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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:
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:
Employment and Social Development Canada (ESDC):- EI Premium Reduction Program - For Employers
Canada Revenue Agency (CRA):- How to reduce the EI premium rate if you provide your employees with a short-term disability plan
Revised: February 26, 2019
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