The day you hire your first employee, you become an employer in the eyes of the CRA and the Province of Alberta. That means deducting and remitting on someone else’s behalf, following Alberta’s employment standards, and filing slips at year-end.
None of it is complicated once it’s set up, but the setup matters. This guide covers what to do before the first payday, on every payday, and when someone leaves.
Before the first payday
Get these in place before you run the first pay:
- A CRA payroll account for your business number, so you can remit deductions
- Your employee’s details and tax forms, so you can calculate the right income tax deduction
- A pay schedule. In Alberta a pay period can’t be longer than one work month, and wages must be paid within 10 consecutive days after the pay period ends.
- WCB coverage. If your industry is one where coverage is compulsory, open a WCB Alberta account within 15 days of hiring your first worker. WCB Alberta also offers personal coverage for owners.
What comes off every paycheque
Each pay, you deduct CPP, EI and income tax from your employee’s gross pay (plus CPP2 once their earnings pass $74,600) and add your own share of CPP and EI as the employer. For 2026:
- CPP: 5.95% from the employee on earnings between $3,500 and $74,600 for the year, and you match it (up to $4,230.45 each)
- CPP2: an additional 4% each on earnings between $74,600 and $85,000 (up to $416 each)
- EI: $1.63 per $100 of insurable earnings from the employee, up to $68,900 of earnings; you pay 1.4 times the employee’s amount
- Income tax: based on the employee’s earnings and the tax forms they gave you
A worked example: one pay
Say your new employee is paid $2,000 every two weeks. Here’s roughly how the 2026 numbers work on one pay:
- CPP: first take off the basic exemption for the pay period ($3,500 ÷ 26 pays ≈ $134.62), then 5.95% of the rest: about $110.99. You pay the same again as the employer.
- EI: $1.63 per $100 of earnings, so $32.60 from the employee. Your employer share is 1.4 times that: $45.64.
- Income tax: depends on the employee’s tax forms; the CRA’s online payroll deductions calculator works it out.
- What you remit: the employee’s CPP, EI and income tax, plus your $110.99 of CPP and $45.64 of EI, by the 15th of the following month.
What an employee really costs
Wages aren’t the whole cost. In the example above, your employer share of CPP and EI adds about $156.63 to a $2,000 pay, close to 8% on top of wages. Vacation pay adds at least 4% more, and if WCB coverage applies to your industry, there are WCB premiums on top.
None of that is a reason not to hire. It’s a reason to budget for the full cost from the start, so the first few months of payroll don’t come as a surprise.
Payroll records to keep
Keep a copy of every pay statement, the employee’s tax forms, your remittance confirmations, ROEs and T4s. Like other business records, the CRA generally expects them to be kept for six years after the end of the tax year they relate to.
Pay statements
Alberta requires a written statement of earnings for every pay period. It can be electronic. It should show what was earned, what was deducted and what was paid, so your employee can check it.
Remitting to the CRA
The deductions you hold back, plus your share of CPP and EI, are sent to the CRA. Most new employers start as regular remitters, which means your remittance is due by the 15th of the month after you paid your employee.
Late remittances are penalized at 3% if one to three days late, 5% if four or five days, 7% if six or seven days, and 10% after that. Put the 15th on your calendar.
Vacation pay and minimum wage
In Alberta, vacation pay is generally 4% of wages (two weeks), rising to 6% (three weeks) after an employee has worked for you for five consecutive years. Employees in construction get 6% from the start.
Alberta’s general minimum wage is $15 an hour. There are separate rates for some groups, such as students under 18 for their first 28 hours a week.
When someone leaves
When an employee stops working for you, you issue a Record of Employment (ROE) to Service Canada. It’s used for EI claims, and it’s generally due within five calendar days; electronic ROEs have slightly different timing depending on your pay period.
Their final pay is due on a set timeline under Alberta’s employment standards, so check the rules for your situation when it happens.
At year-end: T4s
After the calendar year ends, each employee gets a T4 slip showing their earnings and deductions, and you file the slips and a summary with the CRA. Both are due the last day of February (or the next business day if it falls on a weekend). If you file more than five slips, you have to file electronically.
Common first-employee mistakes
The mistakes that come up most often with a first hire:
- Paying someone before the CRA payroll account is set up
- Forgetting the employer’s share of CPP and EI when budgeting for the hire
- Missing the 15th, which starts the late-remittance penalties
- Not tracking vacation pay as it’s earned
- Leaving the Record of Employment until the former employee calls to ask for it
Employee or contractor?
Before you set someone up on payroll, make sure they really are an employee. The CRA looks at the whole working relationship: who controls the work, who provides the tools, who sets the hours. If it’s unclear, you or the worker can ask the CRA for a ruling.
If you’d rather have payroll handled from the first pay run, my payroll services cover all of it: setup, pay runs, remittances, ROEs and T4s.