How Much Can I Save With the EI Premium Reduction?
| EI Sickness Benefit | Typical Short-Term Disability |
|---|---|
| 55% of your average insurable weekly earnings, up to a maximum amount of $729 per week | 66.67% of weekly earning to a maximum of $1500 per week |
| 26 weeks benefit period | 26 weeks benefit period |
| Taxable | Non-taxable (assuming ee paid) |
| 7 day waiting period | 0 day accident – 7 day sickness waiting period |
If you are granted an EI premium reduction, you will calculate your EI premiums using a rate that is lower than the standard employer rate. The amount saved is the difference between what would have been paid at the standard rate and what is now payable at the reduced rate.
How Savings are Calculated
The reduction depends on your plan category (e.g., weekly indemnity). In 2026, an employer with a qualified plan pays a lower rate (e.g., 1.167) instead of the standard multiplier of 1.4 times the employee's EI premium.
For example, in 2026, the total yearly savings per employee could be as much as $261.68 (for employers who offer a weekly indemnity plan with a maximum benefit period of at least 26 weeks). This calculation is based on an employee who earned $54,200, which is the yearly maximum insurable earnings for 2026.
Example:
Comparison: $54,200 Annual Salary of one employee (2026)
| Contributor | W/O Reduction (1.4x) | W Reduction (1.167x) | Annual Savings |
|---|---|---|---|
| EE (1.63%) | $883.46 | $883.46 | $0.00* |
| ER | $1,236.84 | $1,031.00 | $205.84 |
| Total Remittance | $2,120.30 | $1,914.46 | $205.84 |
now multiply by the number of employees
*Note: While the employee's initial deduction doesn't change, the employer must return 5/12 of the total savings ($85.77 in this example) to the employee.