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Complete Guide to Managing Employee Paperwork

Keep your human resource operations running efficiently. These essential, customizable human resources documents will help you hire, employ and terminate employees with ease.

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Step 1

Employment Offer Letter

An Employment Offer Letter is used by an employer to formally present a job opportunity to a new employee. The letter includes employment details, suc...

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Step 2

Employment Contract

An Employment Contract sets out employment terms, conditions, and expectations between an employer and employee.

Last updated December 12, 2023

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Running a business is not easy, but there are ways of managing staff to help you stay organized and run your business efficiently. Whether you or your human resources team handle employees directly, having the correct documents protects you and your business by ensuring you follow the provincial and federal laws.

If you’re starting your own business or looking to grow your current talent pool,  read this guide to discover crucial documents for hiring, onboarding, and managing your new employees.

Documents for hiring employees

Once you’ve found the best candidate to join your business, you’ll need proper documentation for the hiring process. Hiring documents allow employees to see aspects of their future position, such as responsibilities, benefits and hours of work. They further allow you to outline your expectations of new employees in writing.

When running a business and creating employee records, it’s important to know which labour laws apply to you and your employees. In Canada, provincial labour laws cover employers' and employees' rights and responsibilities. There is, however, an exception for those in federally regulated workplaces that the Canada Labour Code covers.

With that said, it's crucial to know which jurisdiction your business falls under because it may impact which documents you're legally required to have. If you need help determining whether your company falls under federal regulations, seek advice from an attorney

Employment Offer Letter

The first step to hiring a new employee is to write a formal Employment Offer Letter. For federally regulated employers, the offer letter must include an employment statement that follows Canadian Labour Code template guidelines. However, provincially regulated employers can also benefit from creating offer letters. 

An Employment Offer Letter includes the key job details for a candidate to consider before accepting the position. By writing an offer letter, you create transparency with your potential new employee and open communication about the role. The key points include: 

  • Job title
  • Start date
  • Compensation

You can make the offer conditional by setting requirements for the applicant to meet. Conditions can include signing a contract or passing a criminal record check. 

Ready to send an offer? Use our Employment Offer Letter

Employment Contract

An Employment Contract outlines employer and employee rights, obligations, and responsibilities. Though written contracts are not required under Canadian law, creating a signed record of the employment terms for both parties is good practice. Verbal agreements are legally binding but are challenging to prove. Signing a contract will provide written evidence and keep you and your employees accountable.

Employers and employees must adhere to employment contract laws. LawDepot’s Employment Contract is customizable to the province in which your company is based. This means that when you create a contract with our template, it will comply with your province’s regulations.

Each province and territory has employment legislation and standards to follow. A majority of businesses will only be under their provincial laws. However, federally regulated workplaces, including federally regulated private sector companies that offer jobs across multiple provinces and territories, like banking, telecommunications, and transportation, need to follow federal laws.

Onboarding new employees

Onboarding a new employee is essential for management as it introduces your latest team member to the organization, their colleagues, and the workspace. 

An essential part of onboarding is completing documents to determine an employee’s eligibility to work in Canada and tax deductions. You may also have other job-specific paperwork, such as benefits forms for health insurance or Non-Disclosure Agreements.

As a business owner in Canada, you’ll need your Business Number and Canada Revenue Agency program account (BN and CRA) if you have not already applied for one. A BN and CRA are legal requirements for businesses that employ workers, allowing you to check employees’ social insurance number for eligibility to work, take payroll tax deductions, and more for your records.

Maintaining and retaining employee records for a certain amount of time is a requirement under federal and provincial regulations. These records include documents holding social insurance numbers, tax deductions, and payment history. Proper documentation ensures that all employers comply with labour regulations and government laws.

Check an employee's social insurance number

Employers must review a new employee’s social insurance number, also known as a SIN, in the first three days of employment. A SIN is a government-issued number to determine an employee’s right to work and gives access to government social programs and benefits. It’s your job as an employer to validate a SIN and prevent fraud by:

  • Identifying an employee with a photo ID
  • Confirming the SIN with Service Canada
  • Storing SIN information safely

If your new employee doesn’t have a SIN, they can still apply for one within three days of starting their position. While waiting for their SIN, employees can still work under insurable employment.

If you hire non-citizen or non-permanent resident employees, their SIN will start with a 9. You’ll need to verify their eligibility for work in Canada has not expired. If they need to extend their authorization, they can apply through Immigration, Refugees and Citizenship Canada.

TD1 Personal Tax Credit Form

All employees must complete tax forms when starting a new position. A TD1 personal tax credit form will determine the amount of taxes withheld from an employee’s pay. After receiving the TD1 forms, employers are responsible for calculating deductions sent to the CRA. 

Each new employee must complete a federal and a provincial TD1 form. You may need to collect further documents based on the current situation of your new employee. 

For financial advice and tax information specific to your situation, seek the assistance of an accountant.

Payroll and direct deposit form

If your payroll service provider offers direct deposits, you’ll need to gather your employee’s details and permission to set it up. 

In the first few days of onboarding, you can collect a blank, void cheque from your employee’s bank or financial institution with a written form of consent containing the following information:

  • Bank name
  • Transit number
  • Bank institution number
  • Account number 
  • Signature authorizing deposits

Employee Privacy Policy

An Employee Privacy Policy is a document that outlines privacy rights in the workplace. Human resource departments rely on a privacy policy to protect and communicate privacy rights in the workplace. It tells employees how you collect, store, and disclose their information. Unlike contracts you create for an individual, an employee privacy policy is a company-wide document.

A privacy policy is essential proof that your company safely stores vital information. It further creates transparency and trust by outlining risk management like data breaches. Information in your privacy policy needs to include:

  • Company or organization name
  • What data the company might collect
  • How the company will use this information
  • How the data is stored
  • How long data is stored

The Personal Information Protection and Electronic Documents Act (PIPEDA) governs personal data protection and carries a clause on collecting SIN details for income-reporting purposes. However, not all provinces and territories use PIPEDA. Alberta, British Columbia, and Quebec have laws similar to the federal regulations for employers. In some instances, employers may need to comply with both PIPEDA and their provincial privacy law.

Customize LawDepot’s Employee Privacy Policy for your company

Documents for managing employees

Your employee’s onboarding is complete, and they’re working. Now, you’ll need to continue managing staff daily. Using the proper paperwork at all stages of an employee’s career enables you to monitor their growth and manage any conflict before it starts.

Employee Evaluation

Tracking progress helps you and your employees grow. Imagine you take on an entry-level employee and want to help them grow their career within your company. Monitoring their progress will help you determine where they need to improve, acknowledge their strengths, and build constructive feedback.

An Employee Evaluation is a critical tool for measuring employee performance and opening up communication. Evaluations cover job-specific areas like communication skills, leadership qualities, and position-based skills. They also help employers create healthy workplace relationships, maintain expectations, and keep records for promotions and improvements. 

LawDepot’s easy-to-use Employee Evaluation template allows you to choose a method of evaluation that best fits your employee management needs. Your choice of a text-based evaluation enables you to create a review with more specific verbal feedback and comments. However, a numerical-based evaluation is also available to help you measure performance on criteria such as growth in quantity results, time scales, and teamwork.

Compensation Agreement

The longer an employee is with you, the more likely compensation arrangements may change. Say one of your employees significantly contributes to the company’s yearly goal with high-quality work. To show your gratitude, you give them a raise to reward them and encourage continued success.

A Compensation Agreement records changes to your employee’s earnings. Changes can be complex or straightforward, ranging from additional vacation time to a promotion.

LawDepot’s easy-to-use Compensation Agreement template allows you to update your records with a clear, legally binding document as your team progresses in their positions.  

A compensation agreement only changes the details regarding an existing contract. It doesn’t fully replace an employment contract. If you require any other alterations to an employee’s contract, you can use an Amending Agreement to record a permanent change. 

Employee Warning Letter

One of the most challenging parts of being an employer is dealing with difficult employees. When an employee creates friction with inappropriate behaviour or demonstrates poor initiative, it’s essential to send a formal warning to reiterate your expectations.

An Employee Warning Letter, or a staff warning letter, is a notice you give an employee to address misbehaviour or poor performance. On some occasions, this follows a verbal warning. In Canada, employers are encouraged to try to work with an underperforming employee through warnings before looking at termination. 

If a verbal warning doesn't provide results, the warning letter serves as a record of the violations or poor work. This way, if a legal dispute occurs, you’ll have evidence of your communication. Having an employee sign their warning letter to confirm they received it further confirms your attempts to solve the problem. You can write a letter for situations such as:

  • Poor performance
  • Breach of policies
  • Absenteeism
  • Negligence
  • Theft

Once you address the issue, your warning letter will set out the consequences and improvements needed. Consequences can be probation or a termination warning in more severe circumstances. So, if you need to terminate your employee, you can reference this document to prove you took reasonable steps to resolve the issue.

Need to create an Employee Warning Letter?

Employee Termination Letter

Letting go of an employee is, unfortunately, unavoidable. It can be difficult as you may not want to create conflict or hurt anyone. Open, professional communication can help ease the situation for you and the employee.

As an employer, you’ll need to write an Employee Termination Letter to give an employee formal notice that their position is being terminated.  Termination letters aren’t just helpful, they’re a legal requirement. 

Federal laws require a termination with at least two weeks' notice for three months of employment. However, it can be longer depending on the time an employee works for you and the statutory notice period for your province or territory. Without written notice, employers may need to pay the employee two weeks’ wages (i.e., payment in lieu of notice).

The only time a notice period isn’t required is:

  • When gross misconduct takes place
  • When a fixed-term contract ends
  • When an employee resigns

LawDepot’s customizable Employee Termination Letter helps you create a clear and valid termination with or without cause. Our questionnaire prompts you to include all the information you’ll need in your letter to follow provincial requirements.

Organizing and managing employee documents

You’re right on track to managing your employees and business. Gathering all the proper paperwork and employee information you need creates professionalism and transparency for your employees. 

A final note to remember is that having an organized system is essential for an employer to manage employees and their paperwork to make it easier to find and update records. 

If you are a federally regulated company, you must keep employee records for at least 36 months once an employee leaves the company. However, provincial and territorial employment standards vary in how long employers must retain records. The reason for holding records is that the government may need access should they inspect the business or investigate a complaint. Once that time has passed, you can securely dispose of all employee documentation.

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