Canadian employers must calculate and remit CPP, EI and income tax on every pay run — at the correct rates for the province the employee works in, not where the business is based.
CPP
The 2026 employee and employer contribution rate is 5.95% on maximum contributory earnings of $71,100, for a maximum annual contribution of $4,230.45.
Employers match employee contributions dollar for dollar.
There are also CPP2 contributions on earnings above the first ceiling.
Quebec is separate
Quebec operates the QPP instead of CPP, and QPIP — the Quebec Parental Insurance Plan — alongside or instead of parts of EI.
If you work in Quebec, the figures are different.
EI
Employment Insurance premiums are deducted from insurable earnings, with employers contributing at a higher rate than employees.
What is insurable and pensionable
This distinction matters at termination:
- Bonuses and incentive pay are pensionable and insurable — CPP, EI and income tax all apply
- Pay in lieu of notice, vacation pay on separation and accumulated overtime paid after termination are insurable
- Severance pay and retiring allowances are the exception: income tax applies, but not CPP or EI
Once employment has ended, you are no longer in pensionable or insurable employment, so those deductions no longer apply to severance.
If CPP or EI was deducted from a severance payment, that is worth questioning.
The Record of Employment
Your employer must submit an ROE to Service Canada within five calendar days after the end of the pay period in which the interruption of earnings occurs.
The ROE is what allows you to apply for EI. Late or inaccurate ROEs delay claims and can result in penalties for the employer.
The separation code matters
The ROE requires a reason for separation. Common codes include A (shortage of work or layoff), E (quit), M (dismissal) and N (return to school).
Using the wrong code can trigger disputes and affect your EI claim. Check what code was used.
Applying for EI
Apply at canada.ca within four weeks of your last day.
Frequently asked questions
What is the CPP contribution rate for 2026?
Five point nine five per cent for both employee and employer, on maximum contributory earnings of $71,100, for a maximum annual contribution of $4,230.45.
Which province’s rates apply if I work remotely?
The rates for the province where the employee works, not where the business is based.
Are CPP and EI deducted from severance?
No. Severance pay and retiring allowances attract income tax but not CPP or EI, because employment has ended and you are no longer in pensionable or insurable employment.
When must my employer issue the ROE?
Within five calendar days after the end of the pay period in which the interruption of earnings occurs. It is what allows you to apply for EI.
Why does the ROE separation code matter?
Because it states the reason for separation — A for layoff, E for quit, M for dismissal, N for return to school — and the wrong code can trigger disputes and affect your claim.