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Termination of Employment in Canada: Employer Obligations

There was a termination of employment with the GEO local employer when one of our clients  legally terminated their contract with their employees in Canada, when they set up their own local entity. This triggered a number of Canadian employment and tax requirements, and we were able to provide assistance to allow our client to better understand their employer obligations, and helped their employees with a seamless transition.

What are the Rules in Canada Regarding Termination of Employment?

The first step in this process is knowing the relevant regulations:

When an employee leaves your business, you must calculate that person’s earnings and deductions, prepare a T4 Summary, and complete a Record of Employment (ROE). If you dismiss an employee, you will usually have to provide pay in lieu of notice and severance pay.”

These regulations kicked in since the Canadian employer of record would now be the client’s own subsidiary, so for purposes of compliance there was a termination of employment with the GEO local employer.

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The employee had the following questions on this process:

Where will the T4 be received? Only to the employer, or also to our home address?

The T4 Summary of your final earnings and deductions will be sent to you electronically by email, as well as to your employer.  The T4 will be received by Feb 28th.

What if I am worried about security for the emailed T4? Is there another option?

There is no security risk, as the T4 documents are emailed using password protected, software encryption approved by the Canada Revenue Agency.  We can mail copies but cannot guarantee timely delivery as with emailed T4s.

How do you handle the RRSP (Registered Retirement Plan) contributions to verify that deposits have been made and the information will be transferred?

The accounting department of the local employer in Canada will verify all contributions, and then your bank will provide a voucher for your tax return of how much was contributed.  You can check the amounts against the contributions listed on your payslip.

When will I get confirmation of the Record of Employment (ROE)?

The ROE is submitted electronically to the Canadian government.  We don’t send you these employment records directly, but you can sign up for “My Service Canada” and view the documents online at this link:

Shield GEO Assists Clients at Every Stage of Foreign Employment

As this example illustrates, we help clients from start to finish when providing a GEO local employer of record service.  Some clients will enter a new market using the GEO to employ their workers, and once they have confirmed the business value, they will set up their own subsidiary or branch office.  In that instance, we will assist them with the transition of employees to their own entity, without interruption of contributions, tax payments or other compliance issues.

This demonstrates the true flexibility and value of our solution, whether for a short transition to test out a new market or long term employment.

Get in touch to find out more about how an Employer of Record Solution can help with your employment needs in Canada

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