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When employees have access to short-term disability plans in the workplace, they may not have to collect EI benefits, or may collect EI benefits for shorter periods. As this reduces demand on the EI program, Service Canada offers the EI Premium Reduction Program. Eligible employers pay EI premiums at a lower rate than the standard 1.4 times the employee EI premium rate. A portion of the savings is shared with employees.
The potential savings depends on a few factors, including:
To illustrate the savings potential, in 2016 the best reduced employer EI rate was 1.219 times the employee EI premium rate.
Employees’ savings are five-twelfths (5/12) of the employer’s savings. Employers return savings to employees through a cash remittance, new employee benefits or improved benefits, or another method approved by Service Canada.
If your company’s short-term disability plan appears to meet the criteria, learn about the application process. Once approved, the EI premium reduction continues until the employer changes or cancels the approved plan. If denied, employers have up to one year from the decision date to submit an appeal in writing.