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The Canadian workforce is among the most highly educated and skilled globally. Over 50% of Canadians possess post-secondary education—the highest rate across the Organisation for Economic Cooperation and Development (OECD). With a diverse labor force of more than 22 million people, Canada is ideal for employers to look for workers.
You don’t have to hire Canadian workers as permanent employees to tap into this strong labor force, though. Instead, consider hiring independent contractors in Canada. Working with Canadian independent contractors will allow you to reap the benefits of expanding your talent pool to Canada without the hassle of international employment. Here’s everything you need to know about hiring independent contractors in Canada.
Why hire independent contractors in Canada?
Hiring global contractors represents a significant opportunity for companies looking to grow quickly with expert, experienced talent. Working with independent contractors offers more flexibility and freedom than hiring employees. You can bring great talent to your organization without making them official employees—a process that typically comes with many headaches.
So why look to Canada for your independent contractors? With a seasoned tech startup scene and a ready-and-waiting pool of skilled contractors and freelancers, Canada is a popular place to source talent. Since Canada is an English-speaking country, it’s also easy to integrate Canadian contractors into your business.
Whether you already have a contractor you’re looking to onboard compliantly or are searching for help from a wider talent pool, this guide will explain the ins and outs of hiring independent contractors in Canada.
What to be aware of when bringing in Canadian contractors
Employers must abide by every country’s labor laws, and Canada is no exception. When hiring Canadian contractors, you must be aware of a few things.
Employee misclassification
Whenever a company hires an independent contractor to work for the business, there’s a risk of employee misclassification. Employee misclassification occurs when a business doesn’t treat an employee as an employee, typically by classifying them as an independent contractor. Different countries have different guidelines regarding employee classification, as well as penalties they impose on companies violating those rules. Companies hiring Canadians as independent contractors must take all the necessary measures to classify their workers correctly.
For example, in Canada, if a worker works exclusively for an employer and uses that employer’s equipment and tools to do their work, they are likely an employee. Any company that classifies such a worker as an independent contractor rather than an employee may have to pay wages owed to the employee, as well as administrative monetary penalties.
Canadian employee misclassification law focuses on establishing the company’s intent to misclassify workers and addressing that misclassification constructively. Familiarize yourself with Canada’s worker classification rules to avoid penalties for misclassifying your Canadian hires.
Making payments
Payroll is already one of the most complicated, tedious tasks businesses must manage, and making cross-border payroll payments is even more difficult. You must know Canadian payment regulations and differences as a foreign company making payments to Canadian workers.
For example, the currency in Canada is the Canadian dollar, so you’ll have to account for the exchange rate in your payments. Make sure you agree ahead of time on the currency in which you’ll pay the contractors, since this can easily cause misunderstandings. If you have to bear the currency conversion cost, it will increase your cost of hiring in Canada.
In Canada, employers aren’t required to withhold taxes on behalf of independent contractors since they’re not employees. The independent contractor is a business and is responsible for managing their own taxes. Some countries have tax treaties with Canada, so workers don’t have to pay income tax twice—once to each country.
Evolving Canadian labor laws and regulations
Staying on top of labor laws in any country can be challenging, and Canada is no different. Labor laws in Canada are not only different from what you might be used to, but are also always subject to change. Consider these current notable labor laws in Canada:
No at-will employment
Unlike in many U.S. states, there is no at-will employment in Canada. In other words, employers cannot terminate an employee without cause or notice. Employers of Canadian workers must either provide adequate notice or pay instead of notice when terminating an employee without cause. These laws may further entice employers to hire Canadian independent contractors rather than employees since it is faster to terminate the working relationship.
Minimum wage
Each province sets the minimum wage in Canada. As of June 1, 2023, the highest minimum hourly wage was CA$16.77 in Yukon, and the lowest was CA$13.00 in Saskatchewan. These minimum wages don’t apply to independent contractors. However, they’re still essential to remember if you ever want to convert an independent contractor to an employee in Canada.
Anti-discrimination protections
Canadian provincial and federal law protects Canadian employees against discriminatory hiring practices by employers. According to the Canadian Human Rights Act, companies cannot discriminate according to race, age, gender, or sexual orientation. Some provinces may set additional requirements, such as prohibiting discrimination based on unrelated criminal convictions.
These protections also apply to independent contractors, which can potentially lead to costly lawsuits and penalties. Make sure you follow the laws around anti-discrimination when hiring contractors in Canada.
Using Oyster to hire and pay Canadian contractors compliantly and easily
Managing all the necessary components to hire and work with contractors in Canada can be challenging. Rather than trying to handle all these details internally, why not turn to exports in global hiring?
With Oyster’s global contractor platform, you can access contractor management tools to streamline paperwork, onboarding, and payments in over 180 countries worldwide, including Canada. Rest easy knowing you have a global employment partner that will keep your company compliant.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, hire, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.
