 2024, s.235 severance of 2 days per year of service with a minimum of 5 days after 12 months, and s.240 lets non-managers with 12 months of service file an unjust dismissal complaint. Quebec: Act respecting labour standards s.82 gives 1 to 8 weeks, s.124 protects employees with 2 years of service from dismissal without good and sufficient cause, and Civil Code art. 2091 adds reasonable notice. Fixed-term contracts without an early termination clause can cost the full balance of the term. The Record of Employment must be filed with Service Canada after the last pay. Our page on misclassification penalties by country covers what goes wrong when a contractor is let go.
Work permits and foreign hires
Anyone who is not a citizen or permanent resident needs a work permit, and since 18 September 2026 ESDC checks who actually directs and pays the worker, so an EOR filing an LMIA for a client’s employee now faces close scrutiny; read our guide on whether an EOR can sponsor a work visa.
From decision to first payroll in 3 weeks
Through an EOR a Canadian hire who already has work authorization can be paid in about three weeks; a new LMIA adds two weeks under the Global Talent Stream or several months under the high-wage stream.
Fix the province
Confirm where the employee will live and work. The province decides the ESA that applies, the minimum wage, payroll tax and workers’ compensation, and Quebec adds QPP, QPIP and a French contract.
Check work authorization
Collect proof of citizenship, permanent residence or a valid permit. The employee must give a Social Insurance Number within 3 days of starting; a SIN starting with 9 signals a temporary permit with an expiry date.
Sign the contract
Sign before day one, with a termination clause that preserves ESA minimums and a probation clause in writing. Ontario employers with 25 or more staff also hand over the written pay and hours information.
Set up payroll
The EOR adds the hire to its CRA payroll account and collects the federal and provincial TD1 forms, banking details and benefit enrolment. Give the ESA poster within 30 days.
Run first payroll
Pay on the agreed pay day with a wage statement. Income tax, CPP, CPP2 and EI withheld are remitted to the CRA by the 15th of the following month for a regular remitter.
Best EOR providers in Canada
Four providers we have reviewed that employ in Canada. Full scoring and the ranked list sit on the Canada EOR page.
Formerly Velocity Global, with the lowest published starting price of the four. Exact Canadian pricing needs a quote, so confirm whether the Quebec contribution load is included.
Self-serve onboarding with contracts generated in-platform and an in-house immigration team. Its $599 list price is the second highest of the four, after Papaya Global, and Deel quotes two different country counts on its pricing page.
Published per-employee pricing with a discount for annual terms: $459 a month on an annual contract, $499 month to month. Check how it handles provincial differences outside Ontario.
Payroll-first platform that suits a company already running Canadian payroll and adding EOR hires beside it. Papaya does not publish which countries run on its own entities, so ask who employs in Canada.
Some links are referral links. We may earn a fee if you sign up, at no cost to you. It never changes our rankings.
All guides for hiring in Canada
Hiring guides for other countries
Compare employer costs, dismissal rules and EOR options in 14 more countries. Each guide is checked against official sources.
FranceHiring guide, 41.5% employer cost
GermanyHiring guide, 22.5% employer cost
NetherlandsHiring guide, 27.4% employer cost
SpainHiring guide, 54.2% employer cost
United KingdomHiring guide, 15.9% employer cost
AustraliaHiring guide, 20.3% employer cost
IndiaHiring guide, 5.7% employer cost
PhilippinesHiring guide, 17.1% employer cost
SingaporeHiring guide, 17.2% employer cost
TaiwanHiring guide, 17.1% employer cost
Questions employers ask about hiring in Canada
These are the points where US habits, old contribution figures or 2024-era advice on termination clauses lead foreign employers wrong.
Is employment in Canada at-will?
No. Outside a just-cause dismissal for wilful misconduct, every province requires notice or pay in lieu, from 1 week after 3 months of service up to 8 weeks under Ontario’s ESA. On top of that, an employee whose contract has no valid termination clause is entitled to common law reasonable notice, which courts set using age, service, seniority and the job market and which can reach about 24 months. A US-style offer letter with no termination clause is the most expensive mistake a foreign employer makes in Canada.
Does a probation period let me dismiss without notice?
Only for the first 3 months, and only under the ESA. There is no statutory probation in Ontario: the ESA simply owes no notice before 3 months of service. Common law is separate. If the contract does not clearly say the employee can be let go during probation with ESA minimums only, a court can award reasonable notice even to someone dismissed in week six. Write the probation term and the termination clause into the contract and get it signed before the first day.
What does an employee cost on top of salary in 2026?
In Ontario, 7.8% on a $4,500 monthly salary, 7.6% on $6,500 and 2.9% on $18,000. The only federal employer contributions are CPP at 5.95% up to $74,600, CPP2 at 4% up to $85,000, and EI at 2.282% up to $68,900, so the most an employer pays per employee in 2026 is $6,219 a year. Many guides still quote the 2025 ceilings of $71,300 and $65,700 or leave CPP2 out. Workers’ compensation and an extended health plan come on top. Model a role with the EOR cost calculator.
Do I owe Ontario Employer Health Tax on my first hire?
Almost certainly not. EHT applies at rates from 0.98% to 1.95% of Ontario payroll, but an eligible private employer whose group payroll is under $5 million pays nothing on the first $1 million. When we checked the Ministry of Finance schedule in October 2026, the exemption was still $1 million, with the next inflation adjustment set for 1 January 2029. Associated companies must share one exemption, and a group that fails to file the allocation form loses it entirely.
Is WSIB coverage compulsory for an Ontario office worker?
Usually yes. Coverage depends on the business activity, not the job, and the WSIB says most Ontario businesses with employees must register. A short list of industries can opt in instead, including banks, trust and insurance companies, travel agencies and private day cares. Where coverage is compulsory, registration is due within 10 calendar days of hiring the first employee. Rates are low for office work: class L (professional, scientific and technical) is $0.18 per $100 of payroll in 2026, and the average across all classes is $1.23. Other provinces run their own boards, such as WorkSafeBC.
Can an employer of record sponsor a work permit in Canada?
Harder than before. Since 18 September 2026, ESDC defines the employer as the entity that hires the worker, sets their working conditions and pays them directly, and Service Canada looks at who decides where, when and how the work is done, and it states that staffing agencies are not employers under the Temporary Foreign Worker Program. An EOR filing for a client’s employee should expect that test. Candidates who already hold an open work permit, or who qualify as CUSMA professionals or intra-company transferees, avoid the LMIA. See our EOR visas and work permits guide.
How is hiring in Quebec different?
It costs more and runs on different plans. Quebec employees pay into QPP at 6.30% instead of CPP, Quebec employers pay a reduced EI rate of 1.82% but add QPIP at 0.602% on up to $103,000, plus the Health Services Fund and CNESST. The minimum wage is $16.60 from 1 May 2026, and a standard-form contract must be offered in French first. After 2 years of service an employee can challenge a dismissal without good and sufficient cause before the labour tribunal.
What changes on 1 January 2027?
EI rises to $2.30 per $100 for employers outside Quebec, on maximum insurable earnings of $70,800, so the maximum employer premium goes from $1,572.30 to $1,625.57. The Canada Employment Insurance Commission confirmed this on 14 September 2026. The CRA normally publishes the 2027 CPP and CPP2 ceilings in November, and they were not out when we checked in October 2026. Ontario’s next minimum wage change will be 1 October 2027, indexed to inflation.
Ready to hire in Canada?
Compare the providers that employ in Canada on pricing, entity ownership and onboarding speed.