Looking for a PEO in Canada? Explore These Hiring and Payroll Options

Businesses expanding into Canada often search for "PEO" services to manage local hiring, payroll, and compliance. But PEOs, by definition, operate under a co-employment model that only exists in the United States, and can only be used if you already have a legal entity in the country.

For companies without a legal entity in Canada, what they really need is an employer of record (EOR) or an administrative services only (ASO) solution.

Deel is trusted by thousands of companies worldwide for global hiring. With legal infrastructure in over 150 countries and deep expertise in Canadian labor laws, Deel enables you to hire, pay, and manage talent in Canada, including Deel EOR.

This guide explains how the Canadian employment model works, how a PEO differs from an EOR, what services EOR and ASO solutions offer in Canada, and how Deel can simplify compliant hiring across all provinces.

Understanding local employment models in Canada

What is PEO?

A professional employer organization (PEO) is a co-employment model used primarily in the US. Under a PEO arrangement, the employer retains control over the day-to-day management of employees but shares HR, payroll, and compliance responsibilities with the PEO. Critically, the business must already have a legal entity in the US to use a PEO.

Canada treats the registered employer as fully responsible for wages, benefits, and statutory filings, so it doesn’t recognize US-style co-employment. PEO services in Canada would still require you to own a local entity and co-file returns, effectively sharing administrative tasks while liability stays with the registered employer—you.

What is EOR?

In contrast, an employer of record (EOR) serves as the legal employer of your workers through its local entities, allowing your company to operate in the destination country, such as Canada, without establishing a local entity. The EOR assumes full legal responsibility for compliance with employment standards, payroll, benefits, taxes, and employment contracts.

In Canada, provincial employment standards and tax laws vary widely. This makes it difficult for foreign employers to navigate compliance without local support. For example:

• Employers must follow provincial rules for minimum wage, work hours, and statutory holidays
• Payroll in Canada must be accurately calculated and remitted to federal and provincial authorities
• Employers must contribute to the Canada Pension Plan (CPP), employment insurance, and workers’ compensation programs

While Canadian equivalents to a PEO exist (e.g., HR outsourcing firms), none offer full legal employment capabilities unless they operate as an EOR.

What services does an EOR provide in Canada?

An EOR provides end-to-end employment services so companies can legally hire Canadian employees without setting up an entity. Here are the main service categories:

Contract drafting and onboarding

An EOR drafts compliant employment contracts that meet federal and provincial requirements, including job title, duties, compensation, hours, location, and statutory notice. They handle background and reference checks per provincial privacy laws and ensure probation clauses, non-compete clauses, and IP assignment provisions align with local jurisprudence. You provide the role profile and compensation guidelines, the EOR issues the offer letter and employment agreement under its own entity.

Payroll processing and tax remittance

An EOR processes payroll on your chosen, locally-compliant schedule, deducts CPP, EI, and income tax at source, then remits both employee and employer portions to the CRA and provincial revenue agencies. They prepare and file T4s annually and manage payroll registers, ensuring alignment with provincial payroll legislation.

With Deel Global Payroll, you can centralize all your global payroll into one place for streamlined reporting, analysis, and payments.

Benefits administration and HR support

EORs administer group health, dental, life, and disability plans that they negotiate at scale, often delivering cost savings and extended coverage. They enroll employees, manage open enrollment, and handle coverage changes during life events. HR support includes policy templates, employee handbooks, performance management tools, and advice on provincial Labour Standards Act queries—from vacation accrual to overtime rules.

Workers’ compensation and insurance

Industry-mandated workers’ compensation coverage varies by province (e.g., WSIB in Ontario, WorkSafeBC in British Columbia, CNESST in Quebec). An EOR registers your employees under its policy, handles premium calculations, and manages claim filing and rehabilitation coordination. They also provide employer liability insurance covering wrongful dismissal, health and safety fines, and third-party suits, shifting risk off your books.

Local benefits benchmarking and plan design

EORs leverage access to broad employee populations to benchmark benefits and customize competitive total rewards packages. They offer plan design advisory so you can align rewards with Canadian market norms—from supplemental health plans to retirement savings programs like RRSP matching. This ensures you attract and retain Canadian employees without separate consulting fees or manual market surveys.

Ongoing compliance and liability management

EORs monitor changing federal and provincial regulations—from occupational health and safety to amendments in leave entitlements—and adjust policies and payroll automatically.

They file workplace postings, update contracts, and conduct quarterly compliance audits. If employees dispute termination or file labor standards claims, the EOR’s in-house legal team acts as the formal employer, preserving your home office from direct involvement.

Benefits of using a Canada EOR

No local entity needed

You can hire in Canada without registering a subsidiary, branch, or corporation. The EOR becomes the legal employer, saving you months of paperwork, legal costs, and ongoing entity maintenance. This approach lets you skip directly to onboarding top talent, bypassing all incorporation hurdles.

Faster hiring and onboarding

A Canada EOR lets you onboard employees much faster than it would take to set up an entity and register for payroll. You’ll respond quicker to market opportunities, clients, or projects, without waiting for bureaucratic processes. This speed means you stay ahead in competitive Canadian hiring environments.

Full compliance coverage

EORs track and implement all relevant employment laws—provincial and federal—on your behalf. From updating contract templates to processing payroll taxes and handling statutory leaves, the EOR shields you from local legal pitfalls. You don’t have to be an expert in Quebec’s French language or privacy laws, as the EOR handles it all.

Scalable headcount

With an EOR, you can flex your Canadian team size up or down as business needs change. There’s no need to worry about maintaining a minimum headcount, dissolving a local entity, or triggering legal obligations tied to entity closure. This built-in agility supports pilot projects, seasonal expansions, or sudden market pivots.

Lower admin costs

You avoid legal, accounting, and entity management expenses by using an EOR. Instead, you pay an all-in-one fee that covers payroll, benefits, HR support, and statutory filings. Your total cost of employment stays predictable, with fewer surprise invoices or consulting fees.

Smooth off-boarding

EORs manage the entire off-boarding process: legally compliant notice, severance calculations, record of employment filings, and even outplacement support. You won’t risk wrongful termination claims or procedural errors. The EOR’s expertise ensures every exit meets Canadian employment rules.

Can I use a global PEO in Canada?

Terms like "global PEO" or "international PEO" are often used interchangeably with EOR. While there is no formal PEO model outside the US, some providers position their employer of record services outside the US as PEO services, which can cause confusion.

If you’re hiring in Canada without a local entity, you’re not actually looking for a co-employment model. You need an employer of record (EOR) who can handle legal employment, payroll, and benefits for your workforce.

Using ASO solutions in Canada

An administrative services only (ASO) organization is a service model that helps businesses streamline and offload administrative HR functions. These typically include:

• Payroll processing

• Tax filings

• Regulatory compliance

• Benefits administration

However, it’s important to note that while benefits administration is provided, the ASO does not offer access to more comprehensive or pooled insurance plans like a PEO might.

In an ASO arrangement:

• The client remains the legal employer and retains full control over hiring, firing, and employee management

• The client bears all employment-related legal liabilities

• The ASO acts as a third-party administrator, improving efficiency without altering the employment relationship

Benefits of using an ASO in Canada

Cost savings

ASOs can provide meaningful cost advantages by removing insurer profit margins and eliminating the need for fixed premium markups. Because claims are paid only when incurred, employers may realize significant savings during low-utilization periods.

Plan design flexibility

An ASO model allows employers to design benefit plans that are tailored to their specific workforce needs, demographics, and strategic priorities. Unlike traditional insurance offerings, which often limit employers to pre-designed, inflexible plans, ASOs offer customization that can adapt as business needs evolve.

Transparency and data access

One of the most valuable features of an ASO arrangement is access to real-time claims data. This transparency enables employers to track healthcare spending, identify cost drivers, and analyze trends. With this insight, organizations can make informed decisions about benefit plan modifications, wellness strategies, and vendor partnerships.

Improved employee experience

Many ASO providers enhance the employee experience through high-touch customer support and easy-to-use digital tools. These resources help employees better understand and engage with their benefits, improving satisfaction, trust, and overall utilization of the plan.

PEO vs EOR vs ASO

How Deel supports workforce expansion in Canada

Deel combines technology, compliance infrastructure, and local expertise to simplify global hiring. Here’s how Deel supports your Canadian expansion:

• Unified dashboard for contracts, payroll in Canada, and time-off tracking
• Automated compliance with Canadian tax, labor, and employment insurance rules
• In-house experts support every step of the process
• Owned infrastructure, including real-time payroll
• Integrated support for global hiring and workforce management of direct employees, EOR employees, and independent contractors
• Centralized system to manage international IT, worker immigration and mobility, and more

Book a demo to see how Deel can simplify your journey.