What goes into the cost
- Employer CPP and CPP2 match the employee's: 5.95% between $3,500 and $74,600, and 4% between $74,600 and $85,000 for 2026; 5.75% from 2027, with the 2027 ceilings projected until the CRA publishes them.
- Employer EI is 1.4 times the employee rate: 2.282% on insurable earnings up to $68,900 in 2026 (a maximum of $1,572.30), and 2.296% up to $70,800 in 2027 (a maximum of $1,625.57).
- WSIB premiums depend on your industry's rate group. Enter your rate per $100 of insurable earnings as a percentage.
- Ontario EHT applies at up to 1.95% once total annual payroll exceeds the $1 million exemption for eligible employers. Leave it off if your payroll is below that.
- Benefits and overhead: health and dental, equipment, software, training, space.
- Productive hours
- Productive hours are the hours an employee is actually available to work: 2,080 paid hours a year, less vacation, public holidays and other paid days off. Ontario has nine public holidays.
The revenue a hire needs to support
Service businesses often use a labour multiplier: revenue per employee of roughly two and a half to three times their total cost, to cover the time that is not billable, overheads and profit. Adjust the multiplier to your own margins.
Hiring also moves your cash before it moves revenue. Run the hire through a cash runway check, or ask us for a 12-month forecast.
Questions
Is vacation pay included?
For a salaried employee, vacation is paid within the salary, so it shows up as fewer productive hours rather than an extra cost. For hourly staff paid 4% vacation pay on top, add it to the benefits percentage.
Does the owner pay EHT?
Ontario's Employer Health Tax applies to total Ontario payroll. Most eligible private employers are exempt on the first $1 million of payroll, so many small businesses pay none.
What labour multiplier should I use?
It depends on your gross margin and how much of each person's time is billable. Two and a half to three times cost is a common starting point for service firms; product businesses usually look at gross margin per employee instead.
Estimates use 2026 and 2027 federal and Ontario rates for individuals and Canadian-controlled private corporations. 2027 figures marked projected are our calculation until the CRA publishes them, and are for illustration only. They leave out many personal credits, deductions and elections. Talk to a CPA before acting on compensation, incorporation or tax decisions.