Canada Employment Insurance Commission sets 2021 Employment Insurance Premium Rate and Maximum Insurable Earnings

September 14, 2020              Gatineau, Quebec              Employment and Social Development Canada

The Canada Employment Insurance Commission (CEIC) today set the 2021 Employment Insurance (EI) premium rate at $1.58 per $100 of insurable earnings for employees and $2.21 for employers who pay 1.4 times the employee rate, which is unchanged from the 2020 premium rate.

Each year on or before September 14, the CEIC is responsible for setting the annual premium rate based on the seven-year break-even rate forecasted by the EI Senior Actuary. The Senior Actuary’s report on the 2021 EI premium rate and the CEIC’s summary of that report are available online to ensure continued transparency and accountability in the rate-setting process.

The Senior Actuary forecasted the seven-year break-even premium rate to be $1.93 per $100 of insurable earnings, an increase of 35 cents. The forecasted increase is mainly attributable to a rise in unemployment resulting from the pandemic, that is the Government of Canada’s response through the Canada Emergency Response Benefit (29 cents) and temporary measures to support transition back to the EI program (6 cents).

However, as a result of the economic impact of the COVID-19 pandemic, the Government of Canada used its authority under the Employment Insurance Act to temporarily limit the change in the premium rate to zero in order to freeze the EI premium rate for 2021 and 2022 at the 2020 level. In addition, the Government of Canada has confirmed to the Commission that it will be crediting the EI Operating Account for the costs related to the Canada Emergency Response Benefit. The Senior Actuary will be issuing a memorandum as an addition to the 2021 Actuarial Report on the Employment Insurance Premium Rate to update projections based on this new information. The memorandum will be available this fall.

The CEIC also announced that the Maximum Insurable Earnings (MIE) for 2021 will increase to $56,300 from $54,200 in 2020. The MIE is indexed on an annual basis and represents the ceiling up to which EI premiums are collected and the maximum amount considered in applications for EI benefits. The maximum annual EI contribution for a worker will increase by $33.18 to $889.54 (up $46.46 for employers to $1,245.36 per employee).

Furthermore, the Premium Reduction Program (PRP) will provide roughly $1.055 billion in premium reductions in 2021 to registered employers and their employees, shared 7/12 and 5/12 respectively, in recognition of savings generated to the EI program by employer registered short-term wage-loss plans.

Finally, for self-employed Canadians who have opted-in to the EI program, the annual earnings required in 2020  will increase to $7,555 for claims filed in 2021. The level of earnings required for self-employed Canadians to be eligible for EI special benefits is indexed annually to the MIE.

The premium rate in 2021 for residents of Quebec covered under the Quebec Parental Insurance Plan (QPIP) will be $1.18 per $100 of insurable earnings, while their employers will pay $1.65 per $100 of insurable earnings. The maximum annual contribution for a worker in Quebec will increase by $13.94 to $664.34 (up $19.52 for employers to $930.08 per employee). EI premium rates are different for residents of Quebec, because the province of Quebec administers its own parental insurance plan, which is financed by Quebec workers and their employers.