Canadian employers must deduct EI premiums from every dollar of insurable earnings of their employees up to a yearly maximum. Through the EI Premium Reduction Program, employers who provide their employees with a short-term disability plan may be entitled to pay their EI premiums at a lower rate than the standard one.

“The Employment Insurance (EI) Premium Reduction Program is a way for employers who offer a short-term disability plan to their employees to reduce their portion of the EI premium. Since employees who have access to short-term disability plans may not have to collect EI benefits, the demand on the EI program is lower, so this program returns the savings to both employers and employees,” according to the Canadian Federation of Independent Business.

This program benefits not only the employer but also the employees. As explained in NPI’s Dialogue Magazine, “as part of the rate reduction program, employers are required to pass down a portion of the savings to their employees. The portion to be passed down to employees is 5/12 of the total savings, and the employer must return that portion to them in the year in which the employer received a premium rate reduction, or within four months of the following year”.

Effective January 1, 2022, the maximum insurable earnings have increased from $56,300 to $60,300. This year, the employee EI premium rate will be $1.58 per $100, meaning that insured workers will pay a maximum annual EI premium in 2022 of $952.74 compared with $889.54 in 2021. Regarding Quebec workers, their premium rate will be $1.20.