A Guide to EI (Employment Insurance) for Canadians

In this blog post we will go over an in-depth explanation of EI (Employment Insurance).

What is EI?

EI is a federal program that you pay into from your paycheque every pay period. It is meant to provide temporary financial assistance to two broad groups of people in Canada: (1) Unemployed Canadians while they look for work (2) Canadians who take time off for family-related reasons or manage an illness.

How does EI work?

As an employee you’re required to pay EI every year. Your payment for EI is typically taken directly off your paycheque during the year. Similar to the way the CPP (Canadian Pension Plan) works, there is an employee portion and an employer portion.

As the name suggests Employment Insurance works like any other kind of insurance that you would pay for (car, house, etc.). You make payments for the premium on a periodic basis, and when you have a claim, you will submit the required documents to collect payments if you’re eligible.  

Employee Portion:

This is paid via your paycheque. The maximum contribution as specified by the CRA in their EI Premium table for the year 2024 for an employee is $1,049.12. 

Employer Portion:

As a business owner, you’re required to also pay into EI for your employees. The required maximum contribution as specified by the CRA in their EI Premium table for the year 2024 for an employer is $1,468.77. The amount an employer pays into EI, is generally 1.4 times what an employee would pay.

When do you collect EI and how much do you get?

As we outlined in the introduction of this post, there are two broad categories for which you’re eligible to apply for EI benefits.

1. Unemployment

You’ve lost your job through no fault of your own. The “no fault of your own” piece is critical. You can apply for EI if you’ve been let go from your job but can’t apply for EI if you resigned from your job. To learn more about eligibility requirements, duration, and how much you can get, read the section below on Unemployment and EI.

2. Special Benefits

Special benefits are designed to provide income support during certain life events. In the section below, we cover the different kinds of special benefits, who can apply for them, the duration, the benefit rate, and eligibility requirements .

Maternity Benefits

Designed for pregnant employees who need time off work before and after childbirth.

Parental Benefits

Designed to provide support to parents who take time off work to care for their newborn or newly adopted child. There are two options for parental benefits, (1) Standard, and (2) Extended

Sickness Benefits

Designed to provide income support to an employee who can’t work because of an illness or injury.

Compassionate Care Benefits

Designed to provide income support to an employee who needs to take time off work to care for a gravely ill family member with a significant risk of death within 26 weeks.

Family Caregiver Benefits

Designed to provide support to parents who need time off to care for a critically ill or injured family member. There are two options for family caregiver benefits, (1) For Children, and (2) for Adults.

EI for new mothers

If you’re a mother, you can combine a couple of the benefits above to extend your leave from work to take care of your newborn. This would be done by getting Maternity benefits and Parental benefits. If you combine the total duration, you could get up to 71 weeks of leave (15 weeks for maternity and 61 weeks for extended parental leave). This is explained under the Canada Labour Code covering parental leave.

How do you apply for EI?

You must submit your application through Service Canada’s website. 

Here’s how:

1. Visit the Service Canada Website

• • Go to Service Canada’s EI page
  • Click on the link for Employment Insurance Special Benefits
    

2. Start Your Application

Select the type of special benefit you are applying for (maternity, parental, sickness, compassionate care, or family caregiver)

• • You will be prompted to log in to your My Service Canada Account (MSCA). If you don’t have an account, you can create one

3. Provide Personal Information

1. • You will be asked to provide your SIN, contact details, and information about your most recent employer

4. Provide Employment Information

• • If your employer has already submitted your Record of Employment (ROE) to Service Canada electronically, the system will automatically retrieve it
  • If not, you may need to submit a paper copy or ensure your employer does

5. Upload Supporting Documents

1. • Medical Certificate:
      – For sickness benefits or family caregiver benefits, upload a medical certificate from your doctor
   • Birth Certificate or Adoption Papers
     – For maternity or parental benefits, submit proof of the child’s birth or adoption.
   • Compassionate Care
     – You will need to provide a certificate confirming that the person you’re caring for has a serious medical condition with a significant risk of death

6. Select Payment Method

1. • Choose direct deposit for faster payments. You will need your banking information (such as a void cheque or direct deposit form).

7. Review and Submit

1. • Review your application carefully to make sure all the information is accurate.
   • Submit your application.

Complete Bi-Weekly Reports (if required)

In some cases, you may need to submit bi-weekly reports to confirm your ongoing eligibility for benefits. These reports confirm that you’re still unable to work, or for parental/compassionate benefits, that you’re still caring for the child or family member. The reports are submitted online through your My Service Canada Account or by phone.

Receiving Benefits

Once your application has been processed, and you are found eligible, you will begin receiving your EI special benefits payments. Payments are made every two weeks and can be directly deposited into your bank account.

If Service Canada requires more information, they may contact you. Always check your My Service Canada Account for updates on the status of your claim.

Unemployment and EI?

EI benefits are available to employees who lose their jobs through no fault of their own and are actively seeking employment. This is the most common type of EI benefit and provides temporary financial assistance while individuals look for a new job. 

To qualify for regular EI benefits for unemployment, you must meet several criteria:

Eligibility Requirements

1. Lost Job Through No Fault of Your Own

• You must have lost your job due to reasons such as layoffs, shortage of work, or the closure of the business. You won’t qualify if you were fired for misconduct or if you voluntarily quit without just cause

2. Paid EI Premiums

• To qualify for benefits, you must have contributed to the EI program while you were working

3. Worked the Minimum Insurable Hours

• You must have worked a certain number of insurable hours in the past 52 weeks or since your last EI claim (whichever is shorter).

• The exact number of hours required depends on the unemployment rate in your region. Typically, you need between 420 to 700 insurable hours to qualify for regular benefits

4. Be Actively Seeking Employment

• You must demonstrate that you are actively seeking work while receiving EI. This means applying for jobs and being willing and able to accept suitable employment when offered.

5. Be Available and Capable of Working

• You must be ready, willing, and capable of working each day during the benefit period.

How Much Do You Get?

The amount of EI benefits you receive is based on your previous earnings. 

• Benefit
  – EI regular benefits typically provide 55% of your average weekly insurable earnings (before taxes) over the last 14 to 52 weeks of employment, depending on your circumstances.

• Maximum Insurable Earnings

• The maximum insurable earnings for 2024 is $61,500. This means that the maximum weekly benefit you can receive is $650 per week (55% of $61,500 divided by 52 weeks).

Duration of EI Regular Benefits

The number of weeks you can receive EI regular benefits depends on two factors:

1. The number of insurable hours you worked in the past 52 weeks.
2. The unemployment rate in your region (higher unemployment rates often mean longer benefits).

EI benefits can last between 14 and 45 weeks, depending on the unemployment rate in your region and how many hours you worked. During times of high unemployment or special economic circumstances, the government may extend these benefits.

When Do EI Unemployment Benefits End?

1. You’ve reached the maximum number of weeks of entitlement.
2. You’ve found full-time employment.
3. You are no longer available or actively looking for work.
4. You’ve earned more than 90% of your previous weekly earnings through part-time or freelance work.

Taxable Income

It’s important to note that EI benefits are considered taxable income. Taxes may be deducted at the source, and you will need to report EI payments on your tax return.

Penalties and Overpayments

If you fail to meet the conditions for EI benefits (e.g., not actively seeking work, misreporting information), you could face penalties such as:

• Repaying EI overpayments.
• Disqualification from future benefits.
• Fines or legal action for intentional fraud.

Do you need help with your EI claim ?or have any questions? Get in touch with us here or sign up to get more accounting and tax tips in our newsletter here.

The accounting and tax information provided in this post does not constitute advice and is meant to be for general information purposes only. The information is current as at the date of this post and does not reflect any changes in accounting and/or tax legislation thereafter. Moreover, the information has been prepared without considering your company or personal financial/tax circumstances and/or objectives.