If you own a barbershop/salon, chances are you have contractors/self-employed barbers/hairdressers working with you. There has been changes specifically for contractors this industry when it comes to Employment Insurance (EI).
Under the Insurable Earnings and Collection of Premiums Regulations, it is now required the employer to withhold and remit EI for any barber/hairdresser if their employment is related to the establishment.
The criteria in which this is true are:
- The worker is a barber or hairdresser
- The barber provides a service normally provided in a barber or hairdressing establishment
- The barber or hairdresser is not the owner or operator of the establishment
These criteria apply regardless of being a self-employed business or an actual employee of the establishment. This situation also applies to “chair renters” who pay rent, supply their own materials and has their own customers.
Employment Insurance (EI) would be calculated on the net revenue that the barber/hairdresser makes (before GST if they charge GST). For 2020, the rate is 1.58% for the employee portion, to a maximum of $856.36 and these EI portions would be deducted from their pay. The employer portion is 1.4 times the employee portion, to a maximum of $1,198.90 and these EI portions are the employer’s responsibility to pay. These amounts (both employer and employee) must be remitted to CRA on the 15th day of the following month.
For more information and generating T4s and T4As for barbers/hairdressers, visit us at Jibe Accounting.