The Hiring Process in Canada: How to Hire Employees
What you have to do to legally hire employees
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
Get a (BN) and/or open a Payroll Deductions Account.
As an , you will need to open a Payroll Deductions account. To do this you must have a business number. 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 centre (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 centre (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.
You make the person an offer of employment. Now you have to:
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.) See:
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 (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 Form TD1, Personal Tax Credits Return.
Form TD1 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.
(Note that 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).
See the for detailed information on payroll deductions including income tax, , EI, and taxable benefits.
Review the starting date and time and any other information pertinent 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 she has to bring or a dress code she needs to adhere to? Is there a new employee orientation session or in-house mentoring? Filling the new employee in on whatever details pertain to her first day on the job will relieve her anxiety and get you both off to a good start.
Start a file for the employee if you haven't already.
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.