This article is for informational purposes only and does not constitute legal, accounting, or tax advice. The information contained herein is subject to change and may vary from time to time in your region. For specific advice applicable to your business, please contact a professional.
Thanks to COVID-19, never-before-seen numbers of Canadians have applied for Employment Insurance because of earnings interruptions, layoffs, illness, and more.
We’d like to help you understand more about Canada’s Employment Insurance program - what it means for you as an employer, your workers, your small business, as well as how you can navigate these rough waters.
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What Is Employment Insurance?
Employment Insurance (EI) is a program for individuals who’ve lost their job to receive temporary financial help whilst they look for more work. The program is also available to people who aren’t able to work due to sickness, pregnancy, caring for young children or looking after an ill family member. EI can also help unemployed workers find employment.
Employment Insurance Roadmap
Both you and your workers have rights and responsibilities when it comes to Canada’s Employment Insurance.
Your rights and responsibilities as a small business owner
One of your most important responsibilities as an employer, is issuing an ROE, or Record of Employment, for your employees. This allows your workers to apply for EI benefits.
When filling out the ROE you must use codes to indicate any employee reduction in earnings or hours worked. Some common ROE codes include:
- Code A - If you’ve had to reduce your employees’ hours or close your business entirely.
- Code B – If an employee is on strike.
- Code C – Is replaced with Code E if the employee is leaving to go back to school or Code J if the worker is leaving for government-approved apprenticeship.
- Code D - If the employee is sick, under an order to stay home or otherwise injured.
As a business owner, Service Canada will work closely with you to ensure a fair and efficient EI program. As an employer you must:
- Advise employees to apply for EI immediately after their work hours diminish or their employment status changes – such as a layoff.
- Record on the employee’s ROE why their hours were cut or why their status changed, how many hours they’ve worked, their gross earnings, as well as any separation pay.
- Check all information provided on the ROE is correct. If anything is false or misleading, you could be fined and issued penalties.
- Issue ROE as soon as an employee is no longer working. For paper ROE, you must provide a copy to your employee and keep a copy yourself for six years. If you issue an electronic ROE, use either the ROE Web or ROE SAT site for employees to view through their My Service Canada account.
- If Service Canada requests any additional information, respond quickly.
- Store your paper copies of ROEs somewhere safe that only you can access.
- Contact Service Canada immediately if you’ve offered employment to an employee claiming EI or if you must pay arbitration or some other settlement awards.
Your employees’ rights and responsibilities
Your workers are entitled to receive benefits in the event of illness, reduced hours, business closure, or other items within Service Canada’s scope. Employees share the responsibility with Service Canada of timely notifications and correspondence.
Employee rights include:
- Filing for benefits
- Receiving benefits owed
- Reconsideration of decisions employees don’t find satisfactory
- Reviewing any documents or records that contain their personal information
- Receiving all correspondence in their official language
For employees to be eligible for EI benefits they must have:
- Been employed in an insured position
- Lost employment through no fault of their own
- Not had work or pay for seven days in a row within the last year
- Worked the required hours of insured employment within the last year or since the date of the last previous EI claim
- Been ready and capable of work
- Been actively seeking employment (should retain a log of employers they’ve contacted and the date and time of contact)
Individuals seeking work must keep a log as proof of job-seeking efforts whilst receiving EI benefits – this log must be retained for six years. It’s important to note that the employee doesn’t need an employer signature as proof of work. Service Canada will consider job availability in the workers local area as well as the employee’s personal circumstances.
Service Canada must be informed if an employee refuses a job offer and the employee must keep all appointments with the office as well as declare all earnings.
Employment Insurance Laws in Canada
The Employment Insurance Act was updated in 1996. Eligibility depends on the maximum yearly insurable earnings and type of employment. For a worker to qualify they must have had a pause in their earnings and worked a qualifying amount of insurable employment.
Employer contribution is equal to 1.4 times what employees pay for premiums. The amount employees are entitled to varies depending on average insurable earnings, region unemployment and net family income.
EI also offers maternity benefits for biological moms, including surrogates, who are unable to work due to pregnancy or a recent birth. This also covers parents who’ve recently adopted a child. EI maternity leave benefits are available for up to 15 weeks.
Canada Employment Trends
The employment rate in Canada returned to pre-pandemic levels in September 2021. The rate of unemployment fell for the fifth month in a row – in October 2021 the rate fell to 6.7% with the number of unemployed falling to 1,366,000.
In October 2021, employment had increased in retail but decreased in food services and accommodation. Self-employment fell to its lowest levels since 2007 with only 13.6% of workers self-employed in October 2021.
People in work between 25 to 54 years of age saw an employment rise of 53,000 people in full time work. COVID-19 especially affected the youth Canadian market – the number of employed young men and women fell between 2019 and 2020. In 2020 the unemployment rate for young men was 15.5% and 13.7% for young women.
In November 2021, the Canadian economy accumulated 153,700 jobs – this contributed to the sixth month of workforce expansion in Canada.
Ensuring Your Employees Get the Benefits They Deserve
As an employer, don’t forget that not all your employees may be eligible for Employment Insurance. If they don’t meet the criteria, encourage your workers to seek financial advice from:
- Supplemental Unemployment Benefits (SUB)
- Other provincial benefits
Supplemental Unemployment Benefits (SUB)
As an employer, you can use a Supplemental Unemployment Benefit plan to increase your workers earnings if they are unemployed. These payments are not classed as earnings and they’re not taken away from EI benefits. To be eligible, they must be unemployed because of an immediate prevention of work, injury, illness, or training.
Canada’s Work-Sharing Program could help your small business to avoid layoffs when normal business activity sees a reduction beyond your control.
Previously, work-sharing could only last for 38 weeks, but it was extended to a maximum of 76 weeks as a response to the current negative financial and employment climate due to COVID-19.
If your opted for a 76-week agreement under COVID-19 special measures, you could extend it an extra 26 weeks before September 25th, 2022.
Canada Emergency Response Benefit (CERB)
Canada Emergency Response Benefit is no longer offered, however it provided financial support to those affected by COVID-19. If eligible, you could’ve obtained $2,000 each month for four consecutive months.
Other provincial benefits and measures
Many of Canada’s provincial governments announced additional measures to help their residents overcome a difficult financial time. The Nova Scotia government provided support for small businesses through investing into the Small Business Impact Grant.
It’s worth looking into eligibility for these programs, for both your small business and your workers.
Square Support is here to help you navigate this new roadmap. If you have any questions, please reach out to a member of the team and we’d be happy to assist.