Reduced Rates

Under the Employment Insurance (EI) Act and the EI Regulations, an employer's EI premiums may be reduced when employees are covered by a qualified short-term disability plan which reduces EI benefits that would be payable if such a plan did not exist.

For each calendar year, the rates of premium reduction are established based on four categories of qualified plans, with a distinct rate for each category. These categories of qualified plans are identified as follows:

Category 1 - A cumulative paid sick leave plan which allows for a minimum monthly accumulation of 1 day and a total maximum accumulation of at least 75 days.

Category 2 - A cumulative paid sick leave plan which allows for a minimum monthly accumulation of 1 2/3 days and a total maximum accumulation of at least 125 days.

Category 3 - A weekly indemnity plan with a maximum benefit period of at least 15 weeks.

Category 4 - A weekly indemnity plan with a maximum benefit period of at least 52 weeks. (This reduction is available only to public and para-public employers of a province.)

In September of each year, the annual rate of premium reduction applicable to the following calendar year for each plan category is calculated by the Canada Employment Insurance Commission’s Chief Actuary, EI Premium Rate Setting, pursuant to section 69 of the Employment Insurance Act. Because an annual rate of premium reduction is given only when the effective date of an employer's reduction is January 1, the pro-rated rate of reduction is based on the number of months in the year for which the employer is entitled to a reduction.

Rates of premium reduction are expressed as a percentage of employee insurable earnings. A corresponding multiple must then be used by the employer to calculate the employer premiums payable based on the employee premiums. Employers cannot use a reduced rate until such time that they receive an entitlement decision from Service Canada containing their individual assigned rate. The multiple that is used by an employer who does not have a reduction is 1.4.

You may access the annual and pro-rated rates of reduction and their corresponding multiples for a particular year by clicking one of the following options:

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