The cost of hiring an employee in Canada: a $60,000 salary, worked through

The statutory costs every employer pays

Two deductions come off every employee’s pay, and the employer matches or exceeds each. The figures below are the CRA’s published 2027 rates; the 2026 rates are shown for comparison because a hire made this autumn is paid under next year’s numbers from the first January pay.

The 2027 CPP base rate is lower than 2026 (5.75% against 5.95%) while the ceiling is higher, so the maximum contribution moves only slightly. The reason for the rate change is explained in the CPP base rate update, and every 2027 figure is on the CPP and EI 2027 guide.

The $60,000 example

An employee in BC on a $60,000 salary, paid through 2027.

The employee’s own deductions are separate: CPP at the same 5.75% on the same base ($3,248.75), EI at 1.64% ($984.00) and income tax, all withheld from the $60,000 and remitted by the employer together with the employer share. The payroll deduction calculator gives the per-pay figures.

Vacation pay is shown as an addition because it is one for hourly and most non-salaried staff, paid at 4% on each cheque or on the vacation taken. For a salaried employee whose two weeks off are paid at the normal salary, the cost is already inside the $60,000: it is two weeks of salary paid for no work, which is the same money. Either way the business pays for roughly fifty weeks of work with fifty-two weeks of salary.

Vacation pay: 4% in all four provinces

Each province sets a minimum. In BC, vacation pay is at least 4% of all wages paid in the previous year, rising to 6% after five years of employment, with two weeks of vacation after 12 months and three after five years. Alberta, Ontario and Manitoba use the same structure: 4% and two weeks for the early years, 6% and three weeks from the fifth year. Many employers pay more, and a contract that promises three weeks from the start costs 6% from the start. The accrual, the payout on termination and the common mistakes are in the vacation pay guide.

Statutory holidays

BC has 11 statutory holidays, and an eligible employee is paid an average day’s pay for each whether they work it or not; an employee who works the day is paid premium rates on top. Alberta, Ontario and Manitoba each have their own list and their own averaging formula. For a salaried employee the holidays are inside the salary like vacation; for an hourly employee they are a direct cost, and a business that is open on holidays pays the premium as well. The calculation by province is in the statutory holiday pay guide.

Workers’ compensation

Every employer registers with the provincial board (WorkSafeBC, WCB Alberta, WSIB in Ontario, WCB Manitoba) and pays a premium set as a rate per $100 of assessable payroll, by industry classification. The rate for an office is a fraction of the rate for roofing, and it changes each year, so the only reliable figure is the one the board quotes for your classification. Budget it as a percentage of payroll from the first hire; registration is on the first-employee checklist.

Employer health tax: BC and Ontario

Two of the four provinces charge a payroll tax, and both exempt small employers. In BC, employers with BC remuneration of $1,000,000 or less pay no employer health tax; between $1,000,000.01 and $1,500,000 the tax is 5.85% of the amount over $1,000,000; above $1,500,000 it is 1.95% of total BC remuneration. In Ontario, the exemption for eligible private employers is $1 million of Ontario payroll, with rates from 0.98% to 1.95% above it. Alberta has no payroll tax. Manitoba’s health and post-secondary education levy has its own exemption threshold; check it if the payroll is large. For a business adding its first few employees, the employer health tax is zero in every province, which is why the example above shows nothing.

The costs that are not on a government page

The statutory items are the floor. The real cost of the hire includes the benefits plan if there is one, the equipment and software seat, the training weeks at full pay and partial output, the recruitment cost, and the time of whoever manages the person. None of these has a published rate and all of them are real. A reasonable practice is to budget the salary plus the statutory 8% or so, plus vacation where it is additional, plus the workers’ compensation rate, plus whatever benefits and equipment you have decided on, and to treat that total as the number the role has to justify.

Employee or contractor: the cost is not the test

The employer CPP and EI, the vacation pay and the holidays all disappear if the person is a self-employed contractor, which is why the question gets asked. The CRA does not let the cost decide it. Whether someone is an employee or a contractor is a question of control, tools, risk and integration, and a contractor who is in substance an employee is reassessed as one, with the employer share of CPP and EI, interest and penalties going back to the start. The test is in employee or contractor: the CRA’s classification, and which slip each one gets in T4 vs T4A vs T5018.

The bottom line

On a $60,000 salary in 2027 the employer’s CPP and EI add $4,626.35, vacation pay adds $2,400 where it is paid on top, statutory holidays and workers’ compensation add more, and the employer health tax adds nothing until payroll passes $1,000,000 in BC or Ontario. Budget the salary plus roughly 8% for the statutory items as the starting point, and add the rest for your province and industry.

The exact figure depends on the province, the industry and how vacation is paid; ask about your own situation and a CPA replies free, usually the same business day. The 2027 rates are kept current on the payroll quick card.

General information for Canadian business owners, current as of November 2026; not tax, legal or accounting advice, and no client relationship. Rules change, so speak with a CPA before acting.