Canada can be a wonderful place to live and work. The landscapes are breathtaking, the people friendly, and the economy relatively stable—Canada is a pretty nice place to be. This being said, there are lots of Canada-specific employment considerations you need to make before you take the leap to live and work in Canada. The following will explore one feature of employment in Canada in particular: the employment insurance program.
What Is The Employment Insurance Progam?
Often referred to as EI, the employment insurance program is a system that provides temporary income to workers who have become unemployed due to forces outside their control (like a factory closing down or a season of fishing is particularly rough) or due to life events like caring for a family member who is ill and at risk of death, caring for someone who has been injured, caring for a newborn child or a recently adopted child, pregnancy, or illness. EI is available to anyone who has paid premiums in the previous year and meets qualifying conditions. People who work in fields that are less stable for seasonal reasons (for example, fishing, farming, or the film industry, which tends to thrive in the summer and dry up in the winter) tend to benefit from the employment insurance program.
Who Is Entitled?
People who have worked the required number of hours and have made premium payments are entitled to EI. Typically the minimum is 400 hours in the last year or since the program was last accessed. Most employed people in Canada have deductions on their paychecks that meet the premium requirements (in many cases, the employee pays part of the premium, and the employer pays part). Often you will need to opt-in to this system when you take employment.
Can Self-Employed People Qualify?
In short, yes, self-employed people can qualify for employment insurance. If you run your own business or are in control of over 40% of a corporation’s voting shares, the self-employed version of the program applies to you. Benefits can be accessed 12 months after registering. You can register for the program online, after which point you’ll begin paying EI premiums. The premiums typically work out to $1.58 per every $100 earned.
What Does EI Provide?
Employment insurance does not provide your entire missing wage but a percentage of your earnings up to a previously decided maximum amount. Typically it works out to being 55% of your standard earnings. In 2022, the cap was $638 per week. The maximum period of time you can receive EI benefits is 45 weeks.
What Are The Basic Requirements For EI?
Each reason for the reduction in work has its own conditions that you need to meet. This means that the process is slightly different for people dealing with maternity leave, parental leave, sickness, supporting a critically ill child, supporting a critically ill adult, or providing end-of-life care for someone. In addition to those, you must also be a permanent resident or Canadian citizen, be registered in the self-employed program for at least 12 months if self-employed, have earned a minimum amount of earnings in the year before you apply for benefits and have decreased the time you spend on your work by more than 40% for at least one week.
Can You Work While On EI?
You can work while receiving EI benefits, but there are strict regulations regarding this. You’re limited in both how much you can earn and how many hours you can work. Typically, the more money you make, the less EI you receive. Given this, many people need to calculate whether it’s worth working while on EI or not. Sometimes it’s worth it to take a temporary or part-time job, but other times it is not. Working a “full week” makes you ineligible for EI.
Do I Pay Taxes On EI?
Yes, employment insurance is taxable. This means that whatever money you’re given through the program will be taxed. The government will withhold that amount automatically (and this means that your payments will be slightly less than the full entitlement you’ve been told about).
Additional Help
In addition to this federal program, most provinces and territories have their own additional systems that can help as well. If you’re in need of financial support but don’t meet the EI criteria, there are many different programs within Canada for different purposes.
The above information should have made clear the basic structure of the EI program in Canada. If you’re unsure about how this program applies to you, you can reach out to your local government office.