Understanding the Difference between Province of Employment & Labour Province

When running payroll for an employee, the Province of Employment (POE) for tax purposes and the province that governs labour law are often the same, but not always. Here’s how they differ:

🇨🇦 1. Province of Employment – Tax Purposes (CRA rules)

This determines which provincial/territorial tax tables apply when calculating income tax, CPP/QPP, and EI/QPIP. Think of this like “how are they taxed?”.

• Definition: Where the employee reports to work. For more information on determining the Province of Employment, check out our blog here. 

• Key factors:

• Where the employee physically works, or

• If remote, where the employee’s establishment they report to is located.

• Examples:

• If an employee lives in Quebec but works in Ontario → Ontario is the POE.

• If working remotely from Nova Scotia but all other business operations are in BC → BC is the POE.

⚖️ 2. Province – Labour Law (Employment Standards)

This determines which employment standards legislation applies (e.g., minimum wage, termination notice, stat holidays). Think of this like “what are they entitled to?”.

• Definition: Typically based on where the employee physically performs their work.

• Key factors:

• Location of work (not employer’s location).

• Employment contracts may not override provincial standards.

• Examples:

• If an employee works from home in Manitoba for a company based in Ontario → Manitoba employment standards apply.

Summary:

While the Province of Employment determines which tax rules apply, the province that governs labour law is usually based on where the employee physically works—even if that differs from where the business is located.