EI premium reduction guide Chapter 5: Your responsibilities once an EI premium reduction is granted
How the EI premium reduction affects your payroll
We will send you a notice that indicates your reduced EI premium rate and the year to which it applies. Since your reduced EI premium rate is applicable from January 1 to December 31, you will have to recalculate the EI premiums you have already paid for the year and make any necessary adjustments to your remittances.
Employees for whom the reduced rate applies are those covered by your approved plan, including employees who are serving the plan's eligibility period, provided it is not more than 3 months.
For more information on remittances (examples: retroactive adjustments, remittances for employees who are not covered by an approved plan), please contact the Canada Revenue Agency office serving your area.
How to calculate your employees' portion of the savings
Refer to Chapter 2 for acceptable methods for returning the savings to your employees.
There are 2 methods to calculate your employees' portion of the savings, you can calculate it by using the multiple (for example 1.177) or by using the rate (%) (for example, 0.3706% = $0.3706 for every $100 of insurable earnings).
Method 1 - Using the multiple to calculate your employees' portion of the savings (5/12 of the total savings)
A = Regular employer premium = Total employee premiums multiplied by the standard rate (1.4)
B = Reduced employer premium = Total employee premiums multiplied by the reduced rate (for example, 1.177 (category 3: weekly indemnity plan multiple))
C = Amount of the total savings = Regular employer premiums minus reduced employer premium (A - B)
D = Employees' portion of the savings = Amount of savings from EI premium reduction to be returned to employees (C x 5/12)
Example
An employee whose salary is $40,000 during 2024 will pay a total EI premium of $664 (calculated at 1.66%). For the purpose of this calculation, we have used a reduced employer EI premium rate of 1.177 (which represents the category 3: weekly indemnity plan multiple).
A = Regular employer premium = $664.00 x 1.4 = $929.60
B = Reduced employer premium = $664.00 x 1.177 = $781.53
C = Amount of total EI premium reduction = A - B = $148.07
D = Employee's portion of reduction = C x 5/12 = $61.70
Method 2 - Using the rate (%) to calculate your employees' portion of the savings (5/12 of the total savings)
A = Employee's amount of insured earnings (up to maximum $63,200 for the year 2024)
B = EI premium reduction specified in cents per $100 of insurable earnings
C = Amount of total EI premium reduction = Employee's amount of insured earnings (up to maximum $63,200 for the year 2024) times the EI premium reduction (specified in cents per $100 of insurable earnings) = A X B
D = Employee’s portion of reduction = C x 5/12
Example
An employee whose salary is $42,000 during 2024 will pay a total EI premium of $697.20 (calculated at 1.66%). For the purpose of this calculation, we have used an EI premium reduction of $0.3706 for every $100 of insurable earnings (category 3: weekly indemnity plan rate (%)).
A = Employee's amount of insured earnings (up to maximum $63,200 for the year 2024) = $42,000
B = EI premium reduction specified in cents per $100 of insurable earnings = $0.3706 for every $100 of insurable earnings
C = Amount of total EI premium reduction = A X B = $42,000 X 0.3706/$100 = $155.65
D = Employee's portion of reduction = C X 5/12 = $64.85
When to return your employees portion of the savings (5/12)
You must return the employees' portion of the savings in the year in which you received the EI premium reduction, or within the first four months of the following year.
If you have any questions about whether the employee benefits you offer are taxable, insurable, or pensionable, please contact the Canada Revenue Agency office serving your area.
When to reapply for an EI premium reduction
Once you are granted an EI premium reduction, your entitlement will continue until you cancel or change your approved plan. If you cancel or make changes to your approved plan, you will have to notify us. For more information on cancelling or changing your approved plan, please refer to Chapter 6.
In the last quarter of each year, we will send you a Notice of Reduced EI Premium Rate for Employers that advises you of the reduced EI premium rate for the coming year.
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