Understanding employment insurance in Canada

What is Employment Insurance?

Employment Insurance (EI) in Canada is a government-operated program designed to provide financial assistance to eligible individuals who are temporarily unable to work. The program is administered by the Canada Employment Insurance Commission and is part of Canada's social safety net.

The scope of Employment Insurance goes beyond mere financial aid, as it incorporates provisions for job search services. These services are designed to support and guide unemployed individuals in their efforts to secure new employment opportunities. By offering a multifaceted approach, EI aims to provide a comprehensive safety net, addressing not only the immediate financial needs of those facing unemployment but also assisting them in their journey toward reintegration into the workforce.

What is Employment and Social Development Canada (ESDC)?

Employment and Social Development Canada (ESDC), which is one of the Government of Canada departments, is responsible for administering both the disability tax credit and child disability benefit programs. It establishes and implements the policies governing human resource, labor and social development. The department has a great hand in helping Canadians with job creation and skills development, incomes securities as well as their wellbeing socially.

Key responsibilities of ESDC include –

• Employment Services: ESDC is engaged in programs that assist Canadian job seekers and also aims to enhance the current education and training program in order to make it appropriate for the labor market. These include job training, career development, as well as employment support programs and services.
• Labor Standards: ESDC provides the setting and enforcement of labor standards, so as to safeguard a conducive working environment for Canadian workers. These are the rules that set limits on pay, time of work, among other job conditions.
• Income Security Programs: The government institution called the ESDC oversees a number of social welfare systems among them is the Employment Insurance (EI) that gives short-time money to those workers who cannot continue working temporarily due to certain reasons.
• Social Development: It also takes part in the formulation of social policies, which are aimed at improving the lives of Canadians. Such measures as anti-poverty project, disability support, and community development.
• Disability Services: The Department of ESDC has programs and services that assist people with disabilities with the disability tax credit as well as other accessibility and inclusivity efforts.
• Old Age Security and Pension Programs: The programs which are administered by ESDC include the Old Age Security (OAS) program and the CPP (Canada Pension plan), among many other plans that provide seniors with retirement benefits.

A critical function that ESDC contributes towards formulation and implementation of relevant policy measures aimed at improving welfare of Canadian people is achieved through its numerous programs and services.

Purpose of employment insurance in Canada

The purpose of Employment Insurance (EI) in Canada is to provide financial assistance to individuals who are temporarily unable to work due to specific circumstances, such as job loss, illness, maternity or parental leave, or compassionate care. The EI program is designed to offer income support to eligible workers during periods of unemployment or when they are unable to work for specified reasons.

Key objectives of the Employment Insurance program in Canada include –

• Income Support: EI provides financial assistance to individuals who have lost their jobs, helping them cover their basic living expenses while they search for new employment.
• Job Attachment: The program aims to maintain the connection between workers and the labor market, facilitating their reintegration into the workforce after a period of unemployment.
• Maternity and Parental Benefits: EI offers maternity and parental benefits to support individuals who take time off work for the birth or adoption of a child.
• Sickness Benefits: EI provides benefits to workers who are unable to work due to illness, injury, or quarantine.
• Compassionate Care Benefits: EI includes benefits for individuals who take time off work to care for a family member who is gravely ill and at risk of death.

By offering these benefits, Employment Insurance contributes to economic stability by assisting workers during times of financial hardship and ensuring a level of social security for Canadians. The program is funded through premiums paid by employers and employees, and it is administered by the Canada Employment Insurance Commission.

Employment Insurance Benefits

There are 6 types of special benefits under the program –

1. Maternity
2. Parental
3. Sickness
4. Family caregiver benefit for children
5. Family caregiver benefit for adults
6. Compassionate care

Employment Insurance Regular Benefits

Employment Insurance (EI) regular benefits are financial benefits provided by the Government of Canada to eligible individuals who have lost their jobs and are actively seeking employment. These benefits are part of the Employment Insurance program, which aims to provide temporary financial assistance to workers during periods of unemployment. Key features of EI regular benefits include –

• Eligibility Criteria

To qualify for EI regular benefits, individuals must have worked a certain number of hours in insurable employment and contributed to the EI program. The specific eligibility criteria may vary depending on the individual's employment situation and the regional unemployment rate.

• Job Loss or Layoff

EI regular benefits are typically available to those who have lost their jobs through no fault of their own, such as due to layoffs or other circumstances beyond their control.

• Application Process

Individuals must apply for EI benefits through Service Canada. The application process involves providing details about the reason for job separation, work history, and personal information.

• Benefit Duration

The duration of EI regular benefits depends on factors such as the number of insurable hours worked and the regional unemployment rate. In general, benefits can be received for a maximum number of weeks, which may be extended in certain circumstances.

• Financial Support

EI regular benefits provide financial support to help individuals cover their basic living expenses while actively seeking new employment. The amount of the benefit is calculated based on the individual's previous earnings and contributions to the EI program.

• Job Search Requirements

Individuals receiving EI benefits are required to actively search for and accept suitable employment opportunities. They may be asked to provide evidence of their job search efforts.

EI Sickness benefits

The government of Canada provides employment insurance for those unemployed by virtue of medically enforced incapacity for work under EI sickness benefits. Here are key details about EI sickness benefits –

• Financial Assistance

The Employment Insurance (EI) sickness benefits pay income support to those who become unable to work because of a disease, accident or some other medical reason.

• Benefit Amount

This is usually about 55 percent of an average weekly insurable income not exceeding $650. This is aimed to assist in meeting the important necessities such as food, accommodation and transport expenses in the incapacitation period.

• Duration of Benefits

You are entitled to 15 weeks of sickness benefits if your claim commenced prior to the date of the 18th December, 2022.

In case you filed a claim that commenced on or after Dec 18th 2022, the period is now capped at 26 weeks.

• Medical Certificate Requirement

For one to be eligible for EI sickness benefits, they should have a medical certificate from an authorized healthcare expert. The individual should be issued a document, which confirms the inability to work because of medical conditions and also mentions an expected time frame within which the work is anticipated to resume.

• Types of Medical Reasons

These are eligible medical reasons that can range from illnesses to physical injuries as well as quarantine-related and any other condition keeping a person from doing his/her job.

• Application Process

To claim EI sickness benefits, people should visit the Service Canada’s official site or walk in at any Service Centre. Individuals can apply for benefits and grants through their private, secure My Service Canada Accounts.

• Reporting Requirements

Service Canada normally requires those people who were receiving their sickness benefit to submit regular reports or updates in order to ascertain that they remain eligible for such benefit payment.

Paying employment insurance premiums

Your employer effortlessly withholds your EI contributions from your salary and transmits these monthly payments to the Canada Revenue Agency (CRA) for supporting the EI program.

There exist yearly caps on insurable earnings and the highest premiums that can be paid each year. These figures undergo annual adjustments, encompassing both the current rates and those from previous years. Visit this website to know the current and previous rates of employment insurance in Canada.

How much can I get?

Without the actual processing of your application, one cannot tell how much amount will you exactly get as part of the Employment Insurance benefits.

• You could get up to 55% of your earnings

Typically, the fundamental formula for determining Employment Insurance (EI) benefits involves a rate of 55% applied to one's average insurable weekly earnings, capped at a specified maximum. Starting January 1, 2023, the annual limit on insurable earnings stands at $61,500. Consequently, the maximum weekly benefit one can receive is $650.

Insurable earnings encompass a broad array of compensation forms arising from employment, including wages, tips, bonuses, and commissions. The Canada Revenue Agency is responsible for defining the categories of earnings considered insurable under the program.

• You could get benefits for up to a maximum of 45 weeks

The duration of Employment Insurance (EI) benefits ranges from 14 to a maximum of 45 weeks. This duration is contingent upon the unemployment rate prevailing in your region at the time of claim submission and the total insurable hours accrued in the last 52 weeks or since your most recent claim, whichever period is shorter. The number of weeks for which you may receive benefits doesn’t change if you move to another region after your benefit period begins.

• Calculating your weekly benefit amount

The weekly benefits amount is determined through the following process -

• We compute your total insurable earnings for the necessary number of optimal weeks, considering the weeks in which you earned the highest income, inclusive of insurable tips and commissions, based on the information you provide or your employment records.
• The divisor (number of optimal weeks) corresponding to your regional unemployment rate is established.
• Your total insurable earnings for the optimal weeks are divided by the required number of optimal weeks.
• The result is then multiplied by 55% to yield the amount of your weekly benefits.

In regions of Canada experiencing the highest unemployment rates, the calculation is based on the best 14 weeks. Conversely, in regions with the lowest unemployment rates, we consider the best 22 weeks. For other regions, the number of weeks utilized for benefit calculation falls between 14 and 22, contingent upon the unemployment rate in those specific areas.

Calculation –

Total insurable earnings for the required number of best weeks

÷

Required number of best weeks

X 55%

= Weekly EI Benefit ($650 maximum)

Required number of best weeks by regional rate of unemployment

What is T4E slip and why is it important to claim EI benefits?

A Canadian tax form known as the T4E slip reports on earnings derived from different kinds of benefits including EI benefits. “T4E” means a Statement of Employment Insurance and other benefits. Service Canada issues such documents and details your wages you got in particular programs. Given below are some key points about the T4E slip –

• Employment Insurance (EI) Benefits: The majority of the incomes recorded on the T4E slip are employment insurance benefits. Such regular benefits like unemployment insurance, maternity, parental, sickness, compassionate care, and family caregiver benefits are also provided.
• Other Benefits: The T4E slip may also indicate payments towards a wage-loss replacement plan in parallel with EI benefits.
• Taxable Income: These figures that appear on the T4E card are taxable incomes and should be indicated on your tax submissions. Nevertheless, not all EI are taxable under the income tax. For instance, maternity and parental benefits are typically taxed, while occasional situations will provide exemption for sickness allowance.
• Reporting on Income Tax Return: You must supply details on your T-4 slip while writing for your income tax returns. This, therefore, means that all the figures indicated in a slip would be aggregated so as to establish your total income and subsequent taxes.
• Issuance: Individuals whose benefits were covered by Service Canada within a particular tax year commonly receive T4E slips. The T4E slip could be sent to you via post or online via the My Service Canada Account.

Applying for EI benefits

To apply to claim the EI benefits in Canada, you need to follow these steps –

• Check Your Eligibility

Make sure your reason of unemployment is valid; you should also have a certain amount of insurable hours worked in the last 52 weeks. Also be able to work immediately upon receiving payments from EI.

• Gather Required Information

Collect the related information such as SIN, ID and your employment details (like record for employment (if it is available)).

• Create a My Service Canada Account

In case do not currently has one, sign up for My Service Canada Account via the official portal. With this account, you’ll be able to make a benefit claim or manage your EI entitlement on Internet.

• Complete the Online Application

Submit an electronic EI application on your My Service Canada Account. Give correct information concerning your past employment position, reason for being out of work among others that will support your case.

• Submit Your Application

Submit it electronically after filling in the online application. Verify that everything is correct so as not to delay proceedings.

• Wait for Processing

Service Canada shall process your application. You will also have a chance for follow-up with your supplier and may receive further phone calls during that time in case there is need for more details.

• Receive a Decision

After that, you will have a determination made concerning whether or not you qualify for benefits and how much. In case your claim gets approved, it is mandatory that you keep on communicating and submitting reports to Service Canada in order to prove that indeed you are still eligible to claim benefits.

Employment Insurance Improvements

The government is enhancing Employment Insurance (EI) to better align with the requirements of both workers and employers. Discover the recent initiatives we've undertaken to enhance the flexibility, inclusivity, and accessibility of EI.

1. EI maternity and paternal benefits

To help working parents the government is striving to make maternity and paternal benefits more flexible –

• Earlier access to maternity benefits

Expectant employees are eligible to receive EI maternity benefits up to 12 weeks prior to their anticipated due date.

• Parents have more choices

Parents have the option to receive EI parental benefits either over a 12-month period at a higher benefit rate or over 18 months at a reduced benefit rate.

• Parental sharing benefits

Parents who mutually share parental benefits for a child born or placed with them for adoption on or after March 17, 2019, are eligible to receive additional weeks of benefits.

2. EI caregiving benefits

Canadians are given more options to claim EI benefits if they are taking care of a critically ill or injured member of their family.

• Introducing new Family Caregiver benefits for adults

Caregivers taking time off work to assist a critically ill or injured adult family member can receive up to 15 weeks of EI.

• Introducing new Family Caregiver benefits for children

Any family member, not just parents, is now eligible for up to 35 weeks of benefits to care for a critically ill child. These benefits were previously referred to as Parents of Critically ill Children benefits.

• Easy application process

Medical doctors and nurse practitioners are now authorized to sign all EI caregiving medical certificates.