If you’re a U.S.-based or international employer wanting to hire an EOR in Canada, it’s essential to understand employer of record costs and fees. By understanding employer of record pricing and the factors that may affect cost, you can avoid surprises and properly budget for your expansion initiatives. Unfortunately, some EORs aren’t very transparent with their pricing. So, to help you better understand employer of record service costs and how pricing works, we’ve put together a 2024 EOR Pricing Guide.
In this guide, our Canadian employment experts will explain all aspects of employer of record pricing so you know exactly what to expect when working with an EOR. Plus, we’ll share some commonly unmentioned “hidden fees” you should know about and discuss how to avoid these unexpected employer of record costs.
Ready to learn everything you need to know about EOR cost and how employer of record pricing works? Keep reading!
But before we discuss the details, let’s take a look at the big picture - the average cost of an employer of record in 2024.
Average Employer of Record Cost in 2024
In 2024, the average employer of record Canada cost ranges from under $400 to $800+ USD per employee per month.
Keep in mind that this estimate is based on average pricing for an EOR in Canada and does not include setup costs and other employer of record fees. Your monthly EOR cost may differ depending on your employment needs.
What do employer of record costs cover?
You’re probably wondering - what do EOR costs cover? The truth is - all employer of record companies vary slightly, offering different services and pricing. But, typically, employer of record pricing covers all employment-related management duties.
For example, most EORs handle onboarding, the development of locally compliant employment agreements, payroll and Canadian payroll deductions, distribution of employee benefits, taxes, worker’s compensation claims, regulatory compliance, and more. Some EORs, like Thirdsail, will even help you obtain certain types of work permits in Canada for top talent.
Now that you know what services are included in the cost of an employer of record, let’s examine a breakdown of EOR costs.
Average EOR Cost Breakdown
The table below provides a breakdown of employer of record cost, revealing what’s included in typical EOR pricing and additional fees you can expect.
*While your employer of record will process payroll and handle payroll deductions, the cost of your employee’s salary is not included in the monthly EOR fee per employee.
**Your EOR will set up and administer employee benefits, ensuring these benefits are locally compliant and attractive to top talent. However, the cost of the actual benefits (e.g., health benefits and insurance, retirement contributions, etc.) is not included in your monthly employer of record Canada cost.
***An employer of record will handle tax filings, reporting, and Worker’s Compensation claims and assist with immigration needs. However, your business is responsible for any additional costs associated with these employment-related requirements.
What factors can affect employer of record pricing?
Several factors can affect employer of record cost, including the following.
- Number of employees - most EORs charge a flat fee per employee per month. Therefore, the most significant factor affecting EOR cost is the number of employees you hire.
The more employees an EOR helps you hire and manage, the more it will cost. That said, employer of record companies often offer volume discounts. For example, if you hire more than 5 employees, each additional employee is less expensive. - Location - employer of record service costs can vary greatly depending on where you’re hiring. That’s because different countries and regions have different labor laws and legal and regulatory requirements. As a result, the cost of hiring employees and maintaining compliance will vary.
- Currency - some EORs price in local currency, while others don't. If you’re billed in a foreign currency, this can be a plus if it works out cheaper or a disadvantage if the exchange rate results in higher costs. Regardless, pricing in foreign currency will result in fluctuating expenses.
Thirdsail, for example, provides pricing in USD but can bill clients in any preferred currency. When working with Thirdsail to hire employees in Canada, U.S.-based businesses benefit from a currency exchange advantage, as employee salaries and other costs, like benefits, are in Canadian dollars.
- Need for additional services - if you require additional employment-related services, such as immigration assistance, this will also impact the total cost of EOR services.
How does EOR pricing work?
EOR companies in Canada use two primary pricing models - a flat monthly fee per employee or a percentage of an employee’s salary.
To help you decide which employer of record cost structure works best for you, here is a summary of the most common employer of record pricing models, how they work, and the pros and cons of each.
Flat Monthly Fee Per Employee
Most EORs in Canada charge a flat fee per employee per month. This fixed pricing includes payroll processing, employee benefit management and distribution, HR support, tax filing and reporting, regulatory compliance, and other back-office tasks.
AVERAGE EMPLOYER OF RECORD COST PER MONTH PER EMPLOYEE: under $400 to $800+ USD
PROS: Predictable and consistent monthly costs, better cost transparency
CONS: Doesn’t scale well for businesses that want to hire a large number of employees
Percentage of Employee Salary
Some employer of record companies in Canada charge a percentage of each employee’s salary. For example, if you have an employee who receives an annual salary of $80,000 and your EOR charges a 10% fee based on salary, EOR services for this employee will cost about $8,000 annually.
AVERAGE EOR SALARY PERCENTAGE FEE: 10% to 20%
PROS: Scalable and cost-effective for businesses hiring low-wage employees
CONS: More costly for high-wage employees, EOR costs may vary greatly year-over-year, depending on wage increases
Additional (Not-So-Common) EOR Pricing Models
Flat monthly pricing per employee and pricing based on an employee’s salary are the most common employer of record cost structures in Canada. However, you may encounter some other models, including the following.
- Fixed Pricing (a flat fee for EOR services, regardless of the number of employees or their salaries)
- Hourly Rate
- Hybrid or Custom Model (a blend of flat-rate monthly pricing per employee, percentage of salary, and hourly rate pricing)
Are there hidden costs when working with an EOR?
There may be hidden or unexpected costs when working with an EOR that isn’t transparent.
Examples of common hidden employer of record service costs include:
- Setup and onboarding fees
- Security deposit
- Currency conversions
- Document processing fees
- Employee benefits distribution (some EORs may charge extra for managing and distributing benefits)
- Offboarding and termination fees
- Employee transfer fees (i.e., transferring an employee to another entity)
While these employer of record costs are legitimate, it’s nice to know about them upfront. Therefore, to avoid hidden EOR costs, it’s crucial to hire an employer of record that is transparent with its pricing.
Experienced EORs like Thirdsail believe in complete transparency and provide upfront pricing with no hidden costs or fees - so there are no surprises!
Addition Employment Costs to Consider
When working with an EOR, there are some additional costs not covered by the employer of record Canada cost. Your organization should account for these additional costs in your budget:
- Employee salaries
- Legal fees
- Cost of employee benefits
- Tax expenses
- Applicable immigration costs, etc.
How do the prices of the best EORs in Canada compare?
To help you find an EOR that’s right for your business, let’s compare the cost of the best employer of record companies in Canada.
Choosing the right EOR is critical to success, and the lowest-cost solution isn’t always the best. As with most things in life, you get what you pay for when it comes to EOR services. So, be sure to look for a mix of experience and value when choosing an employer of record.
Benefit from Experience and Value with Thirdsail
Thirdsail’s extensive expertise and competitive pricing make it an ideal EOR service provider.
With years of experience in Canadian employment, our HR, payroll, and legal experts will ensure your employees are in good hands - so you can focus on expanding your businesses.
Our reliable team will handle all the legal and back office work required to legally employ workers in Canada. We’ll ensure compliance, handle employment agreements, onboarding, and payroll, take care of taxes, and administer benefits to your employees.
Best of all, we provide these high-value services at a cost-effective price (especially compared to setting up a subsidiary). Plus, we’re open and transparent with our pricing - so there are no surprises!
Employer of Record Cost - Quick FAQs
Below are some of the most common questions about employer of record pricing and costs.
How much do employer of record services cost?
When considering working with an employer of record, the big question is - how much is an EOR? In Canada, most employer of record companies charge a fixed monthly fee per employee. In 2024, the average monthly cost per employee for standard EOR services ranges from under $400 to $800+ USD.
What is the difference between payroll and employer of record?
When researching employer of record costs, you might discover that some EORs (and PEOs) offer separate employer of record and payroll services. So, what’s the difference?
With employer of record services, the EOR acts as the legal employer of the international employees it hires on your behalf. In this case, the employer of record handles all legal, compliance, and back office duties associated with employment - including payroll.
On the other hand, payroll services only ensure your employees are paid accurately and on time. Therefore, with payroll services, your business is responsible for all other employment-related activities and must own a legal entity in the country you wish to hire in.
What are the benefits of an EOR?
There are many benefits of an EOR. Some of the most notable advantages of working with an employer of record include:
- Ability to hire employees in a foreign country without establishing a legal entity there.
- Much more cost-effective (especially for smaller organizations) than setting up a legal entity.
- Ensures your business is compliant with local labor laws and policies, helping you avoid legal issues and penalties.
In addition to these benefits, an EOR offers several other advantages, disadvantages, and risks to consider.
What is the difference between employer of record and PEO?
There are two main differences between an employer of record and a PEO.
First, an EOR acts as the legal employer of the workers it hires on behalf of another company. In contrast, a PEO acts as a co-employer, sharing employment-related responsibilities and risks with its clients.
What’s the second big difference between an EOR and a PEO, and which is best for your business? Find out here - EOR vs PEO.
