Hiring Your First Employee in Ontario: A Compliance Checklist

Everything a small Ontario business must register, sign, post, and track before — and after — day one.

Who this is for: Ontario founders and small-business owners about to make their first hire (or who just made one and want to be sure they did it right). What you'll get: a grouped, checkable list of the legal and tax steps — from CRA payroll to the Employment Standards Act to WSIB and the employment contract — with warnings about the traps that cost employers the most.

⚖️ This is a general guide, not legal advice. It can't account for your specific situation. Use it to get oriented, then confirm the details with a licensed Ontario lawyer.

Hiring your first employee turns you into an employer — a legal status with real, ongoing obligations. The good news: most of it is a one-time setup. Work through the groups below in order. Items marked ⚠️ are the ones that most often go wrong.

Group 1 — Confirm they're actually an employee

• Decide whether this person is an employee or an independent contractor
• If you're calling them a contractor, confirm the relationship genuinely qualifies

⚠️ Watch out: You don't get to choose the label freely. The Canada Revenue Agency and the courts look at the substance of the relationship — who controls the work, who owns the tools, who bears financial risk. Calling someone a "contractor" to avoid payroll taxes and Employment Standards Act obligations is one of the most expensive mistakes a small business makes. If there's any doubt, see our contractor vs. employee decision guide before you go further.

The rest of this checklist assumes you've confirmed the person is an employee.

Group 2 — Register with the Canada Revenue Agency (CRA)

You can't legally pay an employee without remitting payroll deductions, and you can't remit without an account.

• Get a Business Number (BN) from the CRA if you don't already have one
• Open a payroll (RP) account under that Business Number
• Collect a completed federal TD1 and Ontario TD1 from the employee (these set their tax credits and deductions)
• Record their Social Insurance Number — and view the SIN card or document; never just take it verbally

💡 Open the payroll account before the first payday. You must remit deductions on a CRA schedule, and being late triggers penalties and interest. Verify current remittance deadlines and thresholds with the CRA — they change.

Group 3 — Employment Standards Act, 2000 (the ESA) basics

Ontario's Employment Standards Act, 2000 sets the legal minimum rights for most employees. You can always offer more; you can never offer less. Know these before you write the contract.

• Minimum wage — pay at least the current Ontario minimum (verify the rate with the Ministry of Labour; it's adjusted regularly)
• Hours of work and rest — understand daily/weekly limits and required eating periods and breaks between shifts
• Overtime — generally owed after a weekly hours threshold at a premium rate; confirm the current threshold and rate, and which roles are exempt
• Vacation — provide minimum vacation time and vacation pay (a percentage of wages); verify the current minimums
• Public holidays — know the statutory holidays and how "public holiday pay" is calculated
• ESA poster — give every employee the Ministry of Labour's "Employment Standards in Ontario" poster (the current version), and keep proof you provided it

⚠️ Watch out: The ESA is the floor, not the ceiling. A contract that tries to contract out of an ESA minimum is void on that point — and, as you'll see below, an unenforceable contract clause can default the employee back to far more generous common-law rights.

Group 4 — Register with the WSIB

The Workplace Safety and Insurance Board provides no-fault coverage for workplace injuries and illness.

• Determine whether your business is required to register with the WSIB (most employers are; some industries are exempt)
• Register within the deadline after hiring (confirm the current timeframe with the WSIB)
• Budget for premiums based on your industry classification and payroll
• Post the "In Case of Injury" (Form 82) poster in the workplace if required

💡 Even some businesses that aren't mandatory can register voluntarily for coverage. If you're unsure whether you're covered, ask the WSIB directly rather than guessing — operating without required coverage carries penalties.

Group 5 — Put a written employment contract in place

A signed, well-drafted contract is your single best protection. Without one, the law fills the gaps with the common law — which is far more generous to employees, especially on termination.

• Have a written contract signed before the first day of work
• Include a carefully drafted termination clause
• Set out a probationary period if you want one (and understand it doesn't remove all obligations)
• Include confidentiality and intellectual-property assignment terms
• State compensation, hours, job duties, and benefits clearly
• Address any non-solicitation terms (note: most outright non-compete clauses are now generally unenforceable in Ontario — get advice before relying on one)

⚠️ Watch out — this is the big one. Termination clauses are the most-litigated part of any employment contract, and a startling share of them are unenforceable. If a clause tries to give the employee even slightly less than the ESA requires — or is ambiguous, or wasn't presented properly — a court can throw out the whole clause and award common-law reasonable notice, which can run to many months of pay. A clause drafted to save money can end up costing many times more. Have a lawyer draft and date it, and have the employee sign it before they start.

💡 Timing matters. A contract signed after the employee has already begun work may be unenforceable for lack of fresh "consideration" (something new given in exchange). Sign before day one.

Group 6 — Workplace policies and postings

Some policies are legally required once you have employees; others are simply prudent.

• Occupational health and safety — post the Occupational Health and Safety Act in the workplace and provide the required worker health-and-safety awareness training
• Workplace violence and harassment — have a policy and a program for each (required of every employer regardless of size; the policies must be in writing and posted once more than five workers are regularly employed)
• AODA — meet your obligations under the Accessibility for Ontarians with Disabilities Act (accessibility policies, customer-service standards, and training scale with your size)
• Disconnecting from work and electronic monitoring — written policies are required once you cross the applicable employee threshold; verify whether you've reached it
• Keep copies of all policies and proof employees received them

💡 Many of these obligations scale with headcount — with thresholds that apply at 5, 25, or more employees. With one employee you won't trigger all of them, but knowing where the lines are helps you stay compliant as you grow.

Group 7 — Run payroll correctly

• Calculate and withhold income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) from each paycheque
• Add the employer's share of CPP and EI (you pay these on top — they're a real cost of employment)
• Remit the total to the CRA on schedule
• Keep pay stubs showing wages, hours, and each deduction
• Issue a T4 slip to the employee and file the T4 summary with the CRA after year-end (confirm the current filing deadline)
• Issue a Record of Employment (ROE) if the employee stops working, has an interruption in earnings, or is terminated

⚠️ Watch out: Payroll deductions you withhold are trust money — they belong to the government, not to you. Spending them or remitting late can lead to personal liability for directors, not just the company. If cash is tight, talk to an accountant before you skip a remittance.

Group 8 — Record-keeping

The ESA requires employers to keep employment records, and the CRA requires tax records, for set retention periods.

• Keep records of hours worked, wages, vacation, and public-holiday pay
• Keep TD1 forms, the signed contract, and policy acknowledgements on file
• Retain payroll and tax records for the required period (verify current ESA and CRA retention rules)
• Store personal employee information securely — Canada's privacy framework expects you to protect it

Quick-reference: who you'll deal with

Mini-FAQ

Do I need all of this for a part-time employee? Most ESA rights, payroll obligations, and the contract apply regardless of hours. A few thresholds differ for part-time or casual roles — confirm the specifics.

Can I just use a template contract I found online? You can start there, but most generic templates contain a termination clause that won't survive an Ontario court and may not address IP or current law. Have a lawyer review it before anyone signs — it's a small cost against a large risk.

What if I already hired someone without a contract? You can still put one in place, but it generally requires giving the employee something new in return (a raise, a bonus, a promotion) to be enforceable. Get advice before you ask them to sign.

What's next

Once these eight groups are handled, your ongoing job is mostly maintenance: run payroll on time, keep records, update policies as you grow, and re-paper contracts when roles change. The two items worth a lawyer's eyes from day one are the employment contract (especially that termination clause) and the employee-vs-contractor question.

How Treadstone Law can help

Treadstone Law drafts enforceable Ontario employment contracts — with termination clauses built to survive — plus the confidentiality, IP, and policy documents your growing business needs. Flat, quoted fees, online intake, and plain-language advice.

• Talk it through: call 1-844-900-1070 or start a file online.
• Learn more: see our corporate services and transparent pricing.
• Ready to hire? Start a file online and we'll get your paperwork right.

This is not legal advice

This guide is general information, not legal advice. Reading it does not create a lawyer-client relationship. Ontario laws, tax rates, and government programs change, and how the law applies depends on your specific facts. For advice about your situation, speak with a licensed Ontario lawyer. Treadstone Law is licensed by the Law Society of Ontario — reach us at 1-844-900-1070 or start a file online.