Is your Canadian business ready to make its first hires? This guide explains the hiring process in Canada, including registering for payroll with the Canada Revenue Agency (CRA), making a job offer, and setting up employee deductions.
Before You Can Hire Employees in Canada
As an employer, you will need to open a Payroll Deductions account. To do this you must have a business number (BN). If you don't already have a business number, you will need to get one from the CRA. You can get do this in one of three ways:
- Register for a BN online.
- Fill out Form RC1, Request for a business number, and mail or fax it to your nearest tax service office (TSO) or tax center (TC).
- Contact the CRA directly by phone at 1-800-959-5525 during business hours.
If you are registering for a business number, you can request a payroll program account at the same time. If you already have a business number, you are just adding a new account to your existing ones. (Note that you can manage all your business accounts, including payroll, using the CRA's My Business Account online portal.)
You can add a payroll account using one of the following methods:
- Use your My Business Account.
- Fill out form RC1, Part C, and mail or fax it to your nearest TSO or TC.
- Call the CRA at 1-800-959-5525 and ask for a payroll program account.
Note that a business can have more than one payroll program account. If you have different offices in different cities, for example, you might also have separate payroll accounts for each office.
The Hiring Process in Canada
Once you've registered for your payroll account, and you've gone through the steps of creating or refining job descriptions, advertising the job positions, and interviewing prospective candidates, you're ready to make your hires. Let's look at the steps you'll need to take to ensure you've covered all your legal bases before those new hires start work.
Have the Employee Accept and Sign the Job Offer
The government doesn't require this, but it's an excellent idea to have the terms of work in writing. It clarifies details such as the job duties, work hours, benefits, salary, probationary period (if there is one), and avoids future misunderstandings. Of course, when hiring employees, your job offer has to meet the employment standards of your province or territory.
- Federal Labour Standards
- Alberta Employment Standards
- BC Employment Standards
- Manitoba Employment Standards
- Ontario Employment Standards
- Nova Scotia Employment Standards
- Newfoundland and Labrador Labour Standards
Examine the Employee's Social Insurance Number
The Social Insurance Number (SIN) is used to administer government benefits. As an employer, you need to view every new employee's SIN card within three days of the employee starting work and record the employee’s name and SIN exactly as they appear on the card.
Watch for SINs that begin with the numeral "9." A SIN starting with this number signals a person who is not a Canadian citizen or permanent resident and who is authorized to work only for a particular employer and time period under a valid employment authorization issued by Immigration, Refugees, and Citizenship Canada.
If a prospective new employee is eligible to work in Canada and does not have a SIN, direct them to apply for one at a Service Canada Office.
Have the Employee Fill out Required Forms
Form TD1, Personal Tax Credits Return, determines how much tax is to be deducted from a person's employment income. A new employee has to complete the federal TD1 and the provincial TD1 if more than the basic personal amount is claimed.
In Quebec, employees need to use the federal TD1 and provincial Form TP1015.3-V, Source Deductions Return. See Filing Form TD1 for more details on who has to complete this form and which form they can or should use.
Communicate Starting Time and Info to Your Employee
Is the new employee's day going to start with a meeting with a supervisor or a tour of the facility? Is there any special equipment they have to bring or a dress code to which they need to adhere? Is there a new employee orientation session or in-house mentoring? Filling the new employee in on whatever details pertain to their first day on the job will relieve their anxiety and get you both off to a good start.
Start a File for the New Employee
It's a good idea to start an employee file right when your new hire starts. As an employer, you're going to collect employee records, such as timesheets and performance evaluations, and manage forms related to running payroll, such as T4 slips. Getting your employee records off to an organized start will save time later.