First‑Hire Costs in Canada: Evidence Submission from Eight Small Employers

Document information

Symbol: RC/TM/2026/S.4

Kind: Submission

Author and signatory: The Secretariat

Recipient: —

Subject: Evidence for TM-001 Fair Hiring Cost Standard

Submitting group: Eight Team Council members based in Canada, whose evidence is published with their consent. Their names and businesses are withheld. No individual account in this submission is linked to a named business.

I. Purpose and scope

1. This submission places a small, consented set of Canadian member experiences before the Team Council. It concerns the direct and administrative costs members encountered, or anticipated, when moving from working alone to employing a first or additional worker formally. It is evidence for the development of TM-001, not a survey of Canadian employers and not a legal opinion.

2. The eight contributors are among the Canadian members who submitted Team Council evidence. As of 22 September 2026, the Team Council had 105 members in 38 countries and 148 reports from 40 countries. Canada was the largest national source of Team Council

reports, with 23. Across the Team Council, the median reported amount at stake was approximately US$4,115. These Assembly figures describe the wider evidence pool; they should not be treated as measurements of this eight-member group.

3. Contributors gave consent for publication of anonymised summaries of their records. The Secretariat reviewed timelines and descriptions of documents members submitted, including payroll estimates, registration checklists, invoices, contribution schedules, correspondence and notes of hiring decisions. The material is reported in aggregate or as anonymised case summaries. It does not establish that every cost described was legally compulsory, nor that the same requirements apply throughout Canada.

4. Where members’ records included Canadian-dollar amounts and approximate US-dollar equivalents, both are presented below. The equivalents are those recorded or estimated in the member material; they are indicative and are not a common exchange-rate conversion prepared by the Secretariat. Amounts refer to different kinds of costs or exposures and are not directly comparable. They should not be added together.

II. Evidence before the Council

A. A repeated sequence before the first paycheque

5. In the eight accounts, the decision to hire did not begin with a single payroll deduction. Members described a sequence: deciding whether the work justified an employee; estimating the full cost; identifying registrations and reporting steps; obtaining payroll or accounting support; and then deciding whether to proceed, delay or change the arrangement. For some, uncertainty arose before the prospective worker had started. In others, a cost became visible only after a quote, invoice or contribution estimate was obtained.

6. The members’ records covered different periods and circumstances. They included dated notes of planned start dates, saved estimates, administrative checklists, invoices for professional assistance, and records of a hire postponed or not made. Several members kept their own calculations because they could not identify a single document that showed the complete cost of employing someone. The submission therefore distinguishes a recorded payment from an estimate, a potential liability or a decision not to incur the cost.

7. The cases below summarise the types of evidence and amounts in the members’ records. They are not a ranking of employers and do not imply that all contributors faced every item listed.

8. “Employment-related cost beyond the planned wage” is a description of the member’s own calculation, not a standard accounting category. In the submitted records, additional amounts could include employer-side contributions, payroll administration, professional assistance or setup work. A figure may combine paid and anticipated amounts. The table does not establish which items are mandatory under a particular provincial or territorial regime.

9. The evidence also records the cost of uncertainty. Members described having to seek more than one estimate, reconcile different explanations, or keep a contingency because they were unsure when a cost would arise or which step came first. These experiences are reported as administrative burdens, not as proof that an adviser or public body gave incorrect advice. The submission contains no allegation against a named provider or authority.

10. The consequences were not uniform. Some contributors postponed or reduced a planned hire; others proceeded after paying for assistance; one account documents a decision not to hire during the period covered. A member’s decision can reflect expected demand, cash flow and other considerations in addition to hiring costs. The records do not permit the Secretariat to assign a single cause to each outcome.

B. The relation to formal employment

11. The members’ concern is not that employment contributions should be removed, or that workers should lose protections. It is that a small employer may face a set of costs and procedures that is difficult to price before the first hire, at a point when the business has limited administrative capacity and uncertain revenue. Contributors favoured arrangements that make obligations visible early, explain what must be done in one place, and avoid disproportionate fixed burdens at very small scale.

12. This concern is consistent with the Team Council’s stated agenda item, TM-001: phased social contributions, one-stop payroll registration and predictable rules for a business’s first ten hires. It is also relevant to the broader policy question of how to encourage formal employment. The ILO reports that micro, small and medium-sized enterprises account for about 70 per cent of employment worldwide and that around 80 per cent operate in the informal economy.¹ Those global estimates do not establish the causes of informality in Canada or the circumstances of the eight contributors. They provide context for considering whether formal-employment systems are accessible to small employers.

III. Assessment against the five-part pattern test

Volume

13. The eight contributors are a limited subset. Their accounts sit within a Team Council pool of 148 reports from 40 countries as of 22 September, including 23 reports from Canada. The Secretariat therefore considers the Canadian accounts sufficient to identify a recurring issue for further assessment, but insufficient on their own to estimate the prevalence or total financial impact of first-hire costs across Canada. The group must not be presented as a statistically representative sample.

Frequency

14. All eight submissions concerned hiring costs. Across the accounts, members repeatedly described at least one of three experiences: an estimate of costs beyond the planned wage; administrative or professional setup work; or a delay, reduction or non-completion of a planned hiring step. This repetition is meaningful within the submitted group. It does not establish how often the same pattern occurs among all Canadian small employers.

Consistency

15. The sequence in the records was broadly consistent: an intention to hire, an attempt to determine the full cost and process, and a subsequent adjustment to timing, scale or support. The records were not identical. Cost categories, time periods and the degree to which amounts had been paid differed. For that reason, the Secretariat finds consistency in the type of friction described, not in a single standard cost or a uniform legal requirement.

Spread

16. The material is from members based in Canada. It can show that the issue is not confined to one contributor’s account, but it cannot establish geographic spread within Canada because the submission does not provide a province-by-province breakdown. The wider Team Council reports came from 40 countries, but this submission does not infer that the Canadian details apply in other countries. Differences in social insurance, payroll administration and employment rules require separate evidence.

Corroboration

17. Members’ records include different kinds of material, including dated estimates, checklists, invoices and planning notes. The wider policy context also supports examining the affordability and predictability of

employment costs. OECD Taxing Wages 2026 reports an OECD-average tax wedge of 35.1 per cent in 2025 and gives country cases, including Germany at 49.3 per cent. These figures concern the tax wedge as defined in that publication; they are not Canadian estimates and should not be treated as the cost of hiring a first employee in Canada.² Their relevance here is limited: employment costs and the design of contributions merit careful, country-specific treatment.

18. On the evidence before the Council, the Secretariat considers that these eight accounts offer useful corroboration of a recurring problem for draft development. They do not, by themselves, determine whether TM-001 has passed all five tests. The Assembly’s process requires the evidence across the full problem set to be assessed before a pattern finding is made.

IV. Local-law scope

19. The Secretariat’s records for this submission do not identify a specific Canadian federal, provincial or territorial statutory provision, regulation, contribution rate or registration deadline for the cases described. The Secretariat therefore makes no claim about which legal obligation applied to an individual member, and does not characterise any recorded cost as legally required. The members’ records are not a substitute for jurisdiction-specific legal review.

20. Any draft standard should be framed as a recommendation for clearer administration and more proportionate design, subject to the applicable law in each jurisdiction. It should not imply that a common contribution schedule or registration process already exists across Canada. Before country-specific recommendations are made, the Council should obtain jurisdictional evidence and, where appropriate, review by qualified local experts.

V. Recommendations for the draft

21. The Secretariat recommends that the TM-001 draft address the following points, while distinguishing proposed principles from changes that require action by governments or other competent authorities:

1. Show the full expected cost before hiring. Encourage a single, plain-language estimate that separates gross wages, employer-side contributions, payroll administration and other applicable charges. The estimate should identify assumptions, timing and the limits of any projection.

2. Make the first steps navigable in one place. Recommend a single entry point or coordinated checklist for registration, payroll setup and recurring reporting, with clear signposting where different authorities remain responsible. A one-stop interface should not conceal which body administers each obligation.

3. Improve predictability for very small employers. Invite competent authorities to examine whether fixed or front-loaded costs can be phased for the first ten hires without reducing workers’ lawful entitlements. Any phasing should be transparent, time-limited where appropriate, and assessed for effects on workers and public revenue.

4. Provide a usable first-hire pathway. Recommend a practical checklist that states the order of steps, what information is needed, when a payment or report is due, and where to seek help. Guidance should distinguish general information from individual legal or tax advice.

5. Make estimates comparable. Encourage payroll and accounting tools to present a clear breakdown and to state when estimates are incomplete. Members’ accounts show the value of distinguishing one-time setup expenses from recurring payroll costs and from contingent amounts.

6. Protect worker rights and formalisation. State expressly that lower or phased employer costs must not be achieved by misclassifying workers, withholding lawful contributions or weakening protections. The objective is to reduce avoidable complexity and improve predictability, not to shift undisclosed costs onto workers.

7. Measure outcomes. Recommend that any future programme report uptake, processing times, small-employer compliance experience and effects on workers, with data disaggregated where lawful and feasible. Evaluation should include whether administrative burden has shifted rather than disappeared.

8. Build a jurisdictional evidence record. Before proposing national implementation detail, collect the relevant rules, rates and registration steps for each jurisdiction in scope. Published comparisons should state their date, assumptions and limits.

22. These recommendations reflect the evidence’s strongest shared feature: members struggled to see the complete cost and sequence early enough to make a confident hiring decision. The accounts do not justify a fixed Canadian subsidy, a specific contribution rate or a conclusion that any individual hire was prevented solely by compliance costs.

VI. Conclusion

24. The eight Canadian members provide a documented but limited account of first-hire planning. Their evidence shows repeated efforts to estimate costs and navigate setup, alongside decisions to delay, scale back or reconsider hiring. It supports drafting a standard focused on transparency, coordinated guidance, predictability and careful evaluation.

25. The Secretariat submits this material for consideration in the TM-001 process. It should be read alongside other member reports, further jurisdiction-specific evidence and the public consultation. The

submission does not name businesses, accuse any provider or authority, or claim that the eight accounts represent Canadian small employers as a whole.

Notes and sources

Sources

1. [1] International Labour Organization, Micro, Small and Medium-sized Enterprises
2. [2] OECD, Taxing Wages 2026: Germany country note