Who Has to Pay Employment Insurance (EI) Premiums?

Employers, whether incorporated or not, are responsible for deducting EI premiums from all employees, regardless of age. The employer pays a premium of 1.4 times the employee premium, unless they qualify for reduced premiums under the Premium Reduction Program.

As of January 2010, self-employed people can remit EI premiums based on their self-employment income, in order to qualify for certain benefits. See our article on EI for the self-employed.

For maximum insurable amounts, and maximum premiums, see our tables of EI premium rates.

Self-Employed Barbers and Hairdressers

If a barber or hairdresser is your employee, the normal processes for deduction of income tax, EI premiums and CPP contributions are followed

If a self-employed barber or hairdresser rents or leases space, a chair, or both from your barber or hairdresser establishment, you are required to report their gross earnings on a T4 slip, and to pay both the worker's share and your share of EI premiums. The worker is responsible for their own CPP contributions and income tax.

For more information, see these Canada Revenue Agency (CRA) articles:

Barbers and hairdressers, taxi drivers and drivers of other passenger-carrying vehicles

Barbers and hairdressers

RC4120 Employers' Guide - Filing the T4 slip and Summary - Self-employed barbers and hairdressers, taxi drivers and drivers of other passenger-carrying vehicles

Other Special Situations For Self-Employed Workers

T4 slips must also be completed for the following workers:

	Self-employed taxi drivers and drivers of other passenger-carrying vehicles
	Fishers - gross income
	Fishers - net partnership amount
	Fishers - shareperson amount

For more information see the CRA Guide RC4120 Employers' Guide - Filing the T4 slip and Summary

Non-Insurable Earnings

EI premiums are not payable in some employment situations, such as when the employee controls more than 40% of the corporation's voting shares, when the employee and the employer do not have an arm's length relationship (depending on other circumstances), or some other cases. Some of the other situations where income is not subject to employment insurance:

casual employment if it is not for your usual trade or business;

when a corporation employs a person who controls more than 40% of the corporation's voting shares (as mentioned above);

employment that is an exchange of work or services;

employment in agriculture or horticulture when

	the person receives no cash remuneration; or
	works less than seven days with the same employer during the year (Note: If the employee works 7 days or more, the employment is insurable from the first day of work.)

employment of a person in connection with a circus, fair, parade, carnival, exposition, exhibition, or other similar activity, except for entertainers, if that person:

	is not your regular employee; and
	works for less than seven days in the year (Note: If the employee works 7 days or more, the employment is insurable from the first day of work.)

employment of a person in a rescue operation, as long as you do not regularly employ that person for that purpose;

employment by a government body as an election worker if the worker:

	is not a regular employee of the government body; and
	works for less than 35 hours in a calendar year (Note: If the employee works 35 hours or more, the employment is insurable from the first hour of work.)

There are some types of employment payments and other payments from which EI premiums do not have to be deducted. CRA information on what type of payments are and are not subject to CPP, EI or tax deductions is available in their Special Payments Chart.

CRA also has a section titled CPP/EI Explained, which talks about different types of earnings and how they are treated for CPP and EI purposes. It includes information on:

	tips and gratuities - see Tax Court case Andrew Peller Limited v. M.N.R., 2015 TCC 329
	employment outside Canada - may be insurable
	status of workers placed by employment agencies
	real estate agents
	Heavy machinery operators
	workers engaged in construction
	workers engaged in fishing

TaxTips.ca Resources

Don't pay unnecessary employment insurance (EI) premiums

Getting back overpayments of CPP/QPP or EI premiums

August 20, 2020 Update: Three new benefits to replace Canada Emergency Response Benefit (CERB)

Canada Revenue Agency (CRA) Resources

T4001 Employers' Guide - Payroll Deductions and Remittances - see Amounts and benefits from which you have to deduct EI premiums, and Employment, benefits and payments from which you do not deduct EI premiums.

Taxable benefits and allowances source deductions

Employment Insurance (EI)

Revised: September 20, 2024