On September 30, 2010, the federal government announced plans to limit the Employment Insurance (“EI”) maximum premium rate increase for 2011 to five cents per $100 of insurable earnings, and ten cents per $100 of insurable earnings for subsequent years.

The rate increase is set by the Canada Employment Insurance Financing Board, which by November 14, 2010, could have raised premiums by the full legislative limit of 15 cents. However, with this announcement, the employee rate per $100 of insurable earnings can rise to no higher than $1.78, starting January 1, 2011, from the current rate of $1.73.

With the exception of Quebec, which has assumed responsibility for maternity and parental benefits, employers contribute 1.4 times the employee’s premiums.  This translates to a maximum employer premium rate of $2.49 per $100 of insurable earnings for 2011.

The government also announced plans to initiate consultations with Canadian individuals and businesses on how the EI rate-setting mechanism can be further improved to ensure “more stable, predictable rates going forward”.

The new increase rate limit is intended to support Canada’s economic recovery.