As one of the fastest-growing Canadian provinces, it comes as no surprise that Alberta is packed with businesses of all sizes. Plus, everyone knows the inherent maverick, entrepreneurial spirit of Albertans. However, all enterprising individuals still need a team behind them, and with that team come responsibilities for an employer. Here’s your go-to starter guide to make sure your trailblazing small business follows the applicable employment laws of the Sunshine Province.
Making Payments to Employees
How are Contractors and Employees Different?
There are a lot of ways that contractors and employees differ. No, seriously – these two types of workers are actually quite different indeed! If you’re looking to start a small business in Alberta (or if you already own one), then this is probably one the first things you should get familiar with.
Employee
So what exactly is an employee? Simply put, it's someone who works for your company and is registered on your company payroll (see our 7 Step Payroll Guide). You have to pay them regularly, and they have rights, perks, privileges – you know, all of the little things that make your company a great place to work. The minimum wage for an employee in Alberta is $15.00 per hour.
Contractor
Okay, so we know what an employee is, what about contractors? Exactly as the name implies, these are people who you hire to work for you and are bound by contractual agreements. They sign contracts that include duration of work, the responsibilities while under contract, when and how much they’re paid, and what method they’re paid. These people are typically paid only once or as the project is completed, and don’t have the company perks that employees do.
Confused about deciding who to hire? We totally get it. At ReInvestWealth, we really recommend assessing what you need from your workers, and what resources you realistically have to allocate to workers before hiring employees and/or contractors.
Can I simply hire everyone as a contractor?
No! Workers can only be contractors if they meet certain specific requirements, such as control over hours and the ability to subcontract work. If the work is full-time and the worker doesn't have much control over their job, they are likely an employee and must be paid vacation hours, pension and employment insurance. BDC has a great guide that can assist you in making informed, smart decisions on what type of workers to hire, so don’t worry!
How Do I Pay Employees?
Small businesses in Alberta have to make payments to their employees at minimum once a month. Most workers, outside of management, get paid more frequently than that. A few arrangements can be made for how often employees get their wages: weekly, bi-weekly or monthly payment are the most common.
Keeping tabs on payroll can waste great amounts of time for small business owners over the months and years. Our payroll cloud accounting software at ReInvestWealth makes paying employees a breeze. The ReInvestWealth app can automate payroll tasks like transferring money, sending payslips and delivering T4s.
Aside from actually paying of wages, there are a handful of other essential employment laws regarding payment rules that every small business owner in Alberta needs to know and follow in Wild Rose Country:
All of the wages must be paid to employees in Canadian dollars (CAD)
You have to pay an employee at least the minimum wage in Alberta ($15.00 per hour)
Wages must be paid to all employees in 10 days (or less) from the end of each pay cycle (which you can usually determine yourself, as the business owner)
How Do I Pay Contractors?
It’s pretty simple, actually. When dealing with a contractor, you sign a contract that specifies their payment schedule and method. E-transfer works great and contractors with more frequent payments can usually be added to payroll software as a general contractor. Keep in mind that the contractor is responsible for making source deductions and government remittances, not you.
Keeping Records in Alberta
Record Keeping 101
To keep things simple, since there are so many requirements when it comes to payroll, it’s just best to use automated software. You don’t want to manually prepare maternity leave forms, T4 or pay slips or any of the other dozens of specific employee situations. A good payroll software will really save you time and shouldn’t cost more than a few dollars per employee per month.
Record Keeping Advanced
In Alberta, record keeping is a requirement for every single pay cycle. Alberta actually mandates that an employer have documentation that goes along with every single wage payment. Wondering what that documentation has to include? Here’s your answer:
In every single pay period, employees need to be given a statement of earnings by their employer.
Records of statement of earnings for a minimum of 3 years past.
Proof that payments were made to the employee within 10 days of the end of the pay period. This requirement is only waived if the employee was terminated, in which case the protocol would be different.
As a small business owner, there’s definitely a lot more information that you might want to consider keeping on file when it comes to the fine, yet mundane, art of record keeping. If you have absolutely no clue where to begin, consider the following:
Basic information about your employee (name, address, phone number, role, responsibilities, backup copies of written documents, etc.).
Dated information (when they began in their role(s), their wages per hour, the currency they’re paid in).
Work related information (when and how long their shifts are, work logs, overtime, etc.).
Leave of any kind ( ex. Maternity, paternity, sick, vacation, etc.).
When it comes to busier times like tax season, having all of this information at your fingertips can make your life way easier. To be even more efficient and organized, we suggest digitizing these records. Accounting software can be life changing for small business owners, because they can count on streamlined services that intuitively cater to the areas their businesses need support in! You can begin to explore the possibilities of cloud accounting here at ReInvestWealth.
Why Does Record Keeping Matter?
Well, there’s the obvious things we’re sure you’re well aware of. You know, the classic paying wages on time, schedule-setting, ease of operations level reasons. But surely you can figure that out on an as-required basis, right? Well, wrong, actually. You can’t.
For starters, you’re legally required to maintain records for your business. The CRA mandates it for all taxation purposes, so there’s no opting out. There’s plenty of ways to manage your records pretty easily (always remember to keep our ReInvestWealth app in mind, nudge, nudge).
On top of cloud accounting simplifying mandatory bookkeeping, it also comes in handy for helping successfully acquire loans and grants. A lot of the time, organizations might want proof of records to evaluate your company’s financial standing, so that they can decide if you meet the requirements or not. And who the heck doesn’t want free grants and bursaries as a cash infusion for their small business?!
Monetary support for hiring employees
Well, at the heart of it, hiring requires capital. If you don’t have the funds to pay wages, you can’t really recruit anyone into your company. The best place to start, for this reason, would be seeking grants and loans. Plenty are available for small and medium businesses alike, and it's typically a breeze to apply.
Applications are usually simple; you need to check the qualification criteria, and if you meet it, fill out some kind of form and provide the documentation that is requested. The nitty gritty details can definitely vary from organization to organization, but it all ultimately boils down to if you can qualify and submit proof.
If this is something you’re struggling with, legal counsel can definitely be helpful. We encourage reaching out to specialized lawyers based in Alberta to get your questions answered.
Resources for Employers
If you’re a little overwhelmed and not quite sure where to begin, don’t worry! You can start your search for small business Alberta grants right here:
If you’re looking for non-governmental places to help fund your business, non-profits can be a really great place to start. Companies like Venture for Canada can match you with contractors right away, and help with the payment as well.
In a lot of cases, you might actually run into questions or concerns that require a legal lens to clarify. There are definitely technical aspects to items like contracts, which specialized lawyers can help you immensely with. To avoid legal liabilities, it would help to become familiar with the rights that your employees and contractors have. Remember, consulting a good lawyer can be the difference between a poor contract and a great one! They can also help you avoid a pesky, costly lawsuit down the road.
Still have questions on what hiring employees and contractors includes? Check out these resources to get a more rounded understanding:
The BDC
Funding plays a huge role in a business of any size, especially smaller ones. Luckily, there’s a lot of places that can help out with that! Places like the Business Development Bank of Canada, or the BDC, offer up many different types of loans and grants specifically for smaller companies and startups.
Under the BDC, small businesses can qualify for loans based on the length of time they’ve been operating for.
Interested in applying to the BDC for a loan or grant for hiring employees? Fill out an application right on the BDC website today! Note that if you are a Black or Indigenous business owner, additional funding streams may be available for you.
Want to Learn More About Alberta Employment Laws?
If there are still any questions or concerns you have about Alberta employment law, chances are that you can find the answers really easily. Check out this list of resources for any extra information or support:
Opening up a small business is not an easy thing to do but it’s very important to remember that you have plenty of help available to you as a small business owner. Online resources (including the ReInvestWealth accounting software), lawyers, and funding can all come together to make your experience running a small business in the Energy Province an incredible (and easy!) one. So whether you’re in C-town or the Big E, or somewhere else in the beautiful province of Alberta, you have what it takes to hire and grow your business.
Written by: Akriti Kaul