About the deduction of Employment Insurance (EI) premiums

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What are EI insurable earnings

Insurable earnings are the employee's earnings from insurable employment. Insurable employment includes most employment in Canada under a contract of service.

To be considered as insurable earnings, the amount has to be paid in cash by the person's employer and received and enjoyed by the person in respect of that employment.

Generally, you have to deduct EI premiums from:

  • Salary, wages or other remuneration
  • Commissions
  • Bonuses
  • Most taxable benefits received in cash
  • Honorariums
  • Certain tips and gratuities

To determine if you need to deduct EI premiums, refer to:

When to deduct EI premiums

You have to deduct EI premiums from your employee’s insurable earnings.

EI premiums:

  • start to be deducted from the first dollar earned up to the yearly maximum
  • have no age limit for deducting them

Employer EI contributions

You must also contribute 1.4 times the amount of the EI premiums that you deduct from your employees' remuneration and remit the total of both amounts. Even if the required deductions were not made, you are deemed to have made them and the deductions not being made may result in a PIER.

Learn more: Pensionable and insurable earnings review (PIER).

When to stop deducting EI premiums

For current employees, stop deducting EI premiums when the employee’s annual insurable earnings reach the maximum insurable earnings or the maximum employee premium for the year in their employment with you.

Learn more: Pensionable and insurable earnings – CPP/EI explained.

What if the employee has different jobs

The EI annual maximum insurable earnings apply to each job the employee holds with different employers (different business numbers).

What happens if your employee has multiple employers

If an employee leaves one employer during the year to start work with another employer, the new employer also has to deduct EI premiums without taking into account what the previous employer paid. This is the case even if the employee has contributed the maximum amount during the previous employment.

Any overpayments will be refunded to employees when they file their income tax and benefit returns. As an employer, you are not entitled to a refund for the employer's share of the contributions.



  • Your employee notifies you that they have reached the maximum EI premiums for the year. They tell you that they had $900 in EI premiums deducted by a previous employer in the year and that when combined with the EI you have deducted from their pay, they have reached the maximum.


  • Do not stop deducting EI premiums from their pay. You are required to deduct EI premiums from your employee's pay until they reach the maximum contribution for the year in their employment with you. Do not factor in EI premiums made through other employers.
What happens when an employer is restructuring

Where there was an employer restructuring, the successor employer may consider the EI premiums previously deducted, remitted or paid by the former employer for the employment of the employees for the year as if they had been deducted, remitted, or paid by the successor employer.

Learn more: Employer restructuring/Succession of employers - CPP/EI explained.

What to do if you have employees whose province of employment is Quebec

If you have employees whose province of employment is Quebec, regardless of your employee's province or territory of residence, you have to deduct a reduced employment insurance (EI) premium using the Quebec EI premium rates and maximums in addition to the Québec Parental Insurance Plan (QPIP) premiums.

Learn more: Québec Parental Insurance Plan (QPIP) Premiums | Revenu Québec.

What to do if you transfer an employee between Quebec and another province or territory

You may have a place of business in Quebec and in another province or territory. If you transfer an employee from Quebec to another part of Canada, in addition to deducting EI/QPIP premiums, you will also have to prepare two T4 slips.

It is important that you calculate and report the proper deductions and insurable earnings on both T4 slips.

What to do if you have employees outside Canada

If you have employees working outside (or partly outside) Canada, you must deduct EI premiums if all of the following applies:

  • You, as the employer, reside in Canada or have a place of business in Canada
  • Your employee usually resides in Canada
  • The employment is not insurable in the country where the employment is done
  • The employment is not excluded from insurable employment for any other reason

 Do not deduct EI if the above conditions are not met.

Learn more: Employment outside Canada.

What to do if you are self-employed

If you are self-employed, participation in the EI program is voluntary.

You are eligible to participate if all of the following apply:

  • You do not work as a barber, hairdresser, fisher, taxi driver, or a driver of other passenger vehicles
  • You are a Canadian citizen or a permanent resident of Canada.
  • You either operate your own business or work for and control more than 40% of the voting shares of a corporation

If you are a fisher, a barber, a hairdresser, or if you drive a taxi or other passenger vehicle, you do not need to register for the self-employed program. People in these professions should apply for EI benefits as an employee.

Learn more:

What is the EI Premium Reduction Program

If you provide a wage loss replacement plan for short-term disability to your employees, you can request a reduced EI premium rate through Employment and Social Development Canada (ESDC).

If approved you will have a reduced EI premium rate that is less than the standard 1.4 times the employee premium (for example, 1.24 times).

Your reduced rate only applies to employees who are covered by the approved plan.

In this situation, you will require an additional payroll deduction program account to make separate remittances for employees not covered by the plan.

Learn more:


Related topics



EIA: 5(1)
Types of insurable employment
EIA: 5(2)
Excluded employment
EIA: 5(3)
Arm’s length dealing
EIA: 5(4)
Regulations to include employment
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Regulations to exclude employment
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Premium reduction – wage-loss plans
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Deduction and payment of premiums
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Maximum deduction by a particular employer
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Liability for failure to deduct
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Succession of employers
EIA: 90(1)
Request for ruling
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Employment included in insurable employment
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Employment excluded from insurable employment
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Earnings from insurable employment
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Earnings not included
Calculation and payment of premiums

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