What is EI (Employment Insurance)?
Employment Insurance is Canada's federal programme providing temporary income support to workers who lose their jobs or cannot work due to illness, pregnancy, or caregiving. Employees pay 1.64% on insurable earnings up to CAD 65,700 (2025), and employers pay 1.4 times the employee rate (2.296%). Quebec employees pay a reduced rate due to the Quebec Parental Insurance Plan.
Current Rate (Calendar year (1 January to 31 December))
Employee: 1.64%, Employer: 2.296% (1.4x employee rate). Maximum insurable earnings: CAD 65,700 (2025).
Example
An employee earning CAD 80,000 in 2025 has EI deducted on earnings up to CAD 65,700. Employee EI premium: 1.64% x CAD 65,700 = CAD 1,077.48 (maximum). Employer EI premium: 2.296% x CAD 65,700 = CAD 1,508.47. No EI applies on earnings above CAD 65,700.
How EI (Employment Insurance) works in Canada
Employment Insurance (EI) is a federal programme jointly funded by employees (through premium deductions) and employers (through a 1.4x premium multiple). EI provides income replacement for workers who are unemployed, sick, pregnant or caring for a newborn, or caring for a critically ill family member.
**Insurable earnings and maximum**
EI premiums apply to all insurable earnings up to the maximum insurable earnings (MIE) for the year. For 2025, the MIE is CAD 65,700. No EI is payable on earnings above this threshold. The premium rate is set annually by the Employment Insurance Commission and can change each year.
**Employer premium multiple**
Employers pay 1.4 times the employee EI premium for each employee. Unlike CPP (where employer and employee each pay the same rate), the employer's EI cost is higher than the employee's. Employers who provide a qualified short-term disability plan may be entitled to a reduced employer EI premium rate.
**Quebec Parental Insurance Plan (QPIP)**
Employees in Quebec pay a lower EI premium rate because Quebec administers its own Parental Insurance Plan (QPIP), which covers maternity, paternity, and parental benefits that would otherwise be covered by EI. The reduced Quebec EI rate reflects that QPIP covers these benefits. Employers in Quebec also pay a reduced EI rate. Employers must administer both EI and QPIP deductions for Quebec employees.
**Self-employed optional coverage**
Self-employed individuals are not subject to EI premiums and are generally not eligible for regular EI benefits. However, self-employed Canadians may opt in to EI special benefits (sickness, maternity, parental, compassionate care, and critically ill benefits) by registering with Service Canada and paying EI premiums on their self-employment earnings for at least one year before claiming.
**Remittance**
EI premiums are remitted together with CPP contributions and income tax deductions on the same remittance schedule. The T4 slip issued to each employee by the end of February must show total insurable earnings in Box 24 and employee EI premiums in Box 18.
Related terms
The Canada Pension Plan is Canada's mandatory public pension scheme for employed and self-employed workers. In 2025, both employer and employee each contribute 5.95% on earnings between CAD 3,500 and CAD 71,300 (the Year's Maximum Pensionable Earnings). A second tier (CPP2) applies 4% on earnings between CAD 71,301 and CAD 81,200. Self-employed individuals pay both sides.
The T4 slip is issued by employers to each employee and to CRA by the last day of February following the taxation year. It summarises employment income, CPP contributions, EI premiums, and income tax withheld during the year. Employers who pay 5 or more employees must file T4s electronically. Late filing attracts penalties of CAD 25 per day up to CAD 2,500.
A Business Number is a unique 9-digit identifier issued by the Canada Revenue Agency to identify a business or legal entity. The BN is the root identifier to which CRA program accounts are added: RC (corporation income tax), RT (GST/HST), RP (payroll deductions), and RM (import/export). All CRA business filings and remittances use the BN and program account suffix.
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