What an Employee Really Costs Per Hour

Two things stack. Employer CPP, CPP2, EI and any benefits sit on top of the wage, and you pay for hours nobody works. Ontario gives two weeks of vacation under five years of service and nine public holidays, so a full-time person is paid for roughly 1,950 hours a year and is actually at work for about 1,807 of them. Dividing the full cost by the smaller number is the honest rate.

The hourly rate at which an hourly contractor costs your clinic exactly what the employee does, for the same hours worked. Below it the contractor is cheaper, above it the employee is. It is the comparison people think they are making when they hold a wage rate up against a quoted contractor rate, and it usually lands well above the wage.

It splits hours at work from hours that generate revenue. A practitioner at the clinic for 1,807 hours might treat patients for far fewer once notes, admin, no-shows and gaps are taken out. Cost per billable hour is the number that actually compares against what you charge for a treatment, and it is always higher than cost per hour worked.

Not directly. It assumes an annual salary that already covers paid vacation, which is how salaried staff are usually paid. An hourly-paid employee earns vacation pay on top of their hourly wage, at 4% under five years of service or 6% at five or more, and qualifies separately for public holiday pay. Add those before comparing.

No. Worker classification is set by the working relationship, not by the rate or the contract, and the CRA can reassess it. This prices two options once you know which one the facts support.

Workplace insurance, because coverage is not mandatory for every Ontario business and rates are set per business activity. Space, equipment, software and admin time are also excluded, since those usually do not change with how you pay someone. Personal income tax is not modelled at all.