What it means
The plan is usually shortened to QPIP, after its French name, and it covers people who work in Quebec, whether they are employed or self-employed. It pays a share of average weekly earnings for a set number of weeks, so it replaces part of a salary rather than all of it.
Funding comes from premiums. Employees pay a percentage of insurable earnings (the pay on which premiums are charged) up to an annual ceiling, employers pay their own and somewhat higher rate, and self-employed workers pay both portions themselves.
The rates and the ceiling are set annually by the Quebec government, so payroll teams have to refresh them at the start of each year. For a business, the plan appears in the accounts as a payroll cost.
The employer premium is an expense on top of salary, while the employee premium is deducted from pay and held as a liability until it is remitted to the tax authority. Workers choose between two broad options when they claim.
The basic option pays a lower weekly percentage over a longer period, and the special option pays a higher percentage over a shorter period, so the choice depends on whether a family values cash flow now or a longer stretch of leave. The nuance that catches managers out is that the plan is only a floor.
Many employers top up the government benefit to bring pay closer to full salary, and that top-up is a separate commitment that needs its own budget. Outside Quebec, other provinces and territories use the federal employment insurance system instead, so a company with staff in several provinces runs more than one set of rules.
In practice
Real-world examples.
Example
A Montreal software firm hires a developer on a $90,000 salary. Payroll deducts the employee premium from each pay run and the finance team books the employer premium as part of the cost of employment. The hiring budget therefore includes a small percentage above salary for this plan.
Example
A freelance graphic designer in Quebec invoices clients directly and has no employer to share the cost. She pays both the employee and the employer portions of the premium herself, which she builds into her day rate when she quotes for work.
Example
A manufacturer in Quebec City promises new parents full salary for 12 weeks. The government plan covers part of the weekly pay, and the company pays the gap, so the finance team accrues only the top-up difference as its own cost.
Formula
Calculation
Premium = insurable earnings (up to the annual ceiling) x premium rate
For illustration, assume an employee premium rate of 0.5% and an employer premium rate of 0.7%, with the ceiling set above the salary used here. An employee earns $60,000 in the year. The employee premium is 60,000 x 0.005 = $300. The employer premium is 60,000 x 0.007 = $420. The total premium attached to this one employee is 300 + 420 = $720, of which the company bears $420 as a cost and collects $300 from the employee's pay.Case study
Seen in the real world.
Maplewood Interiors is an illustrative, fictional furniture maker with 80 staff in Quebec and 20 in another province. When its payroll manager built the new-year budget, she assumed one premium rate for everyone, which overstated the cost for the Quebec group and missed that the other province used a different system.
The finance director rebuilt the budget by location. Quebec employees carried the QPIP employer premium, the other province carried the federal employment insurance employer premium, and the two were reported on separate lines.
The corrected budget came out lower than the first draft by a few thousand dollars, and it also gave the director a clean way to explain the cost of parental leave to the board. The illustrative lesson is that statutory payroll costs depend on where the employee works, not where the head office sits.
Watch out
Common mistakes.
- Assuming the plan is the same as federal employment insurance, when Quebec runs its own scheme with its own rates and rules for parental benefits.
- Budgeting the employer premium as a flat figure for the whole year without checking that rates and the earnings ceiling are reset annually.
- Treating the government benefit as full pay replacement and forgetting that any promise of full salary during leave is an extra cost to the employer.
Questions
People also ask.
Who pays for the plan?
Employees, employers and self-employed workers all pay premiums on insurable earnings, and the benefits are paid out of that pooled fund rather than from the general budget.
Does the employee premium count as a company expense?
No, the employee portion is taken from the worker's pay and passed on to the government, so the company only expenses its own employer portion.
Do employees outside Quebec receive these benefits?
Not from this plan, because it covers Quebec workers only, and staff elsewhere in the country are covered through the federal employment insurance system.
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