What portion of EI premium reduction savings are employers required to share with employees?

• A. 5/12
• B. 7/12
• C. 1/2
• D. 3/4

Answer: (A)

When a small- or mid-sized employer benefits from EI premium reductions, a portion of those savings must be passed on to employees. The required share is 5/12 of the total EI premium reduction savings. In practice, multiply the total savings by 5/12 to determine the amount to be given to employees, and pay it as part of wages, a bonus, or another earnings increase. The remaining 7/12 stays with the employer.

For example, if the yearly EI premium reduction saves $12,000, then $5,000 (12,000 × 5/12) must be shared with employees, while $7,000 remains with the employer. This shared amount is treated as regular earnings for tax and withholding purposes.