Guide
True cost of an employee calculator Canada: 2026 payroll cost
Updated
A useful rule of thumb outside Quebec: salary plus 6–8% for federal statutory costs, then more for workers' compensation, provincial payroll taxes and benefits. Here it is, line by line.
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How this calculator works
- Employer CPP at 5.95% of pensionable earnings between the $3,500 basic exemption and the 2026 YMPE of $74,600, matching the employee's contribution. Maximum $4,230.45 each (canada.ca: CPP contribution rates).
- Employer CPP2 (second additional CPP) at 4% on earnings between the YMPE ($74,600) and the 2026 YAMPE of $85,000; maximum $416.00 each (same canada.ca source).
- Employer EI at 1.4 times the employee premium. The 2026 employee rate is $1.63 per $100 of insurable earnings up to the $68,900 maximum. The employer pays up to $1,572.30 per employee (canada.ca: EI premium rates). Some employers with approved wage-loss plans qualify for a reduced multiple.
- Federal-only model, outside Quebec. Quebec employers pay QPP (6.30% in 2026: 5.3% base plus 1% additional, Retraite Québec), QPIP and the Health Services Fund instead of parts of this model. Quebec's employee EI rate is lower.
- Provincial payroll taxes elsewhere (Ontario's Employer Health Tax, Manitoba's Health and Post Secondary Education Tax Levy, BC's Employer Health Tax, Newfoundland and Labrador's HAPSET) are not included. Nor are workers' compensation premiums; they vary by province, payroll size and industry.
- Figures are for the 2026 contribution year. The CRA publishes new CPP and EI maximums each autumn for the following January; verify the current year's figures on canada.ca before budgeting.
- Vacation pay is not an extra line for salaried staff: it is inside the salary. For hourly staff, provincial minimums of roughly 4% of wages apply and should be added to the wage figure you enter.
The unavoidable federal lines
- Employer CPP and CPP2
- 5.95% between $3,500 and $74,600, then 4% to $85,000: $3,957 on a $70,000 salary, capped at $4,646.45 however high the salary. See the CPP and EI guide.
- Employer EI
- 1.4 times the employee premium: 2.282% of insurable earnings up to $68,900, so $1,572.30 at $70,000 and above.
The costs behind the statutory line
- Workers' compensation: mandatory in every province, rated by industry and claims history. Rates are set per class by each provincial board and published annually; check your board's rate sheet for your classification unit, because the spread between office and construction work is wide.
- Provincial payroll taxes: Ontario, BC, Manitoba, Quebec and Newfoundland and Labrador levy employer health or payroll taxes above exemption thresholds. Ontario's Employer Health Tax tops out at 1.95% with a $1 million payroll exemption (ontario.ca), and BC's tops out at 1.95% with the same $1 million exemption (gov.bc.ca); the other provinces set their own rates and thresholds. Verify your province's before budgeting.
- Vacation pay: a minimum of roughly 4% of wages (two weeks) in most provinces, rising with service. For salaried staff it is inside the salary; for hourly staff it is a real extra line.
- Benefits: extended health and dental plans typically add a few thousand dollars per employee per year at small employers; typical 2026 quotes vary widely by plan and province.
Worked example: $70,000 hire, outside Quebec
| Line | Annual cost |
|---|---|
| Gross salary | $70,000 |
| Employer CPP (5.95%) | $3,957 |
| Employer CPP2 (4% above $74,600) | $0 |
| Employer EI (1.4 x employee premium) | $1,572 |
| Federal statutory total | $75,529 |
| + workers' compensation, benefits, equipment (typical) | $2,000–$6,000 |
| Realistic first-year total | $77,500–$81,500 |
Use the calculator for your own numbers; it itemises each federal statutory line with the 2026 rates and lets you add your own benefits figure.