Cost to Hire an Employee in Ontario 2026 Calculator
The salary is never the cost. Add employer CPP and CPP2, employer EI at 1.4 times the employee rate, Ontario employer health tax after the exemption, the WSIB premium for your industry, vacation and public holiday accrual, and see the true annual and hourly cost of the hire.
per employee per year
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Cost Breakdown Per Employee
| Item | Basis | Annual Cost |
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Hourly Cost and Productive Hours
| Measure | Hours | Cost Per Hour |
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Payroll Account and Remittance
| Obligation | Detail | Deadline |
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Obligations This Hire Triggers
Planning Suggestion
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Disclaimer: This calculator uses 2026 rates: CPP at 5.95% on earnings between $3,500 and $74,600, CPP2 at 4% between $74,600 and $85,000, EI employer premiums at 2.282% on earnings to $68,900, the Ontario employer health tax at 1.95% above the $1,000,000 exemption, and WSIB insurable earnings capped at $121,700. WSIB class rates shown are planning figures only; your actual rate is on your WSIB statement. Income tax withholding is estimated for the remittance frequency test only. Recruitment, training, equipment, workspace and severance costs are not included. This page is general information, not tax or employment law advice.
What an Employee Actually Costs Beyond the Salary
Most Ontario business owners budget a hire at the salary figure and then find the payroll run costs materially more. The gap is made up of four statutory employer charges, plus the paid time that has to be covered whether the person is working or not.
For a salaried professional the burden is usually between 10% and 14% of salary. For an hourly worker in a higher-risk industry, once vacation pay and public holidays become genuinely incremental, it can pass 25%. The difference between those two numbers is what decides whether a hire is affordable.
2026 Employer Rates at a Glance
| Charge | 2026 Rate | Ceiling | Maximum Employer Cost |
|---|---|---|---|
| CPP, employer share | 5.95% | $74,600 less the $3,500 exemption | $4,230.45 |
| CPP2, employer share | 4% | $74,600 to $85,000 | $416.00 |
| EI, employer share | 2.282% | $68,900 | $1,572.30 |
| Ontario employer health tax | 1.95% | Payroll above the $1,000,000 exemption | Nil below the exemption |
| WSIB, Ontario average | $1.23 per $100 | $121,700 per worker | $1,496.91 at the average rate |
The EI rate fell and the cost still went up. The employee rate dropped from 1.64% to 1.63% for 2026, but the maximum insurable earnings rose from $65,700 to $68,900, so the maximum employer premium increased by $63.83 to $1,572.30 per employee. Our EI premium rates 2026 guide sets out the full detail.
Employer CPP and CPP2
The employer matches the employee contribution exactly. Base CPP is 5.95% of earnings between the $3,500 basic exemption and the year’s maximum pensionable earnings of $74,600, giving a maximum of $4,230.45 per employee. CPP2 then applies at 4% on earnings between $74,600 and $85,000, adding up to $416.00.
CPP2 is the line most payroll budgets still miss. It only affects employees earning above $74,600, but for a team of higher-paid staff it is real money and it did not exist before 2024.
Employer EI at 1.4 Times
Employers pay 1.4 times the employee rate, so 2.282% for 2026 against the employee’s 1.63%, on insurable earnings to $68,900. That is a maximum of $1,572.30 per employee.
A reduced employer rate is available under the Premium Reduction Program where the employer provides a qualifying short-term disability plan that meets the Service Canada standards. It is worth checking if you already offer group benefits, because the reduction is not applied automatically.
Ontario Employer Health Tax and the Exemption
The employer health tax applies to total Ontario remuneration, at 1.95% for employers above the threshold. Eligible private-sector employers get an exemption on the first $1,000,000 of Ontario payroll, so most small corporations pay nothing at all.
| Total Ontario Payroll | Employer Health Tax |
|---|---|
| $1,000,000 or less | Nil, fully covered by the exemption |
| Between $1,000,000 and $5,000,000 | 1.95% on the amount above $1,000,000 |
| Above $5,000,000 | 1.95% on the entire payroll, exemption lost |
Associated employers share a single exemption between them. Owners running two or three corporations often assume each gets its own $1,000,000, and it is a costly assumption to get wrong.
WSIB Registration and Premiums
If your industry is covered by Schedule 1 of the Workplace Safety and Insurance Act and you have at least one employee, you must register with the WSIB within ten days of the hire. The 2026 average premium rate is $1.23 per $100 of insurable payroll, the lowest in more than fifty years, and the insurable earnings ceiling is $121,700 per worker.
Your actual rate depends on your class and on your own experience within it, and rate statements are published each November. A professional services office pays a fraction of the average; construction and transportation pay well above it.
Construction has mandatory coverage. Since 2013, coverage is compulsory in construction including one-person incorporated trades. A single officer can be exempt only where they perform no construction work at all, and direct on-site supervision counts as construction work. Hiring subcontractors without pulling a clearance certificate first makes you liable for their unpaid premiums.
Vacation Pay and Public Holidays — When They Are Extra
This is where most calculators overstate the cost. For a salaried employee, vacation and the nine Ontario public holidays are already inside the annual salary, because the employee is paid the same whether they are at their desk or on holiday. Adding 4% vacation pay on top double-counts.
For an hourly employee paid only for hours actually worked, both are genuinely incremental. Vacation pay is 4% of gross wages for less than five years of service and 6% after five years, and public holiday pay is calculated on the regular wages earned in the four work weeks before the holiday.
| Cost | Salaried Employee | Hourly Employee |
|---|---|---|
| Vacation pay | Already in the salary | Extra, 4% or 6% of wages |
| Public holiday pay, nine days | Already in the salary | Extra, roughly 3.5% of wages |
| Productive hours in a year | Around 1,928 after vacation and holidays | Equal to hours actually worked |
The Payroll Account and How Often You Remit
Before the first payment you need an RP payroll account attached to your business number. Remittance frequency is then set by your average monthly withholding amount, which is the total of income tax, CPP and EI, both halves, divided by twelve.
| Average Monthly Withholding | Remitter Type | Due Date |
|---|---|---|
| Under $1,000 with a perfect compliance history | Quarterly | Fifteenth day after the quarter end |
| Under $25,000 | Regular monthly | Fifteenth of the following month |
| $25,000 to $99,999.99 | Threshold 1, twice monthly | Twenty-fifth and the tenth |
| $100,000 or more | Threshold 2, four times monthly | Within three working days of each period |
New employers start as regular monthly remitters. Late remittance penalties run from 3% to 10% of the amount, and 20% for a second failure in the same year made knowingly or through gross negligence.
Employee or Contractor — the Cheaper Option That Usually Is Not
Paying someone as a contractor removes CPP, EI, employer health tax, WSIB and vacation pay from the equation, which is exactly why it is so tempting. The CRA decides the question on the facts, not on the invoice: control, ownership of tools, chance of profit and risk of loss, and integration into the business.
If the CRA rules the person an employee, the corporation is assessed for both the employer and the employee shares of CPP and EI that should have been withheld, plus penalties and interest, and the employee’s share is usually not recoverable from them. A CPP and EI ruling can be requested in advance on Form CPT1 where the position is genuinely uncertain.
What the Calculator Does Not Include
- Recruitment cost: advertising, agency fees and the owner’s own time
- Equipment and workspace: laptop, phone, software licences, desk and insurance
- Training and ramp-up: the months before the hire is fully productive
- Termination cost: notice or pay in lieu under the Employment Standards Act, and common law reasonable notice which is usually far higher
- Overtime: time and a half after 44 hours in a work week in Ontario
- Employer pension contributions: where a registered plan is offered
- Payroll processing cost: software, filings and the annual T4 preparation
Every hire ends in the same three obligations. An RP payroll account, remittances on time, and T4 slips by the last day of February. Our payroll service sets up the account, runs the payroll, files the remittances and prepares the year end on a flat monthly fee.
Frequently Asked Questions
Common questions from Ontario employers adding staff.
Related Calculators and Guides
More tools for Ontario employers.
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We open the RP account, set the remittance schedule, run the pay cycle, file every remittance on time and prepare the T4 slips at year end. Fixed monthly fee, no per-run surprises, and the WSIB and employer health tax positions reviewed once a year.