PROVINCIAL REQUIREMENTS FOR REMOTE
WORKERS
A CROSS-COUNTRY OVERVIEW
The information contained in this document is provided for general information purposes only and does not
constitute legal or other professional advice, nor does accessing this information create a lawyer-client
relationship. This document is current as of January 2023 and applies only to the provincial jurisdictions
expressly indicated. Information about the law is checked for legal accuracy as at the date the document is
prepared but may become outdated as laws or policies change. For clarification or for legal or other
professional assistance please contact any Canadian ELA member firm or Thorsteinssons LLP.
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INTRODUCTION
One of the lasting impacts of the COVID-19 pandemic on the Canadian workplace will likely be
the change in how, and where, employees work. Many organizations have embraced hybrid and
fully remote work arrangements as the “new normal”. Organizations are also increasingly
comfortable with having remote workers living in jurisdictions other than that of the “home
office”.
While this flexibility can be an attractive option for both employers and employees, having
remote workers who reside in other jurisdictions may impose additional legal obligations on an
employer. In many situations, an employer may be required to comply with provincial
employment and labour legislation in another jurisdiction if they have even one employee who
works remotely in another province.
This guide is intended to provide a practical overview of the employment and labour-related
requirements in each provincial jurisdiction if an employer has remote workers residing in that
province, even where the employer has no office or other corporate presence in that location.
It also reviews some of the tax and contractual considerations. This guide does not apply to
employees temporarily performing work in another jurisdiction (as other rules may apply in
these circumstances) or to international jurisdictional transfers.
Please note this is an overview only and is not legal advice. For more information on how remote
work may impact on your organization, reach out to any member of the Canadian Employment
Law Alliance team.
Alberta
Chantel T. Kassongo, K.C. (Employment)
Gabriel Joshee-Arnal (Employment)
British Columbia
Gregory J. Heywood (Employment)
James D. Kondopulos (Employment)
Manitoba
Jeff Palamar (Employment)
Ryan Savage (Employment)
Mark Alward (Employment)
New Brunswick,
Newfoundland and
Labrador, Nova Scotia and
Prince Edward Island
Nancy F. Barteaux, K.C. (Employment)
Michelle Lahey (Employment)
Andrea Baldwin (Immigration)
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Ontario
Erin Kuzz (Employment)
Shana French (Employment)
Quebec
Marc Benoit (Employment)
Olivia Girouard (Employment)
Carl Panet-Raymond (Employment)
Saskatchewan
George A. Green (Employment)
Brett J. Cavanaugh (Immigration)
For assistance with tax-related issues associated with remote employees, please reach out to
Thorsteinssons LLP.
Toronto Office
Kyle B. Lamothe
Vancouver Office
Ian Humphries
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OCCUPATIONAL HEALTH AND SAFETY
Alberta
An employer with no corporate presence in the province is still
required to comply with the Occupational Health and Safety Act if it
has one or more workers permanently working in Alberta. This will
apply even if the worker works from home.
British Columbia
An employer with no corporate presence in the province is still
required to comply with the Workers Compensation Act and the
Occupational Health and Safety Regulation under that Act if it has
one or more workers permanently working in British Columbia.
This will apply even if the worker works from home.
In addition, if the worker is employed through a work-from-home
arrangement, the employer must:
Assess potential hazards and risks associated with the work-
from-home arrangement through a discussion with the
worker, and
Implement a written procedure to check on the well-being of a
worker assigned to work alone or in isolation
Manitoba
An employer with no corporate presence in the province is still
required to comply with the Workplace Safety and Health Act and the
Workplace Safety and Health Regulations if it has one or more
workers permanently working in Manitoba. This will apply even if
the worker works from home.
New Brunswick
An employer with no corporate presence in the province is still
required to comply with the Workers Compensation Act and the
Occupational Health and Safety Act if it has one or more workers
permanently working in New Brunswick. While there is a limited
exception for work performed at a private home, it does not seem as
though this would extend to remote work arrangements. It is more
likely the legislation will apply even if the worker works from home.
In addition, if the worker is employed through a work-from-home
arrangement, the employer must establish a code of practice that
addresses working remotely and by oneself.
The code must ensure, so far as reasonably practicable, the health and
safety of a worker who works alone at any time at a place of
employment (including their home) from risks arising out of, or
connected with, the work assigned. It must contain specific
prescribed information.
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Newfoundland and
Labrador
An employer with no corporate presence in the province is still
required to comply with the Occupational Health and Safety Act if it
has one or more workers permanently working in Newfoundland and
Labrador. This will apply even if the worker works from home.
Nova Scotia
An employer with no corporate presence in the province is still
required to comply with the Occupational Health and Safety Act if it
has one or more workers permanently working in Nova Scotia. This
will apply even if the worker works from home.
Ontario
An employer with no corporate presence in the province is still
required to comply with the Occupational Health and Safety Act if it
has one or more workers permanently working in Ontario.
However, if the worker is performing work from a private residence
(i.e., is working from home) the legislation will not apply.
Prince Edward
Island
An employer with no corporate presence in the province is still
required to comply with the Occupational Health and Safety Act if it
has one or more workers permanently working in Prince Edward
Island. This will apply even if the worker works from home.
Quebec
An employer with no corporate presence in the province is still
required to comply with the Act respecting occupational health and
safety if it has one or more workers working in Quebec. This will
apply even if the worker works from home.
Saskatchewan
An employer with no corporate presence in the province is still
required to comply with the Occupational Health and Safety
Regulations under the Saskatchewan Employment Act if it has one or
more workers permanently working in Saskatchewan. This will
apply even if the worker works from home.
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WORKERS’ COMPENSATION
Alberta
An employer with no corporate presence in the province is still
required to have coverage pursuant to the Workers’ Compensation Act
if it will have an employee who lives in Alberta performing work in the
province.
Certain industries are exempt from mandatory coverage. Examples
include:
Accounting
Architectural services
Chiropractors and physiotherapist
Computer processing services
Employment agencies
Finance companies
British Columbia
An employer with no corporate presence in the province is still
required to have coverage through WorkSafe BC if it will have an
employee who lives in British Columbia performing work in the
province.
Certain industries are exempt from mandatory coverage. Examples
include:
Consulates and trade delegations from foreign countries
Professional sports competitors or athletes
Air transportation firms from outside BC conducting business
in BC, and flight crews (cockpit crew and cabin crew) who are
on turn-around in BC for a short period of time
Manitoba
An employer with no corporate presence in the province is still
required to have coverage pursuant to the Workers’ Compensation Act
if it will have an employee who lives in Manitoba performing work in
the province.
Certain industries are exempt from mandatory coverage. Examples
include:
Accounting
Professional or trade associations
Athletes and entertainers
Financial services
Communication, motivational, public relations, sales and
marketing consultants
Arbitration, mediation and dispute resolution
Data entry
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Professional writing
Telephone answering
Translation and interpretation services
Certain healthcare services
Insurance or bonding companies
Legal services
Personal grooming services including a hair or tanning salon,
body piercing or tattooing
Real estate agencies
Amusement or video arcades, carnivals or circuses
Community clubs, golf or country clubs, recreational or
sporting facilities
Private instruction or training in the arts, a technical skill or
vocational career
Employers transporting their own goods who have no place of
business and no stick of goods in Manitoba
Workers who ordinarily reside outside Canada and are
temporarily working in or travelling through Manitoba
Travel agencies
Universities or colleges
New Brunswick
An employer with no corporate presence in the province is still
required to have coverage pursuant to the Workers Compensation Act
if it has three or more employees employed at the same time in the
province.
Certain industries are exempt from mandatory coverage. Examples
include:
The fishing industry except for undertakings in which 25 or
more workers are “usually employed” at the same time
Newfoundland and
Labrador
An employer with no corporate presence in the province is still
required to have coverage pursuant to the Workers’ Compensation Act
if it will have an employee who lives in Newfoundland and Labrador
performing work in the province.
Certain industries are exempt from mandatory coverage. Examples
include:
Person in respect of construction or renovation of a private
residence, where the residence is or shall be used as a private
residence for that person
Persons employed in respect to a function in a private residence
Professional sports and competitors
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Nova Scotia
An employer with no corporate presence in the province is still
required to have coverage pursuant to the Workers’ Compensation Act
if it will have an employee who lives in Nova Scotia performing work
in the province.
Certain industries are exempt from mandatory coverage. Examples
include:
Agriculture: the business of a florist or seedman, seed growing,
gardening and horticulture; the keeping or breeding of
livestock, poultry or bees; fruit growing; the picking, grading,
packing, hauling, handling and storage of fruit or vegetables
Barber shops and shoe-shining
Undertaking and funeral management
Educational institutions, surgical medical, veterinary work,
dental surgery
Taxidermy
Work upon golf courses, tennis grounds, grounds used for open
air sports, games or athletics when performed by workers of the
owner or occupier
Taxi driving
Operation of any boat, ship, or vessel
Fishing, sealing or dredging before 1970
Ontario
An employer with no corporate presence in the province is still
required to have coverage pursuant to the Workplace Safety and
Insurance Act if it will have an employee who lives in Ontario
performing work in the province.
Certain industries are exempt from mandatory coverage. Examples
include:
Fish and shellfish breeding and propagation services
Hunting and trapping
Educational services
Air traffic control
Customs brokering and clearance
Live animal merchant wholesale
Motion picture and video production
Broadcasting
Central banks and monetary authorities
Real estate fiduciaries
Legal services
Fashion design
Software services
Credit bureaus
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Private child day care services
Museums and historical sites
Personal care services
Prince Edward
Island
An employer with no corporate presence in the province is still
required to have coverage pursuant to the Workers’ Compensation Act
if it will have an employee who lives in Prince Edward Island
performing work in the province.
Certain industries are exempt from mandatory coverage. Examples
include:
Artists, entertainers or performers
Circus operations, travelling shows, and trade shows
Clergy
Positions involving demonstrating and exhibiting
Persons employed in respect to a function in a private residence
Carriers employed to deliver newspapers and other publications
Door-to-door salespeople, or persons to sell on the streets
Salesperson who are not restricted to selling gods for one
manufacturer or supplier
Sports professionals, sports instructors, players, and coaches
Volunteers
Elected public officials
Presidents, vice presidents, directors and officers of a company
Outworkers, being persons to whom articles or materials are
given out to be made up, cleaned, washed, altered, ornamented,
finished, repaired, adopted for sale in their own home or on
other premises not under the control and management of the
person who gave the articles or materials
Taxi drivers
Quebec
The Act respecting industrial accidents and occupational diseases does
not apply if an employer does not have an establishment in Quebec,
unless the CNESST has reached an agreement to that effect with
another government.
Although not mandatory, some employers located outside of Quebec
decide to register with the CNESST when they have employees
working remotely from Quebec.
Saskatchewan
An employer with no corporate presence in the province is still
required to have coverage pursuant to the Workers’ Compensation Act
if it will have an employee who lives in Saskatchewan performing
work in the province.
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Certain industries are exempt from mandatory coverage:
Farming or ranching industries related to dairy, piggery and
poultry farming
Sports coaches and players while engaging in competitive
sports
University professors, assistant professors, associate professors,
lecturers, special lecturers or instructors who are employed by a
university
Salespersons selling goods for more than one manufacturer or
supplier
Artists, entertainers, and performers
People employed by the owner of a residence for the
construction or maintenance of the residence or the performing
of domestic functions in that residence
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EMPLOYMENT STANDARDS
The applicable provincial jurisdiction for a remote worker will be the province in which a remote
worker permanently lives and works. Accordingly, an employer is required to comply with the
employment standards legislation of that province, even if the business has no corporate presence
in the jurisdiction.
The employment standards legislation in each province will address common topics, such as
overtime, vacation, statutory/public holidays, termination entitlements, leaves of absence, etc.
These standards vary among the provinces and are not outlined in full below. In addition, there
are certain provinces that have specific requirements that are distinct from most (and, in some
cases, all) of the other provinces.
The chart below sets out some of the unique requirements of the various provincial
employment standards legislation, as well as the overtime threshold for each province.
Note: Every province will have specific industries and/or positions that are exempt from overtime.
Alberta
Overtime: An employee is entitled to overtime after 8 hours per day
or 44 hours per week. An employer and employee can agree to
overtime banking and overtime averaging, subject to the specific
statutory requirements.
British Columbia
Overtime: An employee is entitled to overtime after 8 hours per day
or 40 hours per week. An overtime averaging agreement can be used
with the agreement of the employer and employee but is subject to
specific statutory requirements.
Paid Sick Leave: After 90 consecutive days of employment, an
employee is entitled to up to 5 days of paid sick leave per year for
any personal illness or injury in addition to up to 3 days of unpaid
leave.
Manitoba
Overtime: An employee is entitled to overtime after 8 hours per day
or 40 hours per week. An employer and employee can agree to
overtime banking and overtime averaging, subject to the specific
statutory requirements.
New Brunswick
Overtime: An employee is entitled overtime (calculated on the
minimum wage) after they have worked 44 hours in a week.
Newfoundland and
Labrador
Overtime: An employee is entitled overtime (calculated on the
minimum wage) after they have worked 40 hours in a week. An
employer and employee can agree to overtime banking, subject to the
specific statutory requirements.
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Nova Scotia
Overtime: An employee is entitled overtime after they have worked
48 hours in a week.
Termination Entitlements: An employee cannot be suspended or
discharged without cause after they have ten years of service and can
be reinstated if they are wrongfully dismissed.
Ontario
Overtime: An employee is entitled to overtime after they have
worked 44 hours per week. An employer and employee can agree to
overtime banking and overtime averaging, subject to the specific
statutory requirements.
Minimum wage: An employee who meets the definition of
“homeworker” is entitled to a separate minimum wage that is higher
than the general minimum wage. A “homeworker” is defined as “an
individual who performs work for compensation in premises
occupied by the individual primarily as residential quarters but does
not include an independent contractor”.
Severance Pay: If the employer has a payroll of 2.5 million or more
(inside or outside of Ontario), an employee with five or more years of
service is entitled to severance pay in addition to their entitlement to
notice of termination (or termination pay). Severance pay amounts to
one week per year of service, prorated for any partial year, to a
maximum of 26 weeks’ wages.
Electronic Monitoring Policy: An employer with more than 25
employees in Ontario is required to have an Electronic Monitoring
Policy.
Disconnect from Work Policy: An employer with more than 25
employees in Ontario is required to have a Disconnect from Work
Policy.
Prince Edward
Island
Overtime: An employee is entitled overtime after they have worked
48 hours in a week.
Quebec
Overtime: An employee is entitled to overtime after 40 hours per
week. An employer and employee can agree to overtime banking,
subject to the specific statutory requirements.
Termination Entitlements: An employer may only unilaterally
terminate the employment of an employee with two or more years of
uninterrupted service for good and sufficient cause and, among
several available remedies, an employee can be reinstated if they are
wrongfully dismissed.
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Contractual Entitlements: Pursuant to the Civil Code of Quebec a
clause in an employment contract that provides for specific notice of
termination or compensation in lieu cannot be invoked against an
employee because what constitutes reasonable notice must be
evaluated at the moment of termination. As such, contractual
termination language cannot be used to reduce an employee’s
reasonable notice entitlement.
French Language: Pursuant to the Charter of the French Language,
every employer must respect the worker’s right to carry on his
activities in French. This means that employees may require that all
documentation and communication be drawn up in French. That said,
regardless of a specific request, there must now necessarily be a
French version of an employment contract before the parties can
agree to sign a version in another language.
Saskatchewan
Overtime: An employee is entitled to overtime after 8 hours per day
(if the employee works a five-day schedule or 10 hours if the
employee works a four-day schedule or 40 hours per week.
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ADDITIONAL EMPLOYMENT-RELATED LEGISLATION
Certain provincial jurisdictions have additional employment-related legislation with which an
employer must comply if it has any remote worker who permanently lives and works in the
province, even if there is no corporate presence. An overview of the applicable additional
statues is set out below.
Alberta
Personal Information Protection Act
Applies to private sector organizations with respect to the
collection, use and disclosure of employee personal
information
Governs the storage and retention of such information and the
right to access same
Alberta Human Rights Act
Prohibits discrimination and harassment in the workplace on
the basis of any of the protected grounds
The protected grounds related to employment are race,
religious beliefs, colour, gender, gender identity, gender
expression, physical disability, mental disability, age,
ancestry, place of origin, marital status, source of income,
family status, and sexual orientation
British Columbia
Personal Information Protection Act
Applies to private sector organizations with respect to the
collection, use and disclosure of employee personal
information
Governs the storage and retention of such information and the
right to access same
Human Rights Code
Prohibits discrimination and harassment in the workplace on
the basis of any of the protected grounds
The protected grounds related to employment are race, sex,
sexual orientation, disability, Indigenous identity, political
belief, family status, and conviction of a criminal or summary
offence unrelated to employment or intended employment
Manitoba
Human Rights Code
Prohibits discrimination and harassment in the workplace on
the basis of any of the protected grounds
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The protected grounds related to employment are ancestry
(including race and colour), nationality, ethnic origin,
religion, age, sex (including pregnancy and gender identity),
gender-determined characteristics, sexual orientation, marital
or family status, source of income, political belief and
physical or mental disability. In addition, the Human Rights
Code prohibits discrimination that is based on other group
stereotypes (such as criminal record or disadvantaged social
condition)
Accessibility for Manitobans Act
Applies to any person or organization that employs persons.
In a broad sense, the statute is intended to remove barriers
affecting people with disabilities
Personal Investigations Act
Applies to an employer that does not have a corporate
presence in Manitoba in the context of verification of
information provided in the scope of a personal investigation,
which can include a reference check in the context of an
application for employment
New Brunswick
New Brunswick Human Rights Act
Prohibits discrimination and harassment in employment on
the basis of any of the protected grounds
The protected grounds are race, colour, national origin, place
of origin, ancestry, creed or religion, age, family status,
marital status, sex, sexual orientation, gender identity, gender
expression, physical or mental disability, social condition and
political belief or activity
Newfoundland and
Labrador
Human Rights Act
Prohibits discrimination and harassment in the workplace on
the basis of any of the protected grounds
The protected grounds are race, colour, nationality, ethnic
origin, social origin, religious creed, religion, age, disability,
disfigurement, sex, sexual orientation, gender identity, gender
expression, marital status, family status, source of income,
political opinion and criminal conviction unrelated to
employment
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Nova Scotia
Nova Scotia Human Rights Act
Prohibits discrimination and harassment in the workplace on
the basis of any of the protected grounds
The protected grounds are age, race, colour, religion, creed,
ethnic, national or aboriginal origin, sex, sexual orientation,
physical disability, mental disability, family status, marital
status, source of income, irrational fear of contracting an
illness or disease, association with protected groups of
individuals, political belief, affiliation or activity, gender
identity and gender expression
Ontario
Pay Equity Act
Applies to a private sector employer if it has 10 or more
employees in Ontario and requires the employer to establish
and maintain compensation practices that provide for pay
equity
Accessibility for Ontarians With Disabilities Act
Applies to an organization that employs any persons in
Ontario. It establishes a process to develop and enforce
accessibility standards, both for members of the public who
access services and for the organization’s employees
Human Rights Code
Protects against discrimination and harassment in the
workplace on the basis of any of the protected grounds
The protected grounds related to employment are race,
ancestry, place of origin, colour, ethnic origin, citizenship,
creed, sex, sexual orientation, gender identity, gender
expression, age, record of offences, marital status, family
status, and disability
Prince Edward
Island
Human Rights Act
Prohibits discrimination and harassment in the workplace on
the basis of any of the protected grounds
The protected grounds related to employment are colour, race,
creed or religion, criminal conviction, ethnic or national
origin, family status, marital status, physical or mental
disability, political believe, sexual orientation, source of
income, sex or gender, gender identity and gender expression
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Quebec
The Act respecting the protection of personal information in the
private sector
Applies to private sector organizations with respect to the
collection, use and disclosure of employee personal
information
Governs the storage and retention of such information and the
right to access same
The Charter of the French Language
Protects a worker’s right to carry on one’s activities in French
Requires an employer provide any communication to its
employees in French and requires any written individual
employment contract be drawn up in French
The Charter of human rights and freedoms
Prohibits against discrimination and harassment in the
workplace on the basis of any of the protected grounds
The protected grounds are race, colour, sex, gender identity,
gender expression, pregnancy, sexual orientation, civil status,
age except as provided by law, religion, political convictions,
language, ethnic or national origin, social condition, and a
handicap or the use of any means to palliate a handicap
Saskatchewan
Saskatchewan Human Rights Code
Prohibits discrimination and harassment in the workplace on
the basis of any of the protected grounds
The protected grounds are related to employment are religion,
creed, marital status, family status, sex, sexual orientation,
disability, age, colour, ancestry, nationality, place of origin,
race or perceived race, receipt of public assistance and gender
identity
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EMPLOYMENT AGREEMENT CONSIDERATIONS
If an employee commences employment in a province where the employer does not otherwise
have operations, an employer will generally prepare the employment agreement to comply, from
the outset, with the laws of that provincial jurisdiction, particularly as they relate to termination
entitlements. However, in certain cases, an employee may have an employment agreement in
place at the time they move to a remote work arrangement in another province. The question
then arises as to whether that employment contract and its terms continue to apply to the
employee. This becomes particularly important if the employee has their employment
terminated.
There are many factors a court may consider to determine if an employment agreement entered
into continues to apply to the employee, despite relocation. These include whether there is a
term of the employment agreement that expressly sets out the governing law (for example, a
provision that states the agreement will be governed by the laws of Manitoba) and, even if there
is, whether there is a “sufficient connection” to the jurisdiction selected to support the
application of that law. Further, if there are public policy reasons why the laws of the selected
jurisdiction ought not apply then this may result in a court rejecting its application. This could
include the selection of a jurisdiction that would result in a contracting out of provincial
employment standards, occupational health, or other legislation (for example, if a Canadian
entity attempted to have the laws of Delaware apply to an employment relationship in British
Columbia).
For these reasons, an employer that hires an employee in another jurisdiction or has an employee
permanently transfer to another jurisdiction is well-advised to consult with experienced
employment counsel to determine if a new (or amended) employment agreement is required to
accurately reflect the new work arrangements and the appropriate termination entitlements.
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TAX IMPLICATIONS ASSOCIATED WITH REMOTE WORKERS
When a remote worker travels and works in different provinces, an employer must consider the
potential impact of the arrangement on the company’s tax liability, compliance obligations, and
withholding and remittance obligations for employee remuneration.
Provincial corporate and health tax implications
Having employees work remotely in different provinces can affect the tax the employer pays, its
access to specific provincial tax benefits, and its filing obligations in different provinces.
Canadian resident corporations are subject to separate income taxes levied by the federal
government and the provinces. While the federal portion of income tax is the same for all
corporations, the income attributable to each province is subject to varying rates. Canadian-
resident corporations are generally subject to tax on active business income at combined federal
and provincial tax rates ranging from 23% (Alberta) to 31% (Prince Edward Island). Canadian-
controlled private corporations may be eligible for the small business deduction on active
business income up to a limit, for combined federal and provincial tax rates ranging from 9%
(Manitoba, Saskatchewan) to 12.2% (Ontario, Quebec). Provinces also have different tax
calculation rules and provide incentives and tax credits that apply only to income attributable to
the province.
While all provinces legislate their corporate tax regimes and rates, the Canada Revenue Agency
(“CRA”) administers corporate provincial tax for each province except Quebec and Alberta.
Corporations file an annual return with the CRA for the federal portion and activities in all
provinces other than Quebec or Alberta. Separate provincial returns may also need to be filed in
Quebec or Alberta if the corporation has activities in those jurisdictions.
A corporation’s active business income may be taxable in any given province if the corporation has
a permanent establishment (“PE”) in that province. Whether a corporation has a PE in a particular
province is a question of fact, determined under the detailed legislation and deeming rule
framework in the Income Tax Act (Canada) (“ITA”) and the Income Tax Regulations (“ITR”).
As remote work has become significantly more common, concern has arisen that a home office
could constitute a PE in a province where an employer did not otherwise have a PE. The answer
in any particular case depends on the work location, the employee’s authority to act on behalf of
the employer, and the extent of the employer’s other operations in the province. The CRA
recently stated that it may not consider an employee working from a home office in another
province to constitute a PE of the employer, provided that the employer does not otherwise carry
on business in that province. While helpful, this CRA statement does not replace the need to seek
tax advice for any particular situation.
Where a corporation has a PE in multiple provinces, its taxable income is allocated among the
provinces. The ITA and ITR provide rules for allocating provincial income, but these do not
address all situations, particularly in a modern and changing world. The CRA has developed
administrative positions on issues that could apply to various situations. However, as with all
CRA interpretations, the guidance is not legally binding and is subject to change.
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The formula for allocating taxable income among the provinces considers the employer’s
salaries, wages and gross revenue in each jurisdiction. Therefore, the salary of an employee
working remotely in another province (either temporarily, periodically, or permanently) where
the employer otherwise has a PE, could factor into the employer’s allocation of income to each
province for provincial tax purposes. Tracking and allocating profits and payroll to different
provinces is an administrative burden on employers. If the CRA or provincial tax authorities
disagree with the allocation, they may reassess the employer for tax, interest and penalties.
Separate from corporate tax, certain provinces (Ontario, British Columbia, Quebec, Manitoba
and Newfoundland and Labrador) impose provincial health and education taxes on employers.
The rates and calculation bases for each of these taxes are governed by provincial legislation, and
remote workers can affect an employer’s liability.
Provincial withholding and social security implications
Employers must withhold the appropriate federal and provincial taxes from an employee’s
remuneration and remit to the appropriate taxation authorities. If an employer fails to withhold
appropriate amounts, it may be subject to penalties.
An employer’s obligation to withhold amounts for provincial taxes from remuneration is
calculated differently than its obligation to pay provincial corporate taxes on its profits. An
employer is to deduct amounts from remuneration following the individual income tax rates of
the province in which the employee reports for work at an employer’s establishment. Suppose an
employee is not required to report to any particular place of business of the employer. In that
case, the employer calculates withholding based on the province from which it pays the
employee’s remuneration.
On the other hand, the employee’s income tax liability for a year depends on the employee’s
province of residence at the end of the year. The personal marginal tax brackets and rates in each
province vary considerably. A remote worker who resides in a province other than the province
from which the employer pays their salary may ultimately owe more or less tax than was
withheld and remitted on their behalf.
Having too much or too little tax withheld and remitted can create cash flow issues or surprises
when an employee files their annual tax returns. To mitigate these effects, an employee can
request that additional tax be deducted and remitted on their behalf or may apply to the CRA for
authorization allowing the employer to reduce the amount deducted and remitted on their behalf.
Employers are also responsible for deducting Canada Pension Plan contributions from
employees to the government-sponsored retirement income program for all provinces except
Quebec, where Quebec Pension Plan (“QPP”) contributions are collected. Employers operating
in and with remote employees inside and outside the province of Quebec must consider the
interactions between the two plans. In certain instances, an employee may contribute to the QPP,
but never benefit from the plan.
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International implications
A non-resident employer engaging a remote worker in Canada can create many complex tax
liability, compliance, and withholding issues for the employer. A full description of the issues of
cross-border workers is beyond the scope of this publication, but a summary follows.
In Canada, a corporation is taxed based on its residency status. Resident corporations are taxed
on their worldwide income. In contrast, non-resident corporations are taxed only on certain
Canadian-sourced income, such as income from a business carried on in Canada. A double tax
treaty may ultimately relieve a non-resident corporation from tax liability to Canada but not
eliminate a filing obligation. Depending on the employer’s operations in Canada, the employee’s
authority to act on the employer’s behalf, the physical location where the employee works, and
other factors, a remote worker may or may not result in the employer being subject to Canadian
tax.
Regardless of whether the employer is subject to tax in Canada, a foreign employer must comply
with Canadian income tax withholding and remittance rules on remuneration paid to employees
in Canada. A foreign employer may also have Canadian social security contribution
requirements and other employer-related tax obligations when engaging Canadian employees.
Complying with these obligations can be cumbersome and costly, but failure to comply can
result in penalties.
The information contained in this document is provided for general information purposes only
and does not constitute legal or other professional advice, nor does accessing this information
create a lawyer-client relationship. This document is current as of January 2023 and applies
only to such laws of Canada as expressly indicated. Information about the law is checked for
legal accuracy as at the date the document is prepared but may become outdated as laws or
policies change. For clarification or for legal or other professional assistance please contact
the law firm identified in this document.
