An employer of record in Canada is a company that already has Canadian entities and payroll registrations in place, and uses them to legally employ a worker on your behalf in whichever province that person lives in, so you can hire in Toronto, Vancouver, or Montreal without incorporating your own Canadian subsidiary first. A canada eor signs the local employment contract, remits Canada Pension Plan (CPP) and Employment Insurance (EI) contributions, and applies the employment standards of the correct province, which matters because Canada has no single national employment law for most private-sector jobs; standards are set province by province, with a separate, smaller set of rules for the specific industries the federal government regulates directly.
Provincial employment standards: Ontario as the working example
Most Canadian employees are covered by their province's own employment standards act, not a federal one, and the rules differ by province. Ontario's Employment Standards Act (ESA) is a useful worked example: an employee continuously employed for at least three months is entitled to written notice of termination or pay in lieu, on a sliding scale from one week's notice under a year of service up to a maximum of eight weeks at eight or more years, with longer notice for mass terminations of 50 or more employees. Severance pay under the ESA is a separate entitlement on top of notice, available only to employees with five or more years of service at an employer with a global payroll of at least CAD 2.5 million, or that severed 50 or more employees in a business closure, calculated as regular weekly wages multiplied by completed years plus completed months divided by twelve, capped at 26 weeks. British Columbia, Quebec, and every other province run their own, differently worded versions of these same protections, which is why a canada eor needs province-specific playbooks rather than one national template.
CPP and EI: the mandatory federal payroll contributions
Every employer in Canada, in every province, must remit Canada Pension Plan (CPP) contributions, matched dollar for dollar between employer and employee. The Canada Revenue Agency's published 2025 rate has both sides contributing 5.95% of pensionable earnings up to the year's maximum pensionable earnings of CAD 71,300, for a maximum annual contribution of CAD 4,034.10 each, on top of which a second CPP2 tier applies to earnings above that threshold. Employment Insurance (EI) is paid on top: the CRA's 2026 published rate has employees contributing 1.63% of insurable earnings up to CAD 68,900, while employers pay 1.4 times the employee rate, 2.282%. Quebec runs its own, lower EI employee rate of 1.30%, because the province administers its own maternity, parental, and adoption benefits separately from the rest of Canada rather than through federal EI.
Federally regulated work versus everything else
A small slice of Canadian employment, air transportation, banks, interprovincial and international rail, road, marine and pipeline transport, telecommunications and broadcasting, uranium mining, and the federal public service, is governed by the Canada Labour Code directly rather than by any province's employment standards. Almost every other private-sector job, the large majority of what a canada eor actually places, falls under provincial jurisdiction instead, which is the split a provider has to get right before it can apply the correct notice, severance, and leave rules to a given worker; getting a worker's regulatory jurisdiction wrong at onboarding means applying the wrong rulebook for the entire employment relationship.
Quebec: a genuinely different system, not just a different province
Quebec is worth calling out on its own because it diverges from the rest of Canada in more than just its employment standards numbers. It runs its own Quebec Pension Plan (QPP) in place of federal CPP, administers its own maternity, parental, and adoption benefits through the Quebec Parental Insurance Plan rather than through federal EI, which is why Quebec's EI employee rate is lower than the rest of the country, and its labour standards, contracts, and civil remedies sit within Quebec's Civil Code tradition rather than the common law used elsewhere in Canada. An employer of record placing someone in Quebec needs Quebec-specific contracts and a Quebec-specific payroll setup; treating Quebec as just another province on a generic Canadian template is one of the more common ways a first-time buyer gets a Quebec hire wrong.
What to check in a Canada EOR provider
Confirm the provider actually runs payroll and remits CPP, EI, and provincial deductions directly rather than subcontracting through a partner it does not control, ask which provinces it has run live payrolls in, since Quebec support in particular should not be assumed, and get the ESA-equivalent notice and severance obligations for the specific province in writing before the offer goes out, since those numbers are what most often surprise a first-time buyer at termination rather than at hiring.
Questions people ask about employer of record canada
What does a canada eor actually do?
It uses its own Canadian entity and payroll registrations to legally employ your worker in the correct province, remitting CPP and EI and applying that province's employment standards, so you can hire in Canada without incorporating your own subsidiary first.
Does Canada have one national employment law?
No. Employment standards are set province by province for the large majority of private-sector jobs; only a narrow set of industries like banking, telecommunications, and interprovincial transport fall under the federal Canada Labour Code instead.
Is Quebec covered the same way as other provinces by a Canada EOR?
It should not be. Quebec runs its own pension plan (QPP), its own parental insurance plan in place of federal EI, and its employment law sits in the Civil Code tradition rather than common law, so it needs its own contracts and payroll setup, not a generic Canadian template.
How much notice is required to terminate an employee in Ontario?
Under Ontario's Employment Standards Act, an employee with at least three months of service is entitled to written notice or pay in lieu on a sliding scale from one week under a year of service up to a maximum of eight weeks at eight or more years, with separate, larger notice requirements for mass terminations.