Employee cost premium
+$17,155
What the employee truly costs above their stated salary
Cost difference
$12,155 more
Employee costs more than this contractor annually
Break-even contractor rate
$87,155
A contractor above this rate costs more than the equivalent employee all-in
Not included in this calculation
The following are real costs of employment that vary too widely to calculate here. Consider them in your decision:
Severance pay on termination: ranges from statutory minimums under provincial employment standards to common law reasonable notice, which can be 1 month per year of service or more depending on role and tenure. For a long-tenure employee, severance exposure can represent several months of salary.
Human rights and wrongful dismissal exposure: unpredictable, but a real cost of the employment relationship that does not exist with a properly structured contractor arrangement.
RRSP matching: if your organization offers RRSP matching, add your expected annual match to the overhead section below. A typical match of 3-5% of salary is a significant cost that belongs in the true employee total.
What the contractor absorbs on their own
Self-employed CPP (both employer and employee sides, 11.9% up to YMPE)
contractor's cost
No EI access unless voluntarily opted in
contractor's risk
No employer-paid benefits, dental, vision, or disability coverage
contractor's cost
No paid vacation or statutory holiday entitlement
contractor's cost
Business liability, professional indemnity, and equipment
contractor's cost
Estimated contractor personal overhead built into their rate (approx.)
~$12,000 to $16,000/yr
This is why contractors typically charge 15 to 30% above the employee equivalent. A contractor quoting the same dollar amount as an employee salary is actually cheaper to you, not more expensive.
These costs are estimates and vary by role, industry, and office setup. The RRSP match field applies to the employee column only. Contractor overhead covers access, onboarding, and any equipment you provide.