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Estimating Loss of Non–Wage Benefits



The value of the rewards offered by employment also includes the value of various insurance and pension plans. These and other non-wage benefits can be evaluated from the perspective of the employee by assessing the costs of these fringe benefits to the employer as a proxy measure of the value of the benefits to the employee.


In British Columbia employers are obliged, by law, to make contributions to Canada Pension Plan (CPP), Workers’ Compensation Board (WCB), and Employment Insurance (EI) premiums on behalf of their employees. CPP and EI premiums together amount to between 6.5% and 7.2% of a worker’s earned income, at low and intermediate levels of earnings. Because CPP and EI premiums are paid only up to certain limit amounts, this percentage begins to decline once the threshold of approximately $40,000 in earned income has been reached.


The table which follows illustrates the costs to the employer for CPP and EI premiums (statutory non-wage benefits other than WCB premiums) that are paid on various levels of earnings in 2012, as a first perspective of the values of non-wage benefits:


Gross Employment Earnings Employment Insurance @ 2.632% (max. of $1,247.57) Canada Pension Plan @ 4.95% (max. of $2,356.20) Total Total as % of Gross Employment Earnings
$16,000 $421.12 $618.75 $1,039.87 6.50%
$25,000 $658.00 $1,064.25 $1,722.25 6.89%
$30,000 $789.60 $1,311.75 $2,101.35 7.00%
$40,000 $1,052.80 $1,806.75 $2,859.55 7.15%
$50,000 $1,247.57 $2,301.75 $3,549.32 7.10%
$60,000 $1,247.57 $2,236.20 $3,603.77 6.01%
$80,000 $1,247.57 $2,356.20 $3,603.77 4.50%
$100,000 $1,247.57 $2,356.20 $3,603.77 3.60%



The all–industries average of Workers' Compensation Board base premiums is $1.63 per $100 in earnings (or 1.63% of earnings). Premiums are levied on earnings to a maximum of $75,700 per worker in 2013. Rates vary significantly between industrial classifications, however. For example, the 2013 base premium for shake and shingle mills is $10.76 per $100 per worker; for accounting services companies, it is $0.12 per $100 per worker.


Recent statistical evidence regarding the level of spending on non-wage benefits is available from Statistics Canada's 2005 Workplace and Employee Survey (WES). (The guide to this was released in June 2008.) Associated Economic Consultants Ltd. has obtained the results of a custom tabulation of data from this survey which provides information on total gross payroll and total non-wage expenditures in BC.(1)


These estimates indicate that, on average, employers in BC spend about 10.3% of gross payroll on voluntary, non-taxable non-wage benefits. (To the extent that taxable non-wage benefits such as Medical Services Plan premiums are included in estimated gross payroll rather than in expenditure on non-wage benefits, the average amount spent on non-wage benefits in BC in 2005 would have exceeded 10.3% of gross payroll.)








FOOTNOTES:

1. "Gross payroll" is comprised of regular wages and salaries, commissions, overtime pay, paid leave, piecework payments, special payments, and taxable allowances and benefits recognized by Canada Customs and Revenue Agency. "Total expenditure on non-wage benefits" includes employers' contributions to pension plans including group RRSPs, other employee benefits, compensation in kind other than stock plans, travel expenses, non-taxable allowances and benefits, recreational facilities provided by the employer, moving expenses paid by the employer and employee counselling services. Not included in either gross payroll or total expenditure on non-wage benefits are CPP/QPP premiums, EI premiums, health taxes (where applicable), and WCB premiums.