Employment insurance (EI) premiums

EI premiums are one of the payroll remittances worth checking in a sale. A buyer meets them when setting up payroll, and when asking whether the seller actually remitted what it deducted from staff.

How the rules work

The CRA says an employer has to deduct EI premiums from an employee’s insurable earnings, and must also contribute an amount tied to the premiums it deducts and remit both. Subject to sections 69 and 70, the Employment Insurance Act sets the employer’s premium by reference to the employees’ premiums the employer is required to deduct under subsection 82(1) (s. 68). The CRA adds that where there was an employer restructuring, a successor employer may consider the premiums the former employer already deducted for the year. If an employee works in Quebec, the CRA says the employer deducts a reduced EI premium at Quebec rates, in addition to Québec Parental Insurance Plan premiums.

What to check or ask

• The seller’s remittance history for EI, and whether the payroll account is current
• Whether your deal makes you a successor employer for the year
• Which province each employee works in

For the share-purchase side, read do unpaid source deductions and HST follow a share purchase. See also source deductions.