For Employment Insurance (EI) purposes, as the owner or operator of an establishment that offers barbering and hairdressing services, you may be considered an employer of the self-employed barber and hairdresser, even if you do not provide a payment to them.

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• Steps
• References

Steps

1. Determine if the worker is considered a self-employed barber or hairdresser

   The barber and hairdresser who provide their services in an establishment that offers barbering or hairdressing services can either be an employee or self-employed.

   Types of workers that are not considered barbers or hairdressers for the purpose of EI

   The following workers who provide services in an establishment which offers barbering or hairdressing services are not considered barbers or hairdressers for the purposes of EI:

   • Manicurists
   • Beauticians
   • Massage therapists
   
   

   • If the worker is an employee, do not continue to next step.

     You must deduct CPP, EI and income tax as you would for your other employees.

     Learn more: How to calculate

     If you are not sure if the worker is an employee or self-employed for CPP/EI purposes

     It is important to determine if a worker is an employee or self-employed. Employment status has direct impacts on your reporting and withholding requirements for the worker under the Canada Pension Plan (CPP), Employment Insurance Act (EIA) and the Income Tax Act (ITA).

     You need to consider multiple factors to determine if the worker is an employee or self-employed.

     Learn more about the factors the CRA considers when determining a worker’s employment status: Employee or Self-employed

   • If the worker is a self-employed barber or hairdresser who provides services in your establishment that offers barbering and hairdressing services, continue to Step 2 – Determine if you are considered to be an employer for EI purposes of the self-employed barber or hairdresser.

2. Determine if you are considered to be an employer for EI purposes of the self-employed barber or hairdresser

   You, as the owner, proprietor, or operator of the barbershop or hairdressing business for which the barber or hairdresser is providing their services, are considered to be their employer for EI purposes if all of the following conditions apply:

   • The worker is in the occupation of a barber or a hairdresser
   • The barber or hairdresser provides services normally provided in a barbering or hairdressing establishment
   • The barber or hairdresser is not the owner or operator of the establishment

   Example of employment that meets all 3 conditions
   

   • The barber or hairdresser is not an employee (not employed under a contract of service).
   • The barber or hairdresser enters into an agreement with the owner or operator of a barbering or hairdressing establishment as a chair renter.
   • The chair renter pays the owner or operator of the establishment a fixed amount each month for the exclusive use of a chair and access to the sinks and stationary hair dryers.
   • The chair renter supplies their own combs, brushes, scissors, and other small hand instruments, as well as products used in the performing of their services.
   • The chair renter has their own customers and makes their own appointments.
   • The chair renter is normally seen as running their own business and considered self-employed.

   In this example the chair renter meets the conditions of the Employment Insurance Regulations (EIR) as stated above, and is considered employed in insurable employment.

   
   

   • If you are not considered to be their employer for EI purposes, do not continue to next step.

     You do not withhold CPP, EI or income tax deductions because the worker is considered self-employed.

     Generally, if you provide payments to the self-employed barber or hairdresser for their services and you are not considered their employer for EI purposes, you need to report the amounts on a T4A slip.

     Learn more: Payments of fees for services

   • If you are considered to be their employer for EI purposes, continue to Step 3 – How to calculate insurable earnings.

3. How to calculate insurable earnings

   If you are considered the employer for EI purposes of the self-employed barber or hairdresser, including self-employed First Nations barbers and hairdressers whose earnings are tax-exempt, you are responsible for calculating the insurable earnings of each self-employed barber or hairdresser based on their net revenue.

   Your calculation of the insurable earnings of the worker for a week depends on if you know the barber or hairdresser’s actual earnings and expenses or not.

   Calculate: You know the worker’s earnings and expenses

   If you know how much the worker earned in a week and the expenses incurred in generating revenue from the worker’s operation in the establishment during the week:

   • equals Insurable earnings of the self-employed barber or hairdresser are the total actual earnings (net revenue) from the barber or hairdresser’s employment for the week up to the maximum annual insurable earnings
   Calculate: You do not know the worker’s earnings and expenses

   If you do not know how much the worker earned in a week or the expenses the worker incurred in generating revenue from their operation in the establishment during the week, the amount of insurable earnings is the lesser of:

   • Calculation 1
     
     • Days worked per week
     • multiply by 1/390 of the maximum annual insurable earnings
       
     • equals Insurable earnings of the self-employed barber or hairdresser

     Calculation example

     In 2024, Judith is a self-employed barber working in your barbering establishment. She had worked 3 days during the week. The maximum annual insurable earnings for 2024 is $63,200.

     • 3 days worked per week
     • multiply by (1/390 x $63,200)
       
     • equals $486.15 is the insurable earnings of Judith as a self-employed barber using calculation 1

     Judith’s insurable earnings as a self-employed barber are $486.15, the lesser amount of $486.15 (calculation 1) and $810.26 (calculation 2).

   • Calculation 2
     
     • 1/78
     • multiply by Maximum annual insurable earnings
       
     • equals Insurable earnings of the self-employed barber or hairdresser

     Calculation example

     In 2024, Judith is a self-employed barber working in your barbering establishment. She had worked 3 days during the week. The maximum annual insurable earnings for 2024 is $63,200.

     • 1/78
     • multiply by $63,200 is the maximum annual insurable earnings
       
     • equals $810.26 is the insurable earnings of Judith as a self-employed barber using calculation 2

     Judith’s insurable earnings as a self-employed barber are $486.15, the lesser amount of $486.15 (calculation 1) and $810.26 (calculation 2).

   
   

   Learn more on how to calculate the EI premiums using the self-employed barber or hairdresser’s insurable earnings: Calculate EI deductions

   • If the payments are made to a self-employed First Nations barber or hairdresser, do not continue to next step.

     Learn more about if the tax exemption and specific reporting requirements apply: Payments to First Nations workers.

   • If the payments are not made to a self-employed First Nations barber or hairdresser, continue to Step 4 – Confirm which deductions you must remit.

4. Confirm which deductions you must remit

   Under special EI regulations, you must pay both the employee and employer's share of EI premiums. EI is remitted on behalf of the self-employed worker on all of their insurable earnings.

   The self-employed barber or hairdresser is responsible for remitting CPP contributions and income tax in the same way as other self-employed individuals.

5. Report the payment on a T4 slip

   Depending on the self-employed barber or hairdresser’s situation, you must report the following amounts on a T4 slip:

   • Box 29 – Employment code 13
   • Box 24 – EI insurable earnings
   • Box 56 – PPIP insurable earnings if barber or hairdresser worked in the province of Quebec
   • Code 83 – Barbers or hairdressers – Gross income
   • Code 88 – Indian (exempt income) – Self-employment

   Learn more: How to report – T4 slip – Information for employers

References

Resources

• Barbers and hairdressers – CPP/EI explained
• How to get a CPP/EI ruling
• What to expect during a payroll examination

Legislation

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