Employer Cost of a New Hire in Canada: CPP, EI and Quebec Rules

The direct answer: what the employer pays and under which law

An employer's statutory cost for a new hire in Canada has three main parts: the employer share of the Canada Pension Plan (CPP), the CPP2 enhancement, and the employer share of Employment Insurance (EI). Outside Quebec, the CPP employer contribution equals the employee's contribution. Section 9 of the Canada Pension Plan, R.S.C. 1985, c. C-8, requires the employer to contribute at the employer rate on the employee's contributory earnings above the basic exemption. For 2026, that rate is 5.95% and the basic exemption is $3,500. The Canada Revenue Agency publishes these figures each year, and its 2026 table puts the maximum contribution for each side at $4,230.45.

The EI rule is different. Section 68 of the Employment Insurance Act, S.C. 1996, c. 23, sets the employer premium at 1.4 times the employee premiums the employer must deduct under subsection 82(1). The Canada Employment Insurance Commission set the 2026 employee rate at $1.63 per $100 of insurable earnings, which makes the employer rate $2.28 per $100 when rounded. The employer rate is exactly 1.4 times the employee rate, so the employer side is 2.282%. The 2026 maximum insurable earnings are $68,900, which puts the employer's maximum at $1,572.30 per employee.

CPP2 sits on top of CPP. For 2026, earnings between $74,600 and $85,000 attract a 4% contribution from each side, capped at $416. The employer matches the employee on CPP2 as well.

If you want the figure for your own salary, use the free calculator on this page. It takes the same steps described below, so you can check the answer for a specific pay rate.

How the figure is worked out, step by step

1. Confirm that the person is employed in a way that brings CPP or EI into play, and note where they work. Quebec uses different plans, covered later in this guide.
2. Check age. CPP applies to workers from 18 until the month they turn 70. Under 18, there is no CPP. After 70, contributions stop even if the person keeps working.
3. For CPP, take the year's pensionable earnings, subtract the $3,500 basic exemption, and stop at the $74,600 ceiling. Multiply the result by 5.95%. That is the employer amount, and it equals the employee amount.
4. For CPP2, take the part of earnings between $74,600 and $85,000 and multiply by 4%. Again, the employer amount equals the employee amount.
5. For EI, take insurable earnings up to $68,900 and multiply by 1.63% to get the employee premium. Then multiply that premium by 1.4 to get the employer premium.
6. Track the year-to-date totals. Each contribution stops once the year's maximum is reached, and it restarts in January.
7. Add the CPP, CPP2 and EI employer amounts. That total is the statutory payroll cost. It is not the full cost of the hire, which also includes wages, benefits and other charges.

Worked example: a $60,000 salary outside Quebec

Take a full-year employee paid $60,000 in salary, employed by one employer for the whole year, working outside Quebec. The figures below use the 2026 rates.

For CPP, the pensionable earnings are $60,000 minus $3,500, which leaves $56,500. Multiplying by 5.95% gives $3,361.75. The employer pays the same amount, so $3,361.75 is the employer's CPP cost. CPP2 does not apply, because the salary is below $74,600.

For EI, the employee premium is $60,000 multiplied by 1.63%, which is $978.00. The employer premium is 1.4 times that figure, which is $1,369.20. Put another way, $60,000 multiplied by 2.282% gives the same result.

The employer's statutory total is $3,361.75 plus $1,369.20, which comes to $4,730.95. That is the amount to add on top of the $60,000 salary before benefits, workers' compensation premiums and other charges.

At the top of the scale, an employee earning $100,000 reaches the CPP maximum of $4,230.45, the CPP2 maximum of $416.00, and the EI maximum of $1,572.30. The employer total for that person is $6,218.75 for the year.

The same $60,000 employee in Quebec shows how the rules differ. The Quebec Pension Plan applies to $56,500 at a combined 10.6% in 2026, which means 6.30% for each side and $3,559.50 for the employer. EI in Quebec is lower for the employee, so the employer's EI share is $1,092.00 at 1.82%. The Quebec Parental Insurance Plan adds $361.20 at the employer rate of 0.602%. The Quebec employer total is $5,012.70, which is $281.75 higher than the same salary outside Quebec.

Cases that change the answer

Quebec is the main exception. The Quebec Pension Plan, not the CPP, applies to employees who work in Quebec. The Quebec Pension Plan has a combined rate of 10.6% in 2026, split evenly between employer and employee. Its earnings band and basic exemption match the CPP, and a second additional contribution of 4% applies up to $85,000. Under the Act respecting the Quebec Pension Plan, these rules are set provincially.

Quebec also has its own parental insurance. The Quebec Parental Insurance Plan has a 2026 employer rate of 0.602% on insurable earnings up to $103,000, with a maximum employer contribution of $620.06. Quebec employees pay a lower EI rate of 1.30%, and employers pay 1.82% on the same base, up to the $68,900 EI ceiling. The payroll setup has to reflect both the Quebec pension and the Quebec parental plan, and the federal EI rate does not apply in the same way.

Age changes the answer at both ends. Under 18, no CPP applies. From 65 to 70, a worker who is receiving a CPP retirement pension can file form CPT30 to stop contributing, and the employer must then stop deductions. Without that form, contributions continue. After 70, contributions stop even if the person keeps working.

Caps change the answer during the year. The CPP, CPP2 and EI maximums apply to the calendar year, not to each pay period. A worker who joins late in the year on a high salary may reach a cap quickly, and the employer's cost for later pays falls to zero for that plan. A worker who joins in January may reach the cap in the second half of the year.

Contract type matters. The Employment Insurance Act defines which kinds of work are insurable employment, and section 5 sets out the types. The Canada Pension Plan excludes some kinds of employment from pensionable employment, including casual employment that is not for the purpose of the employer's business. Someone engaged as a contractor, or in a casual role, may fall outside these rules. The line between an employee and a contractor is decided on the facts, so the cost cannot be assumed to be zero.

Minimum service does not create a waiting period under these rules. Contributions start once the year's earnings pass the $3,500 exemption, so there is no probation period that delays the employer's CPP or EI cost. The rules do not change based on how long the employee has worked.

Resignation does not change the rate. The employer's contributions follow pay, so they stop with the last pay. The year-to-date totals reset on January 1, so a new employer starting in January starts counting from zero.

Common mistakes

• Applying 1.4 times to CPP. The employer matches CPP at 1.0 times. The 1.4 multiplier applies to EI only.
• Using the employee EI rate as the employer rate. The employer pays 2.282% outside Quebec, not 1.63%.
• Forgetting CPP2 for salaries above $74,600.
• Applying EI to all earnings. EI stops at $68,900 in 2026, and QPIP has its own ceiling of $103,000.
• Using federal CPP rates for a Quebec employee. Quebec uses the Quebec Pension Plan and the Quebec Parental Insurance Plan.
• Stopping CPP at 65 without a CPT30 form, or continuing it after 70.
• Treating the statutory total as the full cost of the hire. Wages, benefits and workers' compensation premiums sit outside this figure.

What is not in this calculation

This calculation covers only the employer's statutory CPP, CPP2, EI and, in Quebec, QPP and QPIP contributions. It does not include workers' compensation premiums, vacation pay, paid leave, benefits, or other employer costs. In Quebec, the health services fund is a separate employer obligation that also falls outside this figure. The federal government has announced an intention to reduce the base CPP contribution rate from 9.9% to 9.5% from January 1, 2027, subject to legislation. That change is not yet law, so use the 2026 figures for planning and check the rate again before the new year.

What to check with HR or a lawyer

Confirm the employment status of every person on the payroll. A contractor and an employee can look similar, but they produce very different payroll costs. Confirm the province of work, because Quebec's plans are separate. Confirm the rates in use with your payroll provider each January, and compare them with the Canada Revenue Agency's current tables. If the role change involves any reduction in pay or hours, the employment standards rules that apply in the province and any notice, consultation or severance rules need to be followed, and the change should be agreed with the employee or checked with a lawyer.

This explains the rule in general terms; it is not legal or tax advice for your case.

How employers take routine payroll work off their staff

Most of the work in this guide is repeated every pay run: applying the earnings bands, tracking year-to-date totals against the caps, and checking that the Quebec and federal rules are applied to the right people. An AI worker can read payroll exports, apply these bands, flag anyone who is near a cap, and prepare a monthly summary for a person to check before remittance. The payroll lead still confirms employment status, province and any exception, and approves the final figures. Results depend on the business's own figures, which the free audit measures.