Employment Insurance in Canada: How it works

Knowing how employment insurance in Canada works is vital since it can provide you with an income if you ever lose your job.

While most Canadians strive to work hard and earn enough money to make a living over the course of their lifetime, there are sometimes life events that prevent us from earning an income. In cases where this is no fault of our own, Employment Insurance (EI) can come in really handy until we get back on our feet again. Here’s a quick guide to what you need to know about Employment Insurance in Canada. 

What is Employment Insurance?

Employment Insurance, or EI, provides monetary benefits to Canadians in the labour force that are unable to work. This could be due to several reasons and as such, there are different types of EI benefits. The most common reasons as to why someone would need EI are the following. 

Loss of Job

They may have lost their source of income through no fault of their own. This could be due to seasonal work, mass layoffs, or due to a shortage of work. However, the individual is still available and ready to work, but is unable to find a job.  

Parental Benefits

It could be for someone starting a family. In this case, the individual may be pregnant, have recently given birth, caring for a newborn, or even adopting a child. Click the link to learn more about maternity leave in Ontario. 

Illness or Injury

If you are unable to work due to illness or injury you may also be eligible for EI. 

Caregiving

If you are unable to work because you are caring for someone who is critically injured, ill, or someone who needs end-of-life support. 

How Employment Insurance (EI) Works 

Assuming you meet the eligibility requirements, you can apply for EI. If you are approved, employment insurance will provide you with monetary benefits based. The amount you receive and for how long is based on your own personal circumstances.  

In order to continue to receive your EI benefits, you must complete bi-weekly reports to prove your eligibility. These can be done online or over the phone. It is crucial that you keep up with these bi-weekly reports. If you fail to do them, you will lose your employment insurance benefits.  

It’s also important to note that these benefits, no matter the type or how much you receive, are considered to be taxable. That means that they are subject to federal and provincial/territorial taxes that will be deducted where applicable. 

Who is Eligible? 

Individuals who are considered to be eligible for employment insurance need to be able to demonstrate that:

• They were employed in insurable employment
• You lost your job through no fault of your own (this can also be due to natural disasters)
• You have been without work and pay for a minimum of 7 consecutive days within the last 52 weeks.
• You have worked for the required number of insurable employment hours in the last 52 weeks OR since the start of your last EI claim (whichever is shorter)
• You are ready, willing, and capable of working each day
• You can show that you are actively looking for work 

There are also different eligibility requirements for specific work situations. These are often in trades or certain professions, including farmers, fishers, teachers, military, workers and residents outside of the country and self-employed individuals.  

Who is not Eligible? 

Just because you are not working or lost your job does not mean that you are eligible for employment insurance. In the following situations, you are considered ineligible. 

• If you voluntarily left your job without a just cause
• If you lost your job because of misconduct
• If you are unemployed because you are directly participating in a labour dispute such as a strike or lockout.
• If you are in jail, penitentiary, or other similar institution
• In most cases, if you lose or quit your job because you didn’t comply with your employer’s mandatory COVID-19 vaccination policy.  

How Employment Insurance Benefits are Calculated 

As mentioned earlier, employment insurance benefits are not a flat fee but rather determined on an individual level. For most individuals, the basic calculation ends up being 55% of their average insurable weekly earnings. However, that is only up to a maximum amount. As of January 1, 2022, the maximum yearly insurable earnings amount is $60,300, which means that you can receive up to $638 per week.  

The length of time in which you can receive employment insurance benefits also varies. You can receive EI from 14 weeks up to a maximum of 45 weeks. This will depend on the unemployment rate in your area and the number of insurable hours you have accumulated. 

How to Apply for EI 

You should apply for EI as soon as you stop working. Even if you haven’t yet received your record of employment, you want to start the process as quickly as possible since it can take a while for you to receive your payments. Delaying your application can also result in you losing benefits.  

To apply for EI, you need to submit an online application which can be found here. The application is a straightforward step-by-step process that will take most people about an hour to complete. If you do not have access to a computer at your place of living, find a public access site, such as a kiosk at a Service Canada office or a public library. 

In order to start your EI application process, you will need the following:

• Your Social Insurance Number (SIN)
• Your mother’s maiden name
• Mailing and residential address
• All banking information needed for direct deposit
• Names, address, dates of employment, and reason for leaving employment over the last 52 weeks
• Your details version as to why you are no longer employed from any job within the last 52 weeks
• The days and earnings for your highest paid weeks of insurable claim within the last 52 weeks or since the start of your last EI claim (whichever is shorter).  

Again, even if you are missing some documents, it’s still best to start the application right away to ensure you are eligible for as many benefits as possible.  

Once you have completed the application, you will be asked for your email contact in case Service Canada needs more information and cannot reach you by phone. 

FAQ 

How long does it take to receive EI?

If you are eligible, you will receive your first payment within 28 days of applying. However, there is one week for which you won’t be paid before you start receiving benefits. This is called the waiting period and acts like a deductible which you would pay for insurance. 

My EI Stopped, What Happened?

Your EI payments can stop for the following reasons:

• Your claim is up, and you have already received all the weeks of benefits to which you were entitled
• Your payment timeframe during which you can receive benefits has ended
• You stopped filing your bi-weekly report
• You requested a termination of your claim 

What if I don’t qualify?

If you do not qualify for EI you may still qualify for other benefit programs. You can check the Government of Canada’s website here for the online benefit finder, which will allow you to search for additional programs. You can fill out the questionnaire to see what other programs may be available.