Guide
Budgeting a hire in Canada: where the statutory cost actually bites
Updated
Once the arithmetic is clear, a few consequences follow that are genuinely useful when planning headcount, and none of them is obvious from a percentage.
The uplift is highest on junior salaries
Because all three contributions stop at ceilings, the statutory cost is close to 7.9% of pay around the EI ceiling and about 3.1% at $200,000.
So a team of four junior hires costs proportionately more in statutory contributions than one senior hire on the same total payroll. That is worth knowing when a headcount plan is being compared against a smaller, more expensive team.
The basic exemption favours nobody in particular
The $3,500 CPP basic exemption is a flat deduction from pensionable earnings, so it removes the same $208.25 of employer CPP from every full-year employee regardless of salary.
It matters most for part-time and low-earning staff, where it is a large share of their pensionable earnings, and it is why the uplift on a very low salary is lower than on a middling one.
Ceilings reset in January
Contributions restart at the beginning of each calendar year, so an employee who reached the maximum in September begins contributing again in January, and so do you.
For cash flow that means the employer contribution is front-loaded into the first part of the year for higher earners, which is easy to miss in a monthly budget built from an annual figure divided by twelve.
The multiple-employer problem is theirs, not yours
An employee with two jobs can overcontribute across the year and recovers the excess through their return. The employer does not: each employer contributes on the earnings it pays.
So there is no employer-side saving from an employee having reached a maximum elsewhere, which is a question that comes up and has a short answer.
Check the figures every January
All three ceilings and both EI rates are announced annually, and the CPP2 ceiling moves with the main one under the 1.14 formula.
The rates on this page are the 2026 figures read from CRA on the date shown at the top. A budget built in December against last year's numbers is wrong by the whole of the annual increase.