When a small business owner starts a business they either know they will have to hire right away or will need to hire in the future. If you’ve never gone through the hiring process it can be difficult to navigate.
Hiring staff means advertising that you are hiring, listing the qualifications you are looking for, and the details such as hours, time off, sick days, etc. Then you’ll to review candidate resumes to determine who to interview.
Those are all of the obvious recruitment tasks. However, you will also need to take care of a number of compliance items.
1) Employee Agreements
An employment agreement outlines the expectations of the employer and employee. Important items such as salary, vacation pay, vacation days, your company policies and non-solicitation or non-compete arrangements should be detailed with legal advice.
Do not try and create your own. Find an employment lawyer to write a legal employee agreement based on your needs. The expense can sometime scare most new business owners away, but it will help ensure the terms are defensible under Canadian employment law. The few hundred dollars you spend on an employee agreement could save you thousands and a lot of headaches in the long run.
2) Employer and Employee Source Deductions
When you hire someone you need to ensure that you are registered with the CRA for payroll source deductions. (apply link to highlighted text: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/hwpyrllwrks/stps/ccnt/menu-eng.html) This means that you will have to call the CRA to get your payroll business number. This allows you to take source deductions (federal and provincial taxes, CPP and EI) directly from their payroll to send to the CRA. Normally this is done on a monthly basis, but some small businesses can submit quarterly.
You are also responsible for submitting the Employer portion of the CPP and EI portions. This means you will need to match the CPP your employee is paying and also pay an extra 1.4% of EI. These employer portions need to be submitted at the same time as the employee contribution.
3) Employment Standards Act
It is important that you become familiar with your provincial Employment Standards Act (Ontario). (apply link to highlighted text: http://www.ontario.ca/laws/statute/00e41?_ga=1.64915691.510027592.1444313897) These laws outline standards that need to be followed when hiring and maintaining compliance during the time you have an employee. The Standards Act also outlines things like how to calculate vacation pay, what days are considered statutory holidays and how pay is calculated if an employee works on statutory holidays. If you do not follow them, your employee can register a complaint with the Ontario Ministry of Labour.
5) TD1 and TD1ON Forms
In Ontario your employee should be filling out the TD1 (apply to highlighted text: http://www.cra-arc.gc.ca/E/pbg/tf/td1/README.html) and TD1ON (apply to highlighted text: http://www.cra-arc.gc.ca/E/pbg/tf/td1on/README.html) forms. These forms outline the amount of income that is tax exempt for an employee, starting with the base amount pre-printed on the form. These forms should be filled out any time there is a change to an employee’s deductions.
The form lists the tax benefits that your employee can verify in order to save taxes throughout the year. If an employee has children or a dependant this is the place to note it. Doing this can reduce your employee’s personal tax obligation.
If your employee has more than one job, or lives in a different province, they may want to have extra taxes taken off each pay to ensure they do not owe at the end of the year.
WSIB is a workers safety insurance premium that an employer pays. It is there to help you with coverage for any on the job injuries. These are especially important for restaurants as your employees may be working with equipment than can injure them.
Once registered you can pay monthly or quarterly to ensure you have coverage. If there is an injury on the job WSIB will help to cover medical costs.
Most businesses must register for WSIB. (It’s mandatory for any construction company). (apply to highlighted text: http://needwsibcoverage.ca/) For all other businesses, visit the WSIB website at to see if you need WSIB for your employees. (apply to highlighted text: http://www.wsib.on.ca)
Due diligence in hiring staff
There is a lot to consider when you are about to hire. You have to know all of your responsibilities as an employer before you hire. And don’t hesitate to get advice from a legal, accounting, or HR professionals. It can protect you and your employee in the long-term.