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What does an employee actually cost?

Salary is the number you agree on. The number you pay is higher: employer CPP, CPP2 and EI, plus a provincial health tax in five provinces that most payroll calculators leave out entirely.

Provincial health-tax thresholds apply to your whole payroll, so this employee’s share depends on what else you pay.

Salary
$60,000.00
Employer CPP
$3,361.75
Employer EI
$1,369.20
Employer Health Tax (EHT)
$0.00
Total cost to you
$64,730.95

Employer costs add $4,730.95 on top of salary: about 7.9%.

  • Employer CPP: Matches the employee's contribution dollar for dollar.
  • Employer EI: 1.4× the employee premium — the employer pays more, not the same.
  • Employer Health Tax (EHT): Charged on total payroll — this assumes this is your only employee.
  • Workers' compensation premiums are not included. Every province runs its own board and the rate depends on your specific classification unit, so there is no single number to apply — check your provincial board for your rate.
  • Income tax withheld is not a cost to you: it is the employee’s money passing through your account.

Behind the numbers.

The CRA’s own Payroll Deductions Online Calculator answers a different question: what lands in the employee’s bank account. It computes CPP, EI and income tax withheld from them, and stops there. None of the employer’s own cost appears.

Three things make up that cost:

  • Employer CPP matches the employee’s contribution dollar for dollar, up to the year’s maximum. Above the first earnings ceiling a second contribution (CPP2) starts, which is why the cost curve has a kink in it.
  • Employer EI is 1.4× the employee premium, not the same as it: a detail that quietly understates budgets when people assume matching.
  • Provincial employer health tax, in Ontario, British Columbia, Manitoba, Quebec and Newfoundland and Labrador. It is charged on total payroll rather than per person, so what one employee “costs” here is really their share of a business-wide bill.

Income tax withheld is deliberately absent. That money is the employee’s, passing through your bank account on its way to the CRA: counting it would inflate the answer by its largest line.

comma does not run payroll. It keeps the books underneath it: import the journal your payroll provider produces and the liabilities: CPP payable, EI payable, the provincial levy: sit in accounts you can reconcile, rather than being rebuilt from statements at year-end.

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