CPP and EI payroll costs for restaurants in 2026: what you pay on top of wages

When you work out what a new server or cook really costs, the hourly wage is the beginning. On top of it, an employer in most of Canada pays its share of the Canada Pension Plan (CPP) and Employment Insurance (EI), plus provincial costs such as workers' compensation and the employer health tax in some provinces. This guide covers the two federal ones and how they apply in 2026.

The Canada Revenue Agency publishes the current rates each year, so confirm every number on the CRA website before you set a budget or run payroll. Quebec has its own pension plan and EI rate, so these figures apply to the rest of Canada.

How does CPP work for a restaurant employer?

Canada Pension Plan contributions are shared between employee and employer, and the employer share matches the employee's. They are worked out on earnings above a small yearly basic exemption, up to a yearly ceiling, so each payroll run deducts the employee share and you add your own on top. The rates and ceilings are set each year, so take the current figures from the Canada Revenue Agency before you budget.

There is also a second tier of contributions on higher earnings. It matters only for employees who earn above the first ceiling, which is rare in a restaurant but possible for a chef or general manager.

How does EI work for a restaurant employer?

Employment Insurance premiums work differently from CPP: the employer pays a multiple of the employee premium, so the employer cost is higher than the employee deduction, up to a yearly ceiling on insurable earnings. Premiums apply from the first dollar of insurable earnings, with no basic exemption, and the current rates are on the Canada Revenue Agency's website.

How do these costs show up in a restaurant?

Think of them as a percentage added to every payroll run, until an employee reaches the yearly maximum. For a part-time server who earns under the CPP ceiling, you pay the employer share on almost every dollar over the exemption. For a full-time cook, you stop paying CPP and EI once earnings pass the maximum for the year.

Three situations catch owners out:

1. New hires mid-year. CPP contributions are based on the year's maximum, but the basic exemption is prorated. Your payroll software or bookkeeper should do this.
2. Employees under 18 or over 70. CPP rules differ at each end of the age range.
3. Tips and gratuities. The treatment of tips depends on how they are received and distributed. Confirm with the CRA before you decide how to report tips.

How do you remit these amounts?

You deduct the employee share from pay, add your employer share, and send both to the CRA by the due date for your remitter type. Most small restaurants are regular or quarterly remitters. The CRA assigns the schedule, and late remittance can bring penalties and interest. Keep payroll records for at least six years.

What else should you budget for?

• Provincial workers' compensation premiums, such as WSIB in Ontario or WorkSafeBC.
• Employer health tax in Ontario, British Columbia, Manitoba, Quebec and Newfoundland and Labrador, depending on payroll size.
• Vacation pay and statutory holiday pay, which are set by provincial employment standards.
• Training, such as food handler certificates and server training.

How do you keep the number honest?

Ask your bookkeeper for a "fully loaded" hourly cost for each role, which includes employer CPP, EI, vacation pay and workers' compensation. Use that number, not the wage, when you price a menu or set a labour target. Review it each January, when the rates change.

How do part-time and seasonal staff change the cost?

Part-time and seasonal workers still trigger employer contributions on every payroll, even if they never reach the yearly maximum. A student who works twelve hours a week through the school term costs your business the wage plus the employer share on most of those dollars. A seasonal worker who joins in May and leaves in September may be counted in a different way for the yearly maximum than a year-round employee. Ask your payroll provider to model a typical part-timer, so you can see the true cost of an extra shift before you add it.

Do you want to see which shifts earn their keep?

Knowing the real cost of a shift is only useful if you also know when guests fill the room. Mosey is a food discovery app that helps guests find restaurants by the dish, and its tools for businesses include staff scheduling and analytics for quiet hours. Nobody can pay to outrank you there, because Mosey Gold is earned from ratings alone.

More guides for your business:

• Hiring international students in a restaurant: the 24-hour weekly cap and what to check
• How to price a menu when food costs keep rising: a Canadian owner's method
• Ottawa's return-to-office rules and downtown restaurants: what changes for lunch and after-work trade

More in the Canadian guides for food businesses.