EI overpayment and recovering EI premiums

See EI overpayment if you have overdeducted your employees' employment insurance (EI) premiums and Recovering EI premiums if you have underdeducted your employees' EI premiums.

EI overpayment

If, during a year, you overdeducted EI premiums from your employee (for example, the maximum amount of insurable earnings was exceeded, or the employee was not employed in insurable employment), reimburse the employee the amount deducted in error and adjust your payroll records in the same year the overpayment was made to reflect the reduced deduction. This will result in a credit on your payroll program account equal to the employee and employer portion of the overdeduction. You may reduce a future remittance in the same calendar year by that amount.

Do not include the reimbursed amount on the T4 slip. If you cannot refund the overpayment, show the total EI premiums deducted and the correct insurable earnings on the employee's T4 slip.

If you reported the employee's overpayment on the T4 slip, you can ask us for a refund by filling out Form PD24, Application for a Refund of Overdeducted CPP Contributions or EI Premiums. Make your request no later than three years from the end of the year in which the overpayment occurred.

Recovering EI premiums

If you receive a notice of assessment or discover that you have underdeducted EI premiums, you are responsible for remitting the balance due (both the employer's and employee's shares).

You can recover the employee's premiums from later payments to the employee. The recovered premiums can be equal to, but not more than the premiums you should have deducted from each payment of remuneration.

However, you cannot recover the premiums that have been outstanding for more than 12 months. As well, you cannot adjust the employee's income tax deductions to cover the EI premiums shortfall.

If you should have made a deduction in a previous year and you recover it through an additional deduction in the current year, do not report the recovered premium on the current year's T4 slip. You may have to amend your employee’s T4 slip. For information on how to amend a T4 slip, see Guide RC4120, Employers’ Guide – Filing the T4 Slip and Summary.

The recovered amount does not affect the current year-to-date EI premiums deducted.

Example

a) You did not deduct or remit EI premiums that you should have deducted as follows:

Month

September

October
November
December
Total

 EI

$74.00

$74.00

$78.00

$75.00

$301.00

b) After auditing the records, we issue a notice of assessment as follows:

     

EI premiums 

Employee 

$301.00 

Employer 

$421.40 

Total 

$722.40 

The employer premiums are 1.4 times the employee premiums. Penalty and interest are added to the total.

c) The following year, you can recover the employee’s premiums of $301.00 as follows:

Employee’s deductions calculation – Current and recovered premiums
Month Current
premium
Recovered premium Employee’s
deduction
April $74.00 + $74.00 (for September)  = $148.00
May $78.00 $74.00 (for October) $152.00
June $80.00 $78.00 (for November) $158.00
July $80.00 $75.00 (for December) $155.00
Total $301.00 

Each year, we check the calculations by matching the pensionable and insurable earnings you reported with the required CPP contributions or EI premiums indicated in the Payroll Deductions Tables. This ensures that your calculations are correct.

For more information, see Pensionable and Insurable Earnings Review (PIER).

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