Membership or participation in the Canada Pension Plan (CPP) and Employment Insurance Plan (EI) is compulsory for certain types of employment. As a person responsible for the payroll you need to know which employees must participate in these plans, what amounts to withhold from employees and how much the employer will have to remit or send to the Canada Revenue Agency (CRA).

Payroll plays a pivotal role in administering statutory deductions, specifically the collection and remittance of Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums. These mandatory deductions, along with the employer’s matching portion, must be accurately submitted to the Canada Revenue Agency (CRA) within prescribed timelines.

This chapter outlines the essential criteria used to identify pensionable and insurable earnings, and provides detailed guidance on calculating both employee deductions and employer contributions for regular and non-regular pay periods.

In accordance with federal legislation, CPP contributions are the first deduction applied to employment income, followed by EI premiums. Because these deductions are mandated by statute, they are classified as statutory deductions, underscoring their legal significance and the employer’s obligation to ensure full compliance.

Learning Objectives

Upon completion of this chapter, you should be able to explain:

  1. The requirements and calculations for Canada Pension Plan contributions

  2. The requirements and calculations for Employment Insurance premiums

  3. What Service Canada uses the information on a Record of Employment for

This chapter will cover the following topics:

  1. Identify the following Canada Pension Plan components:

  • Who must contribute to the Canada Pension Plan

  • Types of employment subject to Canada Pension Plan contributions

  • Types of employment not subject to Canada Pension Plan contributions

  • Payments and benefits subject to Canada Pension Plan contributions

  • Payments and benefits not subject to Canada Pension Plan contributions

  1. Calculate Canada Pension Plan contributions at an individual level

  2. Identify the following Employment Insurance components:

  • Who must pay Employment Insurance premiums

  • Types of employment subject to Employment Insurance premiums

  • Types of employment not subject to Employment Insurance premiums

  • Payments and benefits subject to Employment Insurance premiums

  • Payments and benefits not subject to Employment Insurance premiums

  1. Calculate Employment Insurance premiums at an individual level

  2. Describe the purpose of a Record of Employment

  3. Identify when the Record of Employment must be completed

5. Canada Pension Plan¶

Objective of this section is to enable you to identify the following Canada Pension Plan components:

  • Who must contribute to the Canada Pension Plan

  • Types of employment subject to Canada Pension Plan contributions

  • Types of employment not subject to Canada Pension Plan contributions

  • Payments and benefits subject to Canada Pension Plan contributions

  • Payments and benefits not subject to Canada Pension Plan contributions

  • Calculate Canada Pension Plan contributions at an individual level

The Canada Pension Plan (CPP) is a federally legislated social insurance program established under the Canada Pension Plan Act. Its primary purpose is to provide financial protection to contributors and their families in the event of retirement, disability, or death. The program is funded through mandatory payroll deductions from employees, which are matched equally by employers. These employee contributions are specifically referred to as Canada Pension Plan contributions.

In addition to the CPP, employers may offer private or non-government pension plans, which may also involve payroll deductions from employees. The specific payroll withholding requirements for these supplementary pension plans will be discussed in more detail in the later chapters; it is important to note that the CPP is often one of multiple retirement savings vehicles available within an organization’s compensation structure.

Note

Employers located in Quebec are responsible for deducting Québec Pension Plan (QPP) contributions, instead of CPP contributions, from their Québec employees and remitting those contributions to Revenu Québec (RQ).

6. Employment Insurance¶

Objective of this section is to enable you to identify the following Employment Insurance components:

  • Who must pay Employment Insurance premiums

  • Types of employment subject to Employment Insurance premiums

  • Types of employment not subject to Employment Insurance premiums

  • Payments and benefits subject to Employment Insurance premiums

  • Payments and benefits not subject to Employment Insurance premiums

  • Calculate Employment Insurance premiums at an individual level

Employment Insurance (EI) is a federally legislated social insurance program established under the Employment Insurance Act. It provides temporary financial support to individuals who are unemployed while seeking new employment or engaging in skill development. In addition to regular benefits, EI offers special provisions for workers who take leave due to significant life events such as illness, pregnancy, caring for a newborn or newly adopted child, supporting a critically ill or injured person, or tending to a family member facing a serious health condition with a risk of death.

The EI program is funded through payroll contributions made by employees, known as Employment Insurance premiums. Employers also contribute by paying a premium that is calculated based on their employees’ deductions.

While Employment Insurance is a government-mandated program, it may not be the only insurance plan available in the workplace. Many organizations offer private or non-government insurance options such as life and disability coverage, which are funded by employers, employees, or both. Although this chapter focuses specifically on the federally legislated EI program, additional information about private insurance plans will be covered in the later chapters.

7. Record of Employment¶

The Record of Employment (ROE) is the form used by Service Canada to determine an individual’s qualification to collect Employment Insurance benefits when their employment is interrupted, how much the benefit will be and how long they will collect it. As payroll is responsible for completing the ROE, the form will be illustrated in this chapter, along with an explanation of what payroll information must be tracked for ROE reporting purposes.