hr agency

Taking A Second Look At Co-Employment

American companies expanding into Canada may initially believe that co-employment, or employer of record-type services, may be their best option. However, there are multiple advantages to managing your employees under your own Canada Revenue Agency (CRA) Business Number.

Co-employment can blur the lines in an employer–employee relationship. In Canada, whoever directs the day to day activities of the employee is deemed to be the true employer of record. When embarking on a co-employment relationship with employees, you may be subject to higher fees for Workers Compensation (WCB). Your premiums will be based on the industry classification of the co-employer, as all employees are pooled together. The rates will be based on that pool of employees, which can easily result in higher WCB premiums.

This pooling of employees also affects the Employer Health Tax burden in both British Columbia and Ontario. When an employer of record’s payroll exceeds a certain amount in a calendar year in those provinces, then you must pay an additional tax on top of the regular payroll taxes. The total payroll for your employees may not exceed that amount by themselves, but pooling all employees together will result in you paying that burden under a co-employment model.

Finally, there are government Scientific Research and Experimental Development (SR & ED) grants, wage subsidies, training grants and tax credits that you may be eligible to receive; that is, if you manage your employees under your own CRA Business Number. In some cases you must also be incorporated.

It is worthwhile to weigh your options and see what relationship suits you best. A PEO Canada Business Development Consultant can book some time with you to see if working under your own CRA Business Number is a good fit for your business. Contact us today for more information.

Share this post