Employer of Record in Canada: Who Does What Between the EOR and the Client Company

Key Takeaways

• In an Employer of Record (EOR) arrangement in Canada, the EOR is the legal employer and the client company directs the worker's day-to-day work.
• The EOR runs payroll, withholds and remits CPP contributions, EI premiums and income tax to the Canada Revenue Agency (CRA), issues pay statements, T4 slips and Records of Employment (ROEs), and keeps payroll records.
• The client company keeps control of the work itself: assigning tasks, supervising, setting schedules and approving hours.
• Onboarding information, time reporting, pay changes and workplace safety are shared areas that depend on accurate, on-time information from both parties.
• Each pay cycle follows the same basic path: the client approves hours, the EOR calculates and pays, and the EOR remits source deductions to the CRA by the required due date.

How an Employer of Record Arrangement Divides the Work

Alberta's Employment Standards Code gives an employer 10 consecutive days after the end of a pay period to pay the wages earned in it. Under an Employer of Record arrangement, two organizations work inside that window: the company that directs the work, and the EOR that is legally responsible for the pay.

Outsource Payroll Solution describes its EOR service as a way for organizations to have team members in Canada without setting up a Canadian legal entity. Acting as the legal employer, the EOR takes on payroll processing, tax remittances, employment standards compliance and employment documentation. The client company keeps its attention on the work.

On paper, the split is clean. In practice, it holds up only when both sides know exactly where their part begins and ends. What follows breaks down the responsibilities that sit with the EOR, the ones that stay with the client, the ones that are shared, and how payroll information moves between the two every pay cycle. Examples use Alberta rules, since employment standards vary by province.

EOR Responsibilities: What the Legal Employer Handles

Everything on the EOR's side traces back to one point. It is the employer on record, and Canadian payroll obligations attach to the employer.

Source deductions and remittances. Canadian employers withhold CPP contributions, EI premiums and federal and provincial income tax from each pay, then send those amounts to the CRA along with the employer's share of CPP and EI. How often that happens depends on the employer's remitter type, which the CRA generally sets based on average monthly withholdings from two calendar years earlier. A regular remitter's deductions are due to the CRA by the 15th day of the month after employees were paid. Accelerated remitters send them more often: up to twice a month at threshold 1, and up to four times a month at threshold 2.

Tax and identification forms for new hires. The Employment Insurance Regulations require an employer to ask a new employee for their Social Insurance Number within three days after employment begins. The EOR also collects the federal and provincial TD1 forms that determine how much income tax comes off each pay.

Pay calculations under employment standards. Hours and rates come in; the EOR applies the minimum standards to them. In Alberta, that means overtime for hours worked over 8 in a day or 44 in a week, whichever is greater (the 8/44 rule). It also means vacation pay of 4% of wages, increasing to 6% once an employee reaches five years of employment, plus general holiday pay where it applies.

Pay statements. Alberta employers must give employees a statement of earnings for every pay period. It shows details such as the period covered, regular and overtime hours, and wage and overtime rates.

Year-end reporting. T4 slips go to employees, and the slips plus the T4 Summary go to the CRA, by the last day of February after the calendar year. If that date lands on a weekend, the deadline moves to the next business day. February 28, 2027 is a Sunday, so for the 2026 tax year the deadline is Monday, March 1, 2027.

Records of Employment. When an employee has an interruption of earnings, such as the end of an assignment or a leave, the employer issues an ROE to Service Canada. Under an EOR arrangement, that employer is the EOR.

Record keeping. The CRA generally requires payroll records to be kept for six years from the end of the last tax year they relate to. Alberta's Employment Standards Code adds its own rule: employment records must be kept for at least three years.

Client Company Responsibilities in an EOR Arrangement

An EOR takes on legal employment and payroll administration. It does not take on the work. Everything tied to how the job actually gets done stays with the client.

Directing and supervising the work. The client assigns tasks, sets priorities and manages performance. Day to day, the worker functions as part of the client's team, even though the EOR is the one issuing the pay.

Schedules and hours. The client sets working hours and sees what was actually worked. That makes the client the natural party to approve timesheets and confirm overtime before anything goes to the EOR.

The workplace. When the work happens at the client's location, the client controls the site, the equipment and the conditions on the ground. Alberta's Occupational Health and Safety Act sets out obligations for each work site party, so safety at a client location is something both organizations should address in writing.

Ending an assignment. When the client no longer needs a worker, the EOR handles the employer side of the separation, including final pay and the ROE. Alberta sets firm timing for final pay: within 10 consecutive days after the end of the pay period in which employment ends, or within 31 consecutive days after the last day of employment. The EOR can only meet that timeline if the client tells it promptly.

Shared Responsibilities: Onboarding, Time Reporting and Pay Changes

A handful of responsibilities do not sit neatly on either side. These are the areas where the working relationship between the EOR and the client shows up most clearly in the paycheque.

Onboarding information. The client knows the start date, role, pay rate, schedule and work location. The worker holds their SIN, TD1 details and banking information. The EOR needs all of it before the first pay run. Because the three-day SIN request window opens on the first day of work, the client's confirmation of the start date and the EOR's onboarding request have to line up.

Time reporting. The client records and approves hours. The EOR turns those hours into pay, applying overtime, vacation pay and holiday pay rules along the way. Late or incomplete hours leave less room to get the calculation right inside the employment standards deadline.

Pay changes between pay runs. Rate increases, bonuses, unpaid leave, schedule changes and departures all affect what lands in the next pay. None of them can be processed until the EOR knows about them. The service agreement should spell out who approves each type of change and the cutoff for reporting it.

Workplace incidents. If a worker is injured on the job at a client site, the client is on the scene and the EOR is not. The service agreement should state who reports to the provincial workers' compensation board and how quickly incident details pass from the client to the EOR.

EOR vs. Client Company Responsibilities at a Glance

How Payroll Data Moves Between the EOR and the Client Each Pay Cycle

Cutoff days and file formats differ from one arrangement to the next. The underlying sequence does not. Here is the general path payroll data takes, with the specific dates, methods and billing terms set in the service agreement.

1. Hours are captured and approved. The worker records time, and the client approves it along with any overtime, absences or premiums for the period.

2. Approved data goes to the EOR. By the agreed cutoff, the client sends approved hours and any changes: a new rate, a leave, a final day of work.

3. The EOR reviews and calculates. The EOR checks the submission against the worker's file, applies the pay rate, works out overtime under the 8/44 rule, adds vacation pay and general holiday pay where they apply, and calculates CPP, EI and income tax deductions using each worker's TD1 information.

4. The worker is paid. The EOR pays the worker and issues a statement of earnings. In Alberta, wages, overtime pay and general holiday pay earned in a pay period must be paid within 10 consecutive days after the period ends, and a pay period cannot be longer than one month.

5. Deductions are remitted. The EOR sends source deductions to the CRA by its remittance due date. For a regular remitter, that is the 15th of the following month.

6. Records are kept and year-end reporting builds. Each cycle adds to the payroll records that support T4 reporting at year end and, when an interruption of earnings occurs, ROEs.

Canadian Payroll Deadlines That Shape Every EOR Pay Cycle

Making an EOR Arrangement Run Smoothly

The legal structure of an EOR arrangement gets set once, in the service agreement. The pay cycle runs every week, every two weeks or every month after that. The shared areas are where that repetition either builds into a reliable routine or turns into a steady stream of follow-up emails.

A fixed cutoff for approved hours, one named contact on each side and a standing process for reporting changes before they hit a pay run go a long way. When both parties know precisely what they own, the worker experiences one thing: accurate pay, on time, with the right deductions.

Organizations considering an Employer of Record arrangement in Canada can learn more or book a consultation at payrollsolution.ca.

Employer of Record FAQs

Who is the legal employer in an Employer of Record arrangement?
The EOR is the legal employer. It handles payroll, tax withholding and remittance, employment standards compliance and employment documentation. The client company directs the worker's day-to-day work.

Does a company need a Canadian legal entity to use an Employer of Record?
No. An EOR allows an organization to have team members working in Canada without setting up its own Canadian legal entity, because the EOR acts as the employer.

Who remits CPP, EI and income tax in an EOR arrangement?
The EOR withholds CPP contributions, EI premiums and income tax from each pay and remits them to the CRA, along with the employer's share of CPP and EI. Regular remitters must remit by the 15th of the month after employees were paid.

Who approves hours worked under an EOR?
The client company approves hours, because it supervises the work. The EOR uses the approved hours to calculate pay, overtime, vacation pay and holiday pay.

Who issues the Record of Employment when an EOR assignment ends?
The EOR issues the ROE to Service Canada, because it is the employer on record.

When are T4 slips due for the 2026 tax year?
T4 slips and the T4 Summary are due by the last day of February. Because February 28, 2027 falls on a Sunday, the deadline for the 2026 tax year is Monday, March 1, 2027.

How quickly must employees in Alberta be paid?
Alberta employers must pay wages, overtime pay and general holiday pay within 10 consecutive days after the end of each pay period. A pay period cannot be longer than one month.