CanadaCanada is the lowest-friction international hire a US startup can make: same working hours, similar culture, deep engineering talent in Toronto, Vancouver, and Montreal. The surprise is that "Canada" barely exists as a single employment market. Employment standards are provincially regulated, so vacation, holidays, termination notice, and workers' compensation all depend on which province your hire lives in, and Quebec runs its own pension and parental insurance systems entirely.
Here's what you actually need to know.
Quick facts
| Canada | |
|---|---|
| Currency | Canadian Dollar (CAD) |
| Standard work week | 40 hours, 5 days |
| Payroll frequency | Biweekly |
| Employer statutory cost | ~10-15% on top of gross salary |
| Minimum wage | CAD 18.15/hour (federal; most provinces set their own) |
| Probation | 3 months typical |
| Notice period | Tiered by tenure and province |
| 13th month pay | Not mandatory |
| Employees paid in | CAD, required by law |
First decision: contractor or employee?
Plenty of US startups pay Canadian developers as contractors, and for genuinely independent workers it's fine. But Canada's tax authority (the CRA) applies well-developed tests around control, tools, and financial risk, and misclassification exposes you to back CPP and EI contributions plus penalties. The rough test is the same as everywhere: if you'd be uncomfortable with them taking a second client, they're probably an employee.
The extra wrinkle in Canada is that employees carry meaningful termination rights (more below), so converting someone late doesn't just add payroll cost, it changes your exit math. When someone is core to the team, convert them properly through an employer of record (EOR) or your own Canadian entity.
Paying contractors in Canada
The mechanics:
- Collect a W-8BEN before the first payment. It certifies the contractor is a non-US person, so you generally don't issue a 1099. Confirm your setup with your accountant.
- Sign a real contract with scope, rate, IP assignment, and termination terms. Canadian courts scrutinize contractor relationships that look like employment, so keep the substance independent, not just the label.
- Pay in USD or CAD, their choice. Many Canadian contractors happily invoice in USD. Bank wires still cost $25-45 each with an FX spread buried in the rate.
Shor pays Canadian contractors over local rails at a flat disclosed 2% FX margin, for $19/month per contractor. Contracts, W-8BEN collection, and invoicing are built in.
Hiring full-time employees
Employer-side statutory contributions on top of gross salary:
| Contribution | Rate (employer side) | Notes |
|---|---|---|
| CPP/QPP (pension) | 5.95% | Matches the employee contribution; earnings-capped; Quebec uses QPP |
| EI (employment insurance) | 2.28% | 1.4x the employee premium; insurable earnings capped |
| Workers' compensation | ~2% | Provincial boards (e.g. WSIB in Ontario); rate depends on industry |
Headline employer load: roughly 10-15% on top of gross salary, modest by international standards. Note that CPP and EI are capped: for 2026, CPP applies up to CAD 74,600 of pensionable earnings (raised from CAD 71,300), with an additional 4% second-tier contribution (CPP2) on earnings between CAD 74,600 and CAD 85,000, and EI premiums cap at CAD 68,900 of insurable earnings. So the effective percentage falls on higher salaries.
For 2026, also note: the federal minimum wage rose to CAD 18.15/hour in April 2026, and the CRA published mid-year payroll deduction updates effective July 1, 2026 that changed provincial income tax formulas in British Columbia, Newfoundland and Labrador, and Prince Edward Island. Payroll tables in Canada update at least annually and sometimes mid-year, so whoever runs your payroll needs to be on the current CRA (and, for Quebec, Revenu Quebec) tables. Statutory rates change; confirm with your accountant.
Employees must be paid in CAD, typically biweekly, with income tax, CPP/QPP, and EI withheld and remitted to the CRA (or Revenu Quebec).
Leave and benefits
Entitlements below are common baselines; the binding numbers vary by province:
- Vacation: 2 weeks statutory minimum in most provinces (2-3 weeks typical, rising with tenure)
- Sick leave: 10 paid days for federally regulated workers; provincial entitlements vary
- Maternity leave: 15 weeks, paid at 55% through EI (state-funded)
- Parental leave: additional shared, job-protected leave paid through EI, including roughly 5 weeks for the second parent; Quebec runs its own QPIP program
- Public holidays: ~9 days, varying by province
Public healthcare covers the basics, but not dental, vision, or prescription drugs, which is why competitive Canadian offers almost always add extended health and dental coverage, an employer RRSP match, life and disability insurance, and often a remote work stipend.
Ending employment
Canada is not at-will, and this is where founders get hurt:
- Statutory notice is tiered by tenure and set provincially: roughly 1 week under a year of service, scaling to 4 or more weeks after 3 years, with some provinces adding separate severance obligations
- Common-law "reasonable notice" can far exceed statutory minimums (often months, not weeks) unless the employment contract validly limits it, which is why contract drafting matters more in Canada than almost anywhere
- Final pay timing and vacation payout rules are province-specific
A well-drafted, province-correct employment contract at hiring time is the cheapest termination insurance you'll ever buy. This is exactly the work an EOR does for you.
Documents we'll collect from your employee at onboarding
SIN (Social Insurance Number), federal and provincial TD1 tax credit forms (Quebec has its own equivalents), and a Canadian bank account for salary.
What it costs through Shor
- Contractors: $19/month each
- Full-time employees (EOR): $449/month each, province-correct contract, CRA remittances, workers' compensation, and T4s handled
- Your own Canadian entity: we run managed payroll on top of it for $60/month per employee, in the same dashboard
No setup fees, and the FX margin is a flat disclosed 2%. The pricing calculator shows the full Canada math including every statutory line.
Next steps, depending on where you are: the EOR pricing comparison puts published provider prices side by side, and EOR vs. your own entity has the breakeven math for when a local entity starts to win. To see Canada against the rest of our coverage, the reference tables compare employer costs, notice periods, and public holidays across every country here. Already with another provider? Switching EOR providers covers the traps worth planning around.
FAQ
Can I pay Canadian employees in USD? No. Salary must be paid in CAD through Canadian payroll. Contractors, however, can invoice in USD.
Does it matter which province my hire lives in? Yes, a lot. Employment standards (vacation, holidays, notice, workers' compensation) are provincial, and Quebec additionally runs its own pension (QPP), parental insurance (QPIP), and tax administration. The contract and payroll setup must match the province of employment, not a generic "Canada" template.
What does an employer of record in Canada cost? With Shor, $449/month per employee, plus the statutory employer contributions (roughly 10-15% of gross) that any employer pays. Deel and Remote charge $599-699/month for the same coverage.
How fast can someone start? Contractors: as soon as the contract is signed and the W-8BEN is in. Employees via EOR: typically 10-15 business days once the SIN, TD1 forms, and signed agreement are in, with workers' compensation setup running in parallel.