Procurement Guide · procurementguide.ca
True cost comparison: permanent employee vs. agency temp vs. independent consultant, for Canadian public sector project-based procurement work
Step 1 — position and rate details
Standard is 35 or 37.5 hrs/wk
BC avg $1.55/$100; office/professional ~$0.14–$0.30
Bill rate = base pay + rate in lieu of benefits + agency markup
Compensates worker when agency provides no group benefits
Covers agency overhead, employer CPP/EI/WCB for the worker, and margin. 20–30% is the expected ceiling.
Calculated bill rate to client
$107.25/hr
Base pay: $75.00/hr Rate in lieu (10%): +$7.50/hr Resource cost: $82.50/hr Markup (30%): +$24.75/hr ───────────────────────── Bill rate: $107.25/hr
The rate is gross revenue, not take-home income. It covers self-employed CPP (both sides), E&O insurance, home office, software, equipment, professional dues, and unbilled time between engagements. No employer pays pension, benefits, EHT, or WCB on top.
Step 2 — engagement duration
Results
Permanent employee
$76/hr
true cost per productive hour
$128,054 / year
total annual employer cost
Project total (26 wks)
$93,052
Salary $95,000 (37.5 hrs/wk) CPP $4,646 · EI $1,572 Payroll health tax $1,853 Pension $12,350 Benefits $9,500 WCB $133 Overhead $3,000 One-time: Recruiting $14,250 + Ramp-up $14,775
Agency temp
$107.25/hr
Project total (26 wks)
$97,598
$107.25/hr × 910 hrs (35 hrs/wk) No pension, benefits, or payroll health tax to client. Agency bears employer CPP, EI, WCB for worker. Worker gross: $75,075 ($82.50/hr × 910 hrs) Less employee CPP $2,323 + EI $562 Est. worker net before income tax: $72,190
Consultant
$150/hr
Project total (26 wks)
$97,500
$150/hr × 650 hrs (25 hrs/wk) No pension, benefits, or payroll health tax to client. Consultant bears self-employed CPP, E&O, WCB, and all overhead. Est. business costs this engagement: $12,347 Est. net before income tax: $85,154
Employer cost multiplier
1.35×
$95,000 salary costs $128,054 total — $33,054 above the posted figure. That gap is real employer cost; it just doesn't appear on the payroll line.
What this comparison doesn't capture
Severance exposure, allocated office space, and IT infrastructure are excluded from the employee column. Management time for onboarding, supervision, and performance oversight adds further. Most significantly: a new hire in a specialized role typically requires 6–18 months to reach the output quality and volume of an experienced practitioner — a gap that doesn't appear in any cost model.
Calculation basis (2026 CRA): Employer CPP1: 5.95% on earnings $3,500–$74,600 (max $4,230). CPP2: 4% on earnings $74,600–$85,000 (max $416). Total employer CPP max: $4,646. Employer EI: 2.282% on insurable earnings up to $68,900 (max $1,572). Employee CPP: same rates and maxes as employer. Employee EI: 1.63% on insurable earnings up to $68,900 (max $1,123). Payroll health tax rates approximate for large public sector: BC 1.95% (payroll over $1.5M), Ontario 1.95% (payroll over ~$490k), Manitoba 4.3%, Quebec 4.26% — verify with your provincial revenue authority. WCB/WorkSafeBC: BC average $1.55/$100 assessable payroll; professional/office roles typically $0.14–$0.30/$100 — verify at worksafebc.com. Benefits at 8.7% is an illustrative estimate; adjust to your plan's actual rate. Statutory holidays default to 10. Recruiting estimated at 15% of salary. Ramp-up: 12 weeks at 50% output. Agency bill rate = base pay + rate in lieu (max 20%) + markup on total resource cost (max 30%); agency bears employer CPP, EI, and WCB for the placed worker. Agency worker net deducts employee-side CPP and EI prorated to engagement length; no other employment deductions assumed. Consultant net deducts fixed annual business costs prorated to engagement: self-employed CPP both sides $9,293, E&O $2,500, home office & tech $5,000, self-funded benefits $4,500, dues & development $1,500, accounting & filing $1,900. All net figures are before federal and provincial income tax.
For educational and illustrative purposes only. Not legal, tax, or HR advice. · Katherine Caughran, MBA, NISCL-CSCL · procurementguide.ca