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Who Pays EI Premiums?

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Canada Pension Plan (CPP), Québec Pension Plan (QPP) and Employment Insurance (EI) - > Who has to pay EI premiums

Who has to pay Employment Insurance (EI) premiums?

Employers, whether incorporated or not, are responsible for deducting EI premiums from all employees,  regardless of age.  The employer pays a premium of 1.4 times the employee premium, unless they qualify for reduced premiums under the Premium Reduction Program.

As of January 2010, self-employed people can remit EI premiums based on their self-employment income, in order to qualify for certain benefits.  See our article on EI for the self-employed.

For maximum insurable amounts, and maximum premiums, see our tables of EI premium rates.

Non-insurable Earnings

EI premiums are not payable in some employment situations, such as when the employee controls more than 40% of the corporation's voting shares, when the employee and the employer do not have an arm's length relationship (depending on other circumstances), or some other cases.  Some of the other situations where income is not subject to employment insurance:

bullet casual employment if it is not for your usual trade or business;
bullet when a corporation employs a person who controls more than 40% of the corporation's voting shares;
bullet employment that is an exchange of work or services;
bullet employment in agriculture or horticulture when
bullet the person receives no cash remuneration; or
bullet works less than seven days with the same employer during the year (Note:  If the employee works 7 days or more, the employment is insurable from the first day of work.)
bullet employment of a person in connection with a circus, fair, parade, carnival, exposition, exhibition, or other similar activity, except for entertainers, if that person:
bullet is not your regular employee; and
bullet works for less than seven days in the year (Note:  If the employee works 7 days or more, the employment is insurable from the first day of work.)
bullet employment of a person in a rescue operation, as long as you do not regularly employ that person for that purpose;
bullet employment by a government body as an election worker if the worker:
bullet is not a regular employee of the government body; and
bullet works for less than 35 hours in a calendar year (Note:  If the employee works 35 hours or more, the employment is insurable from the first hour of work.)

There are some types of employment payments and other payments from which EI premiums do not have to be deducted.  CRA information on what type of payments are and are not subject to CPP, EI or tax deductions:

bullet Special Payments Chart
 

CRA also has a section titled CPP/EI Explained, which talks about different types of earnings and how they are treated for CPP and EI purposes.  It includes information on

bullet tips and gratuities
bullet status of workers placed by employment agencies
bullet real estate agents
bullet Heavy machinery operators
bullet workers engaged in construction
bullet workers engaged in fishing

For a complete list of non-insurable earnings, see:

bullet T4001 Employers' Guide - Payroll Deductions and Remittances - Employment, benefits and payments not subject to EI premiums.

Other articles of interest:

bullet Don't pay unnecessary employment insurance (EI) premiums
bullet Getting back overpayments of CPP/QPP or EI premiums

Canada Revenue Agency (CRA) information:

bullet Employment Insurance (EI)

 

Revised: April 19, 2014

 

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