How to Use the Employer True Cost Calculator

Before You Start

• Know the annual gross salary you plan to offer.
• Know your total payroll across all employees — this affects EHT thresholds in Ontario, BC, Manitoba, and Quebec.
• Decide whether you will offer a benefits plan and at what level.

Step-by-Step

1. Select province: Choose the province where the employee will work. Employer Health Tax rules differ significantly — Ontario exempts payrolls under $1M, BC under $500K, and Manitoba under $2.5M.
2. Enter salary: Enter the annual gross salary you plan to pay.
3. Set vacation pay percentage: Most provinces require at least 4% (2 weeks). Select a higher rate if you offer more generous vacation.
4. Select benefits loading: Choose 0% if you offer no benefits, or use 5–20% depending on your benefits package quality.
5. Enter total payroll: Enter your estimated total annual payroll for all staff including this new hire. This determines whether EHT applies to your payroll in applicable provinces.

How to Read the Output

• The "true employer cost" is the all-in annual cost of this employee. It is typically 15–30% above the quoted salary.
• The cost multiplier (e.g., 1.22×) means for every $1 in salary, you pay that many dollars in total.
• Employer Health Tax is the most commonly forgotten cost. Ontario's EHT alone adds 1.95% once your payroll exceeds $1M.
• The per-hour cost view is useful for pricing services: if a technician costs $42/hr to employ, your billable rate must cover that plus overhead and margin.

Common Mistakes to Avoid

• Budgeting only the salary, then being surprised by employer CPP/EI, EHT, and vacation accruals at year-end.
• Using an employee's province of residence instead of the province where they perform work for EHT purposes.
• Treating vacation pay as a discretionary bonus rather than a mandatory accrual from day one.