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Payroll Service for Employees in Canada
We manage Canadian payroll for international companies, even without their own local entity in Canada.
Hire employees in Canada without your own local entity and manage Canadian payroll?
Would you like to employ staff in Canada without setting up your own Canadian company? International Payroll Services supports you with payroll, international HR administration and the employment of staff in Canada.
Whether you send employees to Canada for business purposes or plan to hire staff locally on a long term basis, Canadian tax, payroll, social security and employment law requirements must be taken into account.
Two models are particularly relevant for employing staff in Canada without your own company:
1. Employer of Record in Canada
Your employee is employed through a suitable employer structure in Canada while working operationally for your company.
✓ Fast start in Canada
✓ No Canadian company required
✓ Payroll and administration outsourced
✓ Support with local compliance requirements
2. Direct Employment in Canada
Your company remains the employer and fulfills the required Canadian payroll, tax and social security obligations.
✓ Direct employment within your own company
✓ Canadian payroll through IPS
✓ Support with registration and administration
IPS is your global payroll solution for successful and efficient
cross border payroll without your own local entity.
Employing and Paying Employees in Canada: Information About Payroll in Canada
Canadian payroll differs from many European payroll systems, particularly because the relevant province or territory plays an important role in addition to federal requirements.
Most employment relationships in Canada are subject to the Employment Standards of the relevant province or territory. Only certain industries such as banking, telecommunications, aviation or interprovincial transportation are governed by the Canada Labour Code.
For this reason, when employing staff in Canada, both Canadian payroll requirements and the employee’s actual place of work and province must be considered.
For federally regulated employees, the statutory minimum wage has been C$ 18.15 per hour since April 1, 2026. If the minimum wage in the relevant province or territory is higher, the higher rate applies.
Payroll Costs and Payroll in Canada
Employer payroll costs in Canada cannot be expressed as a single nationwide percentage. In addition to federal contributions, further payroll taxes, health taxes and Workers’ Compensation contributions may apply depending on the province.
Canada Pension Plan (CPP) 2026
Outside Quebec, employers and employees generally each contribute 5.95% in 2026 on pensionable earnings between the annual basic exemption of C$ 3,500 and the Year’s Maximum Pensionable Earnings of C$ 74,600.
The maximum regular CPP contribution in 2026 is C$ 4,230.45 for both employers and employees.
For income between C$ 74,600 and the second threshold of C$ 85,000, CPP2 also applies at 4%. The maximum additional contribution is C$ 416 each.
Employment Insurance (EI) 2026
Outside Quebec, the employee contribution to Employment Insurance in 2026 is 1.63% on annual insurable earnings up to C$ 68,900.
The employer generally pays 1.4 times the employee contribution, equivalent to 2.28%. The maximum employer contribution in 2026 is C$ 1,572.30 per employee.
Special Requirements in Quebec
Quebec has its own systems with the Quebec Pension Plan (QPP) and the Quebec Parental Insurance Plan (QPIP). The regular QPP rate in 2026 is 6.30% for both employers and employees. An additional contribution also applies to higher income levels.
The EI rate in Quebec is reduced in 2026 due to the province’s own parental insurance system. Employees pay 1.30% and employers generally pay 1.82%. In addition, QPIP contributions of 0.430% for employees and 0.602% for employers apply.
Depending on the province, additional employer charges such as Employer Health Tax, Health Services Fund or Workers’ Compensation contributions may also apply.
Sick Leave
There is also no single sick leave rule that applies to all employees in Canada. Entitlement, duration and payment of sick leave depend in particular on the applicable province or the Canada Labour Code.
Employees in federally regulated companies are entitled to up to 10 days of paid medical leave per year.
After 30 days of continuous employment, employees initially earn three days of paid medical leave. One additional day can then be earned each month up to the statutory maximum.
The rules in individual provinces can differ significantly. The employee’s actual place of work should therefore be considered when preparing the employment contract and Canadian payroll.
Vacation and Public Holidays
Statutory vacation entitlement in Canada is not uniform nationwide and depends on the relevant province or the federal regulation applicable to the employer.
For employees covered by the Canada Labour Code, for example:
→ Less than 5 years of service: at least 2 weeks of vacation
→ From 5 years of service: at least 3 weeks of vacation
→ From 10 years of service: at least 4 weeks of vacation
The number of statutory public holidays also depends on the province and applicable jurisdiction.
There are ten general statutory holidays in the federally regulated sector. Ontario, for example, has nine public holidays.
Common public holidays in Canada include New Year’s Day, Good Friday, Canada Day, Labour Day and Christmas Day. Additional public holidays vary by region.
Vacation Pay is also calculated according to the applicable Employment Standards. For example, it often corresponds to at least 4% of relevant earnings for two weeks of vacation and 6% for three weeks.
Probationary Period and Termination
Probationary periods, notice periods and severance pay in Canada vary depending on the province, length of employment, employment contract and whether federal or provincial law applies.
The old rule of thumb that generally assumes two to four weeks of notice per year of service is therefore not suitable as a statutory standard for Canadian employment relationships.
For employees covered by the Canada Labour Code, the following rules generally apply to individual termination by the employer:
→ Less than 3 months of employment: generally no statutory notice period under this rule
→ 3 months to less than 3 years: at least 2 weeks of notice or equivalent payment
→ From 3 years: one week for each completed year of employment
→ Maximum statutory notice period of 8 weeks
In the federally regulated sector, termination by the employer after at least twelve months of continuous employment may also result in an entitlement to Severance Pay.
This statutory severance pay generally corresponds to the higher amount of two days’ wages for each completed year of employment or at least five days’ wages.
Important: Provincially regulated employees are subject to the Employment Standards of the relevant province. In addition, the employment contract and Common Law may create further entitlements to reasonable notice or payment.
Payroll in Canada Requires Consideration of the Relevant Province
Whether Ontario, British Columbia, Alberta, Quebec or another Canadian province, employment law, minimum wage, vacation, public holidays, sick leave, Workers’ Compensation and additional employer charges may differ.
As an international payroll service provider, we support you in aligning Canadian payroll with the actual place of work of your employees.
Employ and Pay Employees in Canada in Compliance with Local Requirements
Employing your own staff in Canada involves tax, employment law and administrative requirements at both federal and provincial level. With our international payroll solutions, we support you with efficient and locally compliant processing.
Your benefits:
✓ Canadian payroll processing
✓ Calculation of CPP or QPP and Employment Insurance
✓ Consideration of provincial payroll requirements
✓ Support with payroll registration and ongoing reporting
✓ Employment of staff without your own Canadian company using suitable structures
✓ Employer of Record for suitable employment situations
✓ Support with direct employment as a foreign employer
✓ Flexible expansion into the Canadian market
Request a non binding consultation now and employ and pay employees in Canada professionally.
Where We Can Support You
Any Questions About Payroll in Canada?
We are here to help quickly and easily!
Simply call us: +49 2173 2039568
or send us an email!
