Guide
The true cost of an employee in Canada (2026)
Updated
A useful rule of thumb outside Quebec is salary plus 6–8% for federal statutory costs, then more for workers' compensation, provincial payroll taxes and benefits. Here is where the number comes from, line by line.
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.