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Hiring in Ontario without setting up a Canadian entity? This guide explains how Employer of Record (EOR) services work in Ontario and what you need to know about provincial employment standards, payroll rules, termination laws and employer obligations. Employment law in Canada is provincially regulated, so hiring in Ontario follows entirely different rules than hiring in other provinces like Quebec or British Columbia.
This guide focuses on Ontario-specific compliance for comparing EOR providers, please see our Best Canada EOR ranking.
What an EOR in Ontario Does
An Ontario EOR legally employs your worker in the province and handles:
- Payroll, tax withholdings and remittances
- Vacation pay and statutory holiday pay
- Overtime calculations based on Ontario’s ESA
- Employment contracts aligned with provincial law
- Termination, notice and severance requirements
- Provincial leaves (parental, sick, family responsibility)
This allows foreign companies to hire in Ontario without registering a Canadian corporation.
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Key Employment Rules in Ontario
Hours of Work & Overtime
Standard overtime applies after 44 hours/week at 1.5× pay.
Vacation Pay
- Minimum 4% vacation pay (for employees with <5 years).
- 6% for employees with 5+ years.
Public Holidays in Ontario
9 statutory holidays, including New Year’s Day, Family Day, Good Friday, Victoria Day, Canada Day, Labour Day, Thanksgiving, Christmas, etc.
Termination & Severance
Ontario has two layers:
- Termination notice (1–8 weeks depending on tenure)
- Severance pay (only applies when the employer’s global payroll is > CAD 2.5M and the employee has 5+ years of service)
Note that this is one of the biggest cost considerations for employers.
Leaves of Absence
Ontario provides multiple unpaid protected leaves, including:
- parental leave
- sick leave
- personal emergency leave
- bereavement leave
- family caregiver leave
Estimated Employer Costs in Ontario
Employers typically pay ~7–12% of salary in Ontario. Employer-side contributions include:
- Canada Pension Plan (CPP) – 5.95% (~CA$446/month on CA$7,500)
- Employment Insurance – Ontario employer rate (EI) – 2.212% (~CA$166/month)
- Ontario Employer Health Tax (EHT) – 0–1.95% (~CA$0–CA$146/month depending on the EOR’s payroll size)
- Workplace Safety & Insurance Board (WSIB) – ~1–3% (~CA$75–CA$225/month depending on industry)
- WSIB premiums vary by industry classification.
- Vacation pay – 4–6% (~CA$300–CA$450/month)
Total estimated employer burden: ~CA$987 to CA$1,433 per month
Frequently Asked Questions on Ontario EOR
Yes. EOR is permitted and widely used by foreign employers expanding into Canada.
Yes. An EOR must follow Ontario ESA rules for holidays, overtime, termination and leaves.
This really depends on the EOR you’re working with. Typically, EORs are able to hire within a few days depending on background checks and documentation.
Yes, since they’re the “actual” employer on the ground. Note that Ontario’s notice and severance rules may increase cost depending on tenure and the EOR’s actual payroll size.
Provincial public healthcare applies and every employee is automatically enrolled. However, an extended benefits depends on what the company abroad wants to offer. Usually, EORs have a wide range of benefits packages available.
Written by
Courtney Pocock is a Copywriter & EOR/PEO Researcher at Employsome with 15+ years of experience writing for the HR, corporate, and financial sectors. She has a strong interest in global business expansion and Employer of Record / PEO topics, focusing on news that matters to business owners and decision-makers. Courtney covers industry updates, regulatory changes, and practical guides to help leaders navigate international hiring with confidence.
Our content is created for informational purposes only and is not intended to provide any legal, tax, accounting, or financial advice. Please obtain separate advice from industry-specific professionals who may better understand your business’s needs. Read our Editorial Guidelines for further information on how our content is created.