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Employment Insurance Premium Reduction Program For Employers
Employment Insurance Act s. 69(1)
Employers who provide a wage-loss replacement plan for short-term disability for illness of or injury to their employees may be able to qualify for a reduction in their EI premium rate. To be considered for the Premium Reduction Program, the wage-loss replacement plan must:
 | provide at least 15 weeks of benefits for short-term disability |
| match or exceed the level of benefits provided under EI |
| pay benefits to employees after 14 days of illness or injury |
| be accessible to employees within 3 months of hiring |
| cover employees on a 24-hour-a-day basis |
There are 4 different categories for reduced premiums, with varying rates of savings. The employer pays a reduced multiple times the employee premiums, instead of the regular 1.4 times.
The employer premiums are reduced by reducing the factor that is applied to the employee premiums. Normally, employers pay 1.4 times the total of employee premiums. There are 4 different categories for reduced premiums, with varying rates of savings.
Although it is only the employer portion of the premium that is reduced, it is a requirement of the Premium Reduction Program that the employer return 5/12 of the savings to the employee. Although a cash rebate (taxable and insurable) can be provided to the employee, other arrangements can be made to satisfy Service Canada that a portion of the savings is being returned to employees, including:
| a written mutual agreement between employer and employees or their representatives on the method of returning the employees' portion of the premium reduction; |
| new employee benefits provided as a result of the premium reduction, such as a dental plan, group life insurance; or |
| increased employee benefits or upgrading of existing benefits, such as more holidays, more time off work, increased life insurance. |
Employment and Social Development Canada (ESDC) Resources
EI Premium Reduction Program - For EmployersCanada Revenue Agency (CRA) Resources
How to reduce the EI premium rate if you provide your employees with a short-term disability plan
Revised: October 26, 2023