Employee Hiring Process in Canada
This guide explains the process in Canada, including registering for payroll with the Canada Revenue Agency, making a job offer, and setting up employee deductions.
What You Need Before Hiring Employees in Canada
As an , you will need to open a Payroll Deductions account. To do this you must have a (BN). If you don't already have a business number, you will need to get one from the Canada Revenue Agency. You can get a business number in one of three ways:
- Register for a Business Number online.
- Fill out Form RC1, Request for a Business Number (BN) and mail or fax it to your nearest tax service office (TSO) or tax center (TC).
- Contact the Canada Revenue Agency 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 basically 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 RC1B and mail or fax it to your nearest tax service office (TSO) or tax center (TC).
- Call the Canada Revenue Agency at 1-800-959-5525 and ask for a Payroll Deductions Account.
(Note that a business can have more than one Payroll Deductions account. If you had different offices in different cities, for example, you might also have separate Payroll accounts for each office.)
The Hiring Process in Canada
This outlines the nitty-gritty of the actual hiring process; what you have to do legally to hire an employee in Canada when you have decided you want to hire a person. These are the steps you need to take after you’ve gone through the whole preliminary hiring process of creating or refining a job description, advertised the job position(s), and interviewed prospective candidates. All of that is behind you and you've made the person an offer of employment.
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 and 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.
Examine the Employee's Social Insurance Number (SIN)
The Social Insurance Number 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 number "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 with a valid employment authorization issued by Citizenship and Immigration Canada.
(If a prospective new employee is eligible to work in Canada and does not have a SIN, direct him or her 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 (Canada Revenue Agency).
Make sure to review information on including income tax, , EI, and taxable benefits.
Review the Starting Date and Time Prior to the Person's First Day of Employment
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 they need to adhere to? 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 do this right away when hiring . As an employer, you're going to collect employee records such as time sheets 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.