Employment Insurance

Employment Insurance also known as E.I benefits aims to provide temporary income replacement to Canadians who may have lost their jobs through no fault of their own due to re-structuring, shortage of work, seasonal lay-offs, etc.

Run by Employment and Social Development Canada, (ESDC), Employment Insurance aims to minimize the financial hardship during this difficult time by providing a taxable weekly benefit that can last for 14-45 weeks.

Eligibility

To qualify for regular benefits, you must meet the following criteria:

Lost your job through no fault on your own (restructuring, shortage of work, seasonal) Keep in mind that if you quit your job voluntarily, you may not qualify for EI.
You paid into employment insurance during time of employment
Have been unemployed and without salary for at least a week in the last 52 weeks
You were employed for a minimum of 420 and 720 hours during the qualifying period which is 52 weeks or since the start of your last EI claim, whichever is shorter.
You’re ready and willing to work each day and actively looking for employment. (You must keep a list of employers that you’ve contacted about employment opportunities)

From time to time, you have to do bi-weekly reporting in order to confirm your eligibility on a continuous basis.

You will not qualify for employment insurance benefits if:

If you left your job voluntarily
If you’re in jail
If you were dismissed with cause
If you’re part of a lockout or strike

Qualifying Period

To qualify for employment insurance, you must have worked a certain number of hours. The minimum number of hours is between 420 and 700 hours depending on the unemployment rate in the area. The hours must have been accumulated during the qualifying period.

The qualifying period is the shorter of :

52 week period before the start date of your claim
- or
the period from the beginning of a previous benefit period to the start of your new benefit period

The qualifying period may be extended to a maximum of 104 weeks if you couldn’t work due to illness, injury or pregnancy.

Amount of Employment Insurance Benefits

The amount that you could receive from employment insurance isn’t fixed. It depends on your earnings and where you currently live. For the average person, the basic rate to determine EI benefits is 55% of their average insurable weekly earnings up to a maximum amount. By submitting a formal application, you’ll be able to find the weekly employment insurance amount which is payable from 14 weeks up to 45 weeks.

For 2020, the maximum yearly insurable earnings is $54,200 or $573 per week.

The benefits are based on your highest weeks of earnings over the qualifying period which is usually 52 weeks. The benefits are calculated over a number of weeks which can range from 14 weeks to 22 weeks, depending on the unemployment rate in the region. 22 weeks is used in regions with the lowest rates of unemployment while 14 weeks is used in areas with high rates of unemployment.

Keep in mind that your benefits can be reduced if you earn certain type of income during the benefit period such as

Income from CPP or pension plan
Severance Pay
Legal settlements due to wrongful dismissal
Self employment income
Callback pay which means that your employee calls you back for a short period of time after you’ve been let go.

Employment Insurance is a way for Canadians to continue being able to pay their bills if they’ve been laid off through no fault of their own.

Low Income Family Supplement

Low income families with income less than $25,921 per year may be eligible to receive the EI family supplement. The supplement is based on number of children in the family and your family net income. The supplement may increase your EI benefit rate up to 80% of your average insurable earnings. Family supplement can only be received by one spouse and it’s recommended that the lower spouse receive the benefit.

Applying for EI Benefits

Before you apply, make sure that you gather all the applicable documents needed to complete the application such as

Social Insurance Number
Government Issued ID or Passport
Direct Deposit Information or Void Cheque
Your Employment Information
Dismissal of employment letter if applicable
Record of Employment for the last 52 weeks

The application can be submitted via

Online at www.canada.ca/ei
At a Service Canada office.

Receiving Benefits

After you’ve applied and your application has been accepted, your first payment should be received within 28 days with a 1 week waiting period in between. Bi-weekly reports must be completed in order to continue receiving payments. The bi-weekly reports confirm your continuous eligibility.

If you are employed and earn income during the time you’re receiving benefits, you can keep 50 cents of your EI benefits, up to 90% of the weekly insurable earnings.

Example

Steve was laid off when his bank branch closed down due to low traffic. His weekly earnings were $550. It was determined that his weekly employment insurance benefit was $302.50. (55% x 550) Steve has found a part time job as a teller where he works 2 days a week earning $250 per week.

Due to his part time employment, Steve’s EI benefits are lowered by 50 cents for every dollar earned or $125. ($250/2 = $125). This part time employment would reduce Steve’s EI benefit to $177.5 ($302.50 – $125) = $177.50.

Steve’s total take home pay is $177.50 from his EI benefits plus $250 per week = $427.50

Receiving Benefits Outside of Canada

If you’re receiving EI benefits and are planning a vacation outside of Canada, you’re permitted to continue to receive the benefits as long as you declare your time away in the by-weekly reporting and can prove that you’re available to return to Canada within 48 hours if a job opportunity arises. ESDC works together with Canada Border Services Agency to enforce Employment Insurance.

You are allowed to be outside of Canada for a week if you’re:

Attending a funeral of a family member
Visiting a family member who is sick or injured
Accompanying a family member who is seeking medical that is not available in Canada
Job Interview
- You’re allowed to be outside of Canada for maximum 2 weeks if you have a job interview & seeking employment

Taxes & EI Clawback

EI payments are taxable income and must be reported. Anyone receiving payments from EI will get issued a T4E which must be filed with your income tax return for that particular year.

If your net income exceeded $66,375 in 2019, you’ll be required to repay 30% of the lesser of

your net income in excess of $66,375; or
the total regular benefits paid in the taxation year.

Example: If your income was $76,376 in 2019, $10,000 above the threshhold then you’ll have to pay back $3,000 ($10,000 * 0.30). If your income was $68,375 in 2019, then you’ll have to pay back all of $2,000. Remember that it’s the lesser of the two.

Exception on Clawback

If no income was earned on EI during last 10 years, you’re not obligated to repay back any benefits, no matter the level of your income.
If the EI benefits were the following, no clawback exists
- Pregnancy, Parental and Maternal Benefits
- Sickness Benefits
- Compassionate Care Benefits