What Calgary Business Owners Should Know About EI Premiums

Employment Insurance (EI) premiums are a mandatory payroll deduction for virtually all employees in Canada. As a Calgary employer, understanding EI rules is essential because errors in EI calculations or remittances can result in CRA penalties and unexpected costs.

How EI Premiums Work

Employees pay EI premiums on insurable earnings up to an annual maximum. For 2026, the employee premium rate is 1.64% of insurable earnings up to the maximum insurable earnings (approximately $65,000). Once an employee hits the annual maximum contribution, no further EI deductions are taken for the rest of the year.

The Employer's Obligation

Employers must contribute 1.4 times the employee's EI premium. So for every $1.64 the employee pays, the employer pays $2.30. This employer portion is an additional cost of employment beyond the employee's salary and must be remitted to CRA along with the employee deductions.

Who Is Exempt?

Some workers are exempt from EI premiums: shareholders who control more than 40% of the corporation's voting shares (owner-managers), and workers in certain specific exempt roles. However, determining exemptions incorrectly can result in penalties, so err on the side of deducting unless you've confirmed the exemption with CRA.

EI and Self-Employment

Self-employed individuals are not required to pay EI premiums (and are not eligible for regular EI benefits). However, they can opt in to the EI Special Benefits program, which provides maternity, parental, sickness, and compassionate care benefits. The opt-in is voluntary and requires registration with Service Canada.

Year-End Reconciliation

At year-end, verify that total EI premiums deducted from each employee match the expected amounts based on their insurable earnings. Over-deductions must be refunded to the employee. Under-deductions may result in a CRA assessment to the employer.

Castle Handles EI Compliance

Castle Bookkeeping calculates EI premiums accurately for every pay run, ensures employer contributions are included in CRA remittances, and reconciles annual totals for T4 preparation. Contact us for a free consultation.