Employment Insurance (EI) is a program that provides temporary income support to workers who lose their jobs or are unable to work due to illness, injury, pregnancy, or caregiving responsibilities. EI also helps workers find new jobs and develop their skills through training and employment programs.
In this blog, we will explain who needs to deduct EI premiums, how they are deducted, and provide some examples of how to calculate them.
Who needs to deduct EI premiums?
If you are an employee who works in insurable employment, you and your employer must deduct EI premiums from your earnings. Insurable employment is any work for which you receive wages and are not self-employed. This includes full-time, part-time, casual, and contract work.
Some exceptions apply, such as if you are related to your employer, work outside Canada, or earn more than the maximum insurable earnings.
What is Insurable Employment?
Insurable employment is a term that refers to any work for which you receive wages and are not self-employed, and for which you and your employer must deduct Employment Insurance (EI) premiums from your earnings. EI is a program that provides temporary income support to workers who lose their jobs or are unable to work due to various reasons.
Some examples of insurable employment are:
Full-time, part-time, casual, and contract work
Work in Canada or outside Canada (subject to certain conditions)
Work for a related employer (subject to certain conditions)
Some examples of excluded employment are:
Self-employment
Work for which you do not receive any wages (such as volunteer work)
Work for which you receive only tips or gratuities
Work for a foreign government or international organization
How are EI premiums deducted?
EI premiums are deducted from your gross earnings, which are your total earnings before taxes and other deductions. The amount of EI premiums you pay depends on your annual insurable earnings and the EI premium rate for the year.
If you live in Quebec
You pay a lower EI premium rate because the province administers its parental insurance plan. The EI premium rate for Quebec residents in 2024 is 1.32% of insurable earnings for employees and 1.85% for employers.
Other Province
The EI premium rate for 2024 is set at 1.66%of insurable earnings for employees and 2.32% for employers who pay 1.4 times the employee rate. This represents a three-cent increase from the 2023 EI premium rate of 1.63% for employees and 2.28% for employers.
The maximum insurable earnings for 2024 are $63,200, which means the maximum annual EI contribution for a worker is $1,049.12, and for an employer is $1,468.771.
The maximum annual EI contribution for a worker in Quebec is $834.24 and for an employer is $1,167.94.
How to calculate EI premiums in Quebec and Other Province?
To calculate your EI premiums, you need to multiply your insurable earnings by the EI premium rate for your province. If your insurable earnings exceed the maximum insurable earnings for the year, you only pay EI premiums up to that amount.
Province | Earning | Employer Contribution | Employee Contribution |
|---|---|---|---|
Quebec | $50,000 | $925 | $660 |
Other Province | $50,000 | $1,160 | $830 |
Quebec | $70,000 | $1167.94 (1.85% of $63,200) | $834.24 (1.32% of $63,200) |
Other Province | $70,000 | $1,468.77 (2.32% of $63,200) | $1,049.12 (1.66% of $63,200) |
Conclusion
Employee Insurance (EI) is a valuable program that helps workers cope with income loss and find new opportunities. As an employee, you need to be aware of how much EI premiums you and your employer pay, and how they are calculated. By understanding the EI premium rates and maximums for 2024, you can plan your budget and manage your finances accordingly.
The content above is meant for educational or basic understanding purposes. One should not make financial or any decisions without consulting the professionals.
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