One of the challenges of hiring internationally is understanding a new and different tax system and social safety net. Understanding employee and employer payroll taxes, including mandatory contributions to Canada Pension Plan (CPP) and Employment Insurance (EI) is something many businesses struggle with. Employment Insurance Canada requirements and rules are complex but working with a PEO can help simplify things! By outsourcing your international payroll to a PEO, you can stay focused on managing your team, while they take care of payroll, taxes and all other deductions and remittances.
Canadian Payroll Services takes care of employment insurance and compliance and makes it stress free.
How Insurance Works for Canadian Remote Workers
Employment insurance is Canada’s national job insurance program. EI provides temporary relief to individuals who need to take time off work with weekly payments of 55% of their regular earnings. There are multiple EI benefits, each with their own rules, including Sickness, Caregiver Maternity and Parental Leave.
Employment insurance is mandatory in Canada. All employed Canadians, regardless of age and schedule contribute to Employment Insurance, including students, seniors, part time and remote workers. Self-employed Canadians and contractors are the only exception. While they are not required to contribute, they can do so by registering to contribute EI special benefits. Unfortunately, many self-employed Canadians neglect this process, leaving themselves unprotected.
In Canada, employers are responsible for deducting EI premiums from their employees’ paychques and remitting these payments to the government. They are also responsible for making EI contributions themselves. Fines for failing to remit or remitting incorrectly can be high. It’s important that foreign businesses looking to hire in Canada are aware of current EI contribution rates, and that they have procedures in place to remit. Employers struggling to handle cross border taxes often turn to a PEO to handle things for them.
Each year EI premiums and maximum insurable earnings are assessed and adjusted. This year, the maximums for employees and employers are:
|EI Premium Rate||$1.63 per $100||$2.28 per $100|
|Maximum Insurable Earnings||$61,500||$61,500|
|Maximum Weekly EI Benefit||$650||N/A|
Remote Workers Get Insurance with Canadian PEO
Employment Insurance is fundamental part of hiring and employing workers in Canada. However, for international businesses hiring in Canada, it can be a confusing hassle. In order to collect and remit EI premiums, you need to register a local subsidiary, set up payroll and accounting – or, you can work a PEO. When you outsource your international payroll to a PEO, they hire your team compliantly and take on payroll, taxes, and employee health benefits in Canada. There’s no need to open a local subsidiary, because PEOs hire your workers and then lease them back to you. PEOs take care of EI, CPP and taxes so that you don’t have to.
Work with a PEO like Canadian Payroll Services
Job insurance in Canada is a mandatory program for both employees and employers, and while Employment Insurance can be confusing to keep up with and remit, it doesn’t have to be. PEOs like Canadian Payroll Services make it easy to stay compliant while hiring internationally. Our team of certified payroll administrators and HR account managers ensure that you and your team are on top of mandatory remittances and that your international payroll is always accurate, on time, and compliant.
Want to learn more about how Canadian Payroll Services can keep you compliant? Contact us today!