However, it's helpful to reference the average employer costs … Our employee cost calculator shows you how much they cost after taxes, benefits, & other factors are added up. The CRA gives a full rundown on the rules of employee benefits in Canada. For example, if … Total Employee Benefits is the total amount of any provision an employer gives to an employee, as a benefit, that is not part of a salary agreement or bonus. But for new companies, I always suggest starting benefits at 80% coverage. How Much Do Group Benefit Plans Cost? Here are some of the main employee benefits in Canada. Here’s a basic overview of employee benefits in Canada, including a look at legislation, best practices, and examples of a few companies with interesting policies. But first, tell us … Total compensation is the combination of salaries, wages, and benefits that employees receive in exchange for them doing a particular job. If an employee is hospitalized and treated outside of Canada, the provincial plan still pays for the costs as though the employee were treated in Canada. Expatriate salaries and benefits also reflect the higher cost of living abroad. Placement Incentives. Flex plans allow employees to select the benefits most useful to them. St. Joseph Communications uses cookies for personalization, to customize its online advertisements, and for other purposes. “As a consequence, age-rated benefits will cost more, and utilization in the areas of health and disability will increase.”. the cost range for a $50,000/year employee might $62,500 to $70,000. The average cost for health insurance benefits was $3.18 per hour worked. Regardless of the makeup of your staff, it’s probably a good idea to survey them to see what benefits they would enjoy the most. The Cost: Full-time employees require benefits. That equates to $5,698 per worker, per year. It doesn’t matter how small your business is – with Sage Employee Benefits you only need to pay for the number of staff you have, and with rolling 30-day contracts, you’re never tied in. Reported anonymously by Canadian Coast Guard employees. What about healthcare and dental costs in Canada? Clearly, more strategic planning is needed to help mitigate the costs of benefits plans. Healthier employees mean reduced healthcare costs for your organization. The commute to work may cost your employees more than $100 a month. “I work with a lot of startups where the average age is between 25 and 32. Nearly half of workers consider their commute to be the worst part of their day and one in five employees say they are ‘regularly late’ for work due to travel disruptions. “To help keep your costs down, you may want to consider capping drug coverage at $10,000 and implementing a combined maximum for paramedical expenses. , and it’s definitely worth a look. Aircraft Benefits. Employers pay 140% of the employees’ contributions; A salary of $51,300 costs an employee $836.19; cost to the employer is $1,170.67; Ontario Health Tax equals 1.95% of payroll over $450,000; Worker Compensation Cost: Average rate in Ontario is $2.43 per $100 of payroll – the 2nd highest in Canada; Employee benefit cost, i.e., health care Life insurance, when provided by an employer, is typically term insurance and fairly cost effective. However, they won’t pay any more than they would have if the employee was treated in Canada. No doubt, a costly benefits program and rising healthcare premiums can be a worrisome burden for small businesses. The details for each of these vary by province: Universal health insurance. Finally, while overtime isn’t exactly a benefit, we think it’s relevant here to note the importance of rules surrounding extra work. These work just like bank accounts: Employers contribute funds for each employee, and each employee can submit claims against the credit he or she has built up. That means that each year, employees that share the cost of their benefits could contribute as much as $568 and $412 for extended health and dental family coverage, respectively. That can lower usage and costs for benefits programs longer term. According to a 2014 survey conducted by Arthur J. Gallagher & Company, the number one challenge for US employers when it comes to employee benefits is controlling the cost of benefits programs. “You can offer 80% coverage for a cost to the business of about $80 per month for a single person or $185 to $200 for family coverage. According to Joe Hamzida , senior lecturer at MIT Sloan School of Management, after including taxes and benefits, the costs of hiring a full-time employee for a company are actually roughly 1.35 times base salary . That cost, as well as any related administration fees, is taxable. The cost of compensation typically includes base pay (wage or salary) and amounts paid by the employer for legally required and other benefits. While it’s important for Ontario employers to offer a competitive benefits package to attract and retain quality employees, a full suite of benefits can be cost-prohibitive for a startup. Things can get a bit complicated. Whether it’s absenteeism, drug and benefit costs, disability, engagement or participation, make sure you measure the right things for your program. This way, you don’t need to offer something like vision coverage, which is expensive, to everyone, but employees who need it can cover the cost from their spending account. Steve Pritchard of Cuuver put it this way: In my experience, employees are very appreciative of the perks they are given and do not abuse them. Not all employee types are eligible for all benefits - uncheck those that would not apply. Between employment standards legislation and tax rules set out by the CRA, there’s plenty to keep track of when it comes to employee benefits in Canada. E.g. However, with a little research and planning, managers and HR teams can certainly come up with an effective solution for their organizations. Besides direct relocation costs, many expatriates have to pay for additional expenses abroad, eg. (Thomas Northcut/Getty). #8 Transportation Benefits for Employees. But this too is a false comfort. Wages and salaries cost employers $26.17 while benefit costs were $12.04. … As a tool for keeping employees happy and healthy while managing risk, employee benefits programs are certainly a good investment. If you insist on offering 100% benefits packages at the outset, then you’re looking at $110 to $120 for a single person and $210 to $250 for family coverage. So you can level the playing field with competitors for recruitment, and continue to attract the best people into your business. The average cost for health insurance benefits was $3.18 per hour worked. For example, if you have 60 eligible employees, 45 would need to take the health insurance coverage. November 8, 2016, Employers competing for talent often want to offer vision care, but it can be too expensive for many small businesses. “As a consequence, age-rated benefits will cost more, and utilization in the areas of health and disability will increase.”. Despite cost-containment efforts, employer spending on benefits programs for employees represents a significant cost. Canada Pension Plan Premiums In most cases, you must withhold CPP premiums from employee cheques and match these payments. To further get your creative juices flowing, here are a few examples of interesting employee benefits: Employee benefits are more than just a perk; they can be key to the success of a business. Enter how many employees you have and how many hours they work per week on average to calculate your employee benefits costs for the year: As an example, if a 25-person business with employees who averaged 40 work hours per week wanted to offer all of the benefits we’ve covered here, it would cost $596,960. Beyond that, there are federal and provincial/territorial legislated minimums for items such as vacation time and vacation pay. For more information, go to Remitting GST/HST on employee benefits or see Chapter 5 of Guide T4130, Employers’ Guide Taxable Benefits and Allowances. The last thing you want is to implement a plan and then realize you can’t afford it and have to either scale it back or cut it out entirely. Auxiliary employees (BCGEU only) who have worked three consecutive years with the same ministry without a loss of seniority and have 1,200 hours of straight-time in the past 26 pay periods. These are just a few of the most common taxable benefits in Canada. So, for example, if you offer $500 for combined paramedicals, employees can spend $400 on massage and $100 on physio. Taking a look at Canada, Brian Lindenberg drew attention to a bigger benefits issue back in 2013 – the changing demographics of the workforce. If you’re headed for a renewal of your group benefits plan, understanding what influences your costs can help you determine the fairness of your new premiums. “How much you spend depends on the demographics of your company,” says Chris Gory, the president of Insurance Portfolio Financial Services Inc., a Toronto-based independent insurance brokerage specializing in employee benefits coverage. That means that each year, employees that share the cost of their benefits could contribute as much as $568 and $412 for extended health and dental family coverage, respectively. Costs matter. Communicate clearly via multiple channels so there’s no confusion as to the benefits employees are entitled to and how to claim them. For example, if your employee earns $25,000 per year, you contribute $21,500 *.0510 or $1,096.50 in 2019. Canada V5H 3Z7. This form will allow you to determine the cost to your P/G of an employee's benefits and statutory deductions. Life Insurance. One company reduced its average employee lost time from 8% to 3%, or 20 average days per year to 7.5 days. The average cost of providing benefits for employees is $8,330 annually per full-time employee, according to a survey by the Conference Board of Canada. To help payroll pros navigate year-end, we share some helpful information and tips on issuing T4 slips to their employees. For more information, go to Remitting GST/HST on employee benefits or see Chapter 5 of Guide T4130, Employers’ Guide Taxable Benefits and Allowances. No doubt, a costly benefits program and rising healthcare premiums can be a worrisome burden for small businesses. private education for children or health insurance, as well as travel home. And with the retirement age shifting back and with people living longer lives, employee benefits programs may be used more extensively and for longer periods of time. Employee benefits can improve your company’s bottom line by engaging employees to participate in wellbeing programs, such as Virgin Pulse. The 12.5 saved days per year, among 1,000 employees, was equivalent to 50 full-time employees — not to mention an improvement in sales, morale, mental health, administration costs and more. Employee Benefits – Think they have to cost you lots of money? That said, Lindenberg did see a bit of a silver lining. For example, employers who provide free board and/or lodging to employees must calculate the fair market value of said lodging and add it to their employees’ income. Do you contribute to an employee’s RRSP? However, the survey also found that only 31 percent of survey respondents had quantified the cost of healthcare reform, and 90 percent of those organizations lacked a written employee benefits plan with measurable objectives. As an employer, you also have to make Canada Pension Plan (CPP) contributions, employment insurance premiums, and other expenses. © Copyright 2020 St. Joseph Communications. Although there are some exceptions, employers usually still need to pay overtime to salaried employees. And once they’ve exhausted those maximums, their coverage is done for the year. According to a survey of U.S. Bureau of Labor Statistics (BLS) data, the average cost of benefits as a percentage of total compensation has increased from around 20 percent in 1966 to nearly 30 percent today. When it comes to health-care costs, private sector spending on dental care is second only to drugs. 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