As a business owner you pay 1.4 times the EI rate that an employee does, meaning that any hike hits you even harder! Payroll taxes are the most difficult for your business to cope with since you have to pay them whether you make any money or not.
What are the rates right now?
The current federal rate for employers is $2.21. It has been frozen since 2020, as a relief measure due to the COVID-19 pandemic. In Quebec, the current rate for employers sits at $1.65.
EI RATES (per $100 insurable earnings)
What’s next for EI rates?
Support for those who lost their income remains critical during the pandemic, whether they are employees or self-employed. However, it should not make anyone better off than when they were working.
There have been calls to make some relief measures permanent, such as through a guaranteed income program or enhanced sick leave provisions. But the government must not overload the EI system with additional costs related to the pandemic. Such costs will only mean higher EI premiums and a more precarious position down the road for small businesses.
What does this mean for you?
While EI rates have been going down since 2019 and were frozen during the pandemic, CPP/QPP premiums still went up in January 2021. This increases the cost of labour for your business at a time when you can least afford it.
What is CFIB doing about this?
We’ve long advocated for more fairness in the EI system for employers. Over the years, we’ve been able to score some big wins for small business:
- In 2012, the federal government announced the seven-year break-even rate that ensures EI funds are used exclusively for the EI program during that time frame.
- In 2014, the government implemented a CFIB idea by creating the Small Business Job Credit (SBJC) which, until 2016, helped you pay just 1.2 times the employee EI rate.
- In August 2020, the government announced an EI rate freeze until 2022 to help employers and employees cope with the pandemic.
The safe and rapid return to employment will be essential in ensuring the recovery of your businesses. That’s why we’re keeping up the fight by recommending some of the following things to government:
- Do not make any permanent changes that could add additional costs to the EI system until after the pandemic when the economy and small businesses have fully recovered.
- Ensure robust consultation with small business around any proposed changes to EI. Employers and employees pay for the EI system and therefore should have a say in how it is run.
- Introduce an EI rebate for small businesses which effectively lowers the rate they pay from 1.4 times the employee rate to 1.2 times.
- Ensure more transparency around how EI funds are being used to ensure that the hard-earned money that you and your employees pay into EI is only used for EI-related expenses.
- Introduce a training tax credit, such as a refundable income tax credit or an EI credit, which recognizes the investments you make in hiring and training your employees.
- Create an EI credit to encourage businesses to hire more youth between the ages of 18 and 24 that would offer employers a 12-month break on EI premiums – a Liberal Party pledge during the last federal election.
- Implement a 50/50 split in EI premiums so that employers don’t contribute more than their fair share.
- Consider putting in place a permanently lower EI rate for small businesses.
- Implement a system to allow business owners to claim over-contributions. While employees get a refund on their tax return if they go over their maximum annual contribution, employers can’t.
Want more information?
Find out more about EI, including what to do if you’re self-employed or employ family members. And for government relief details, online resources and frequently asked questions, visit our COVID-19 Small Business Help Centre.