Make sure you’re a match before committing to an EOR.

You’re on a mission to hire the best talent for your business – great! But if you’re hiring internationally, it’s important that you bring an EOR (Employer of Record) into the fold as well.

A Canadian employer of record not only handles HR-related tasks, like payroll and benefits administration, but they’re the government-recognized legal employer, and will assume all the legal responsibilities and mitigate the financial risks (think compliance) that can come with hiring cross-border.

So, when you’re looking to engage with an EOR, it’s important you do a little digging and ask the following six questions to determine whether they’re the right fit for your business.

Six questions to ask an EOR:

1 As an EOR, what specific services do you provide?

Why it’s important: While there is some overlap between the services offered by EORs and PEOs (Professional Employment Organizations), there are several major differences regarding where responsibilities begin and end.

An EOR functions as the legal employer of your Canadian employees, handling everything from payroll to employment contracts and compliance.

On the other hand, a PEO in Canada functions as a partner or co-employer that primarily handles payroll, plus other general HR and benefits administration.

Need a little more info? Read our in-depth comparison of EORs and PEOs now!

2 Do you have expertise in HR policy and employment in the province where my employee resides?

Why it’s important: Employment law and HR policies can vary greatly from one province to the next – especially if we look at employees living in Quebec (Montreal) versus Ontario, for example.

“One size” HR policies and employment contracts definitely don’t fit all.

It’s critical that your EOR has HR policies and employment contracts specifically tailored to each Canadian province where employees live due to the differing legal requirements. Getting into this level of detail is crucial for protecting both you, as the employer and your Canadian hires, while ensuring you stay compliant with all provincial laws.

Let’s look at employee vacation, for example.

Every province has employment legislation governing vacation pay, as well as the minimum amount of vacation time that an employee is entitled to.

Most provinces mandate a minimum of two-weeks’ vacation per year for new employees, but Saskatchewan requires each employee to have a minimum of three weeks per year.

It’s a small difference, yes, but an important one!

3 Do you have employment law or HR policy experts on-hand to advise on major employment events?

Why it’s important: Challenging HR situations/events happen in every company.

Hiring a Canadian can sometimes add another layer of complexity. That’s why your EOR needs to have access to experts that are intimately familiar with provincial (and federal) employment laws to handle a whole range of HR events (including hiring, termination, protected leaves and vacation accruals) and mitigate legal and financial risks that come with those events.

For example, terminating an employee in Montreal, Quebec will have different laws and requirements for notice or pay outs than if they live in Ontario or Alberta. You need provincial experts who can help you smoothly navigate these issues and mitigate risks.

4 Do you have certified payroll compliance professionals (PCPs) on staff?

Why it’s important: Payroll compliance professionals are truly a breed apart. Why? They’re highly knowledgeable about federal and all the provincial requirements for payroll taxes, deductions – i.e., for employees in Quebec vs. Alberta or Ontario vs. British Columbia.

With payroll compliance professionals, you have peace of mind that payroll will always be accurate, and your business will avoid costly surprises at tax time.

5 Can you provide Canadian salary benchmarking or advice on benefits, retirement savings plan expectations to help put together a competitive offer?

Why it’s important: The US and Canada are similar…but different – particularly when it comes to employee expectations around salary and benefits.

Where you might be accustomed to offering health insurance in the US, Canada has a free, public healthcare system. That said, Canadian employees will expect to receive good extended benefits for all the things public healthcare doesn’t cover, such as dentistry, massages, glasses - and more.

Having an EOR that can provide deep insight and expertise into the Canadian market will help you match what other talent is expecting so that you can attract – and land – higher quality candidates.

6 How does your fee structure work?

Why it’s important: An EOR typically charges a percentage of salary, invoiced with each pay cycle. They usually require payment in full from the client company before they will process payment to the employee.

Smaller EORs may have an alternate minimum flat charge, if the employee’s salary is below a threshold (say CDN$70,000 per year), paid monthly or each pay cycle.

Another thing to note is that EORs will often require a deposit or lump sum payment. In the event you run into legal issues (i.e., an employment/compensation dispute), or your company is unable to pay the employee’s salary for whatever reason, the deposit can be used on a contingency basis to cover part or all of those costs.

If the deposit isn’t needed by the end of the employment relationship, it will be returned.

A good EOR should be able to provide you with a full, transparent breakdown of their fee structure, what you can expect to pay per employee and what other fees required (i.e., the deposit.)

Bridgewater TI: Brings us all your burning EOR-related questions

Now that you know the six most important questions to ask your potential EOR partner, get some practice by talking to us about your Canadian EOR (or PEO) needs.

Get in touch today!