EI premium rates hold steady

(Jan. 7/09) In 2009, Employment Insurance (EI) rates will remain at $2.42 per $100 of insurable earnings for employers, and $1.73 for employees in all provinces except Quebec.  EI premium rates in Quebec will drop by two cents to $1.93 in 2009 because parental leave in the province is financed by a separate parental insurance scheme. 

Due to an increase in average annual weekly earnings, the maximum insurable earnings will increase to $42,300 in 2009, from $41,100 in 2008.  For employers, the maximum annual contribution for each employee will not exceed $1,025.51, an increase of $29.07 from 2008.

Supreme Court notes unlawful EI contributions

In December, the Supreme Court ruled that the federal government “unlawfully” collected employment insurance premiums in 2002, 2003 and 2005.  According to the ruling, the government ignored the fundamental principle of “no taxation without representation” when it set premium rates for those years.  Because the premiums set by the government for those years had no actual connection to the costs of the EI system, the premiums are more accurately described as a tax.  Under Canadian law, only Parliament has the legislative authority to set a tax.  The Supreme Court suspended its ruling for 12 months to give the government time to introduce corrective legislation. 

The government responded to the ruling stating: “Canadian employers and employees can be confident that any future revenues raised from EI premiums will go exclusively towards paying benefits and reducing EI premiums.” CRFA applauds this commitment as it has long argued that premiums should be set at break-even rates and that surpluses should be used to reduce premiums. 

CRFA has also long called for the creation of a truly stand-alone EI fund to be administered at arm’s length from government, and in June 2008 the government created the Employment Insurance Financing Board to separately manage the EI account on a break-even basis.  Because this board is still being established and no staffing appointments have yet been made, 2009’s EI rates were set according to the same methodology as 2008.