Employment Insurance (EI) is an essential social program of government benefits in Canada that provides temporary financial assistance to eligible workers who lose their jobs through no fault.
Commonly referred to as “EI,” this program is administered by Employment and Social Development Canada (ESDC) and the Canada Employment Insurance Commission (CEIC).
EI offers income support and job search assistance to Canadians experiencing unemployment. It also benefits individuals unable to work due to significant life events like pregnancy, illness, or caregiving duties.
Our guide here explains everything you need to know about eligibility, benefits, premiums, the application process, and more regarding EI in Canada.
What is Employment Insurance?
Employment Insurance is an unemployment insurance program funded by premiums paid by Canadian workers and employers. The program provides temporary financial assistance to eligible unemployed individuals searching for new employment opportunities.
Some key facts about Employment Insurance in Canada:
- It is administered by the federal government benefits in Canada under the Employment Insurance Act.
- Funded through EI premiums – employees will be paid 1.64% of insurable earnings in 2025, employers contribute 1.4 times the employee premium.
- Paid into a particular account, the EI Operating Account, not general revenues.
- Provides income replacement between 40-55% of average insurable weekly earnings, depending on regional unemployment rates.
- Regular EI benefits can be paid for 14 to 45 weeks, depending on hours worked.
- There are over 24 different types of EI benefits available for regular unemployment, sickness, maternity/parental leave, compassionate care, and other claims.
- In July 2024, there were 489,000 Canadians getting regular Employment Insurance (EI) benefits, which was an increase of 2.2% (11,000 people) compared to the previous month.
- EI supports Canadian economic stability by providing income assistance during temporary unemployment.
EI is Canada’s first defence line for workers impacted by job loss. It functions as an automatic economic stabilizer during recessions, injecting billions into the economy through benefits paid.
How Does Employment Insurance Work?
Employment Insurance is an insurance program for Canadian workers financed through compulsory payroll deductions. Here’s a quick rundown of how the program works:
| Premiums | EI premiums are paid by employees and employers on insurable earnings up to a maximum annual maximum ($63,200 in 2024). The employee rate is 1.66%, while employers contribute 1.4 times the employee rate. These premiums fund the EI program. |
| Eligibility | To qualify for EI regular benefits, claimants must have accumulated sufficient insurable hours in the last 52 weeks and meet other criteria. The required hours range from 420 to 700 depending on the regional unemployment rate. |
| Benefit amount | 55% of average insurable weekly earnings, up to a maximum of $638 in 2022. Benefits can be paid for 14 weeks up to 45 weeks, depending on regional unemployment and hours worked. |
| Application | Applications must be filed online. Various documents, such as ROEs and government-issued IDs, are required. There is a one-week waiting period when first filing. |
| Taxes | Income tax is deducted from EI payments at the source. Recipients also receive a T4E documenting benefits paid. |
| Reporting | Claimants must complete biweekly reports confirming their continued eligibility for benefits. Failure to report can interrupt benefits. |
Source: https://www.canada.ca/en/employment-social-development/programs/ei.html
Canadians do not need to apply separately for EI coverage. The program automatically covers all eligible workers through payroll deductions.
Who is Eligible for Employment Insurance?
To receive EI regular benefits, applicants must meet the following eligibility criteria:
- Lost your job through no fault (not fired for misconduct).
- I have been without work and pay for at least 7 consecutive days in the last 52 weeks.
- Worked the minimum required insurable hours during the qualifying period:
- 420 to 700 hours required, depending on the regional unemployment rate
- Qualifying period = last 52 weeks or period since the last EI claim
- Be ready, willing and capable of working each day (actively seeking suitable employment).
- Submit regular biweekly reports to confirm eligibility.
In addition to laid-off workers, individuals in the following exceptional situations may qualify for EI benefits:
- Self-employed workers who paid premiums on insurable earnings.
- Anglers who are actively seeking work.
- Teachers on seasonal lay-offs.
- Canadian Armed Forces members released from service.
- Workers who quit with just cause or due to family responsibilities.
Check detailed eligibility requirements for your situation using the EI Regular Benefits Eligibility tool.
Are Employment Insurance Benefits Taxable?
Yes, EI benefits received are considered taxable income in Canada.
Individuals who collect EI will receive a T4E tax slip from the federal government documenting the total amount of their benefits for the tax year. Taxes are automatically deducted from EI payments when claimants choose this option.
The tax rate on EI benefits will depend on your total annual income and personal tax situation. EI benefits get added to your taxable income, potentially bumping you into a higher tax bracket.
It’s important for EI recipients to consider how benefits may impact their overall tax bill when filing. Setting aside funds to cover potential taxes owing on EI income is advisable.
Canadians can estimate their EI insurable earnings and potential EI benefit amount using the EI Benefits Online Calculator. This can help anticipate taxes payable on EI income received.
Being strategic with income sources while on Employment Insurance can help minimize taxes owed. For example, withdrawing RRSP funds while collecting EI could lead to significant tax bills.
When Should You Apply for Employment Insurance Benefits?
To avoid delays, it is advisable to apply for EI benefits as soon as you stop working.
Many workers incorrectly believe they need to obtain their Record of Employment (ROE) from their employer first before filing for EI. This is not the case. Your ROE can be submitted after your application.
Here are some guidelines on when to file your EI claim:
- Apply immediately – Submit your claim as soon as your job ends, even if you are still owed wages or vacation pay. Do not delay filing.
- You can apply without an ROE – While an ROE is required, it can be submitted after filing. Acquire this from your employer ASAP.
- No need to wait for severance – Apply immediately and report any severance amounts later. Severance may impact your benefit amount.
- File quickly – Apply early to get benefits flowing faster, even if your last day is a few weeks out.
Filing your EI claim promptly ensures your benefits kick in as soon as you become eligible. As the application can take 28 days to process, applying early provides peace of mind.
Delaying your EI application can cost you significant benefits. You generally can only receive payments retroactively for weeks after filing.
Is EI Available to the Self-Employed?
Certain Employment Insurance benefits are accessible to self-employed Canadians who have opted into the program and paid Employment Insurance premiums on their income.
Special benefits, such as maternity, parental, sickness, compassionate care, and family caregiver benefits, are available to eligible self-employed individuals who register for EI coverage.
For regular Employment Insurance benefits, self-employed workers must also register and pay premiums for at least 12 months before collecting benefits. They must have temporarily ceased operations due to reasons like shortage of work.
To access Employment Insurance unique benefits, self-employed persons must have earned at least $7,750 in insurable earnings in the last 52 weeks or since their last EI claim. Other eligibility criteria also apply.
Key Takeaways
Employment Insurance provides a crucial financial lifeline to Canadian workers and families when job loss strikes. Understanding Employment Insurance eligibility, benefits and application process ensures you can access this support system if needed.
Here are the main points to remember:
- Employment Insurance (EI) provides temporary financial assistance to eligible Canadian workers who lose their job, can’t work due to illness/injury, or need to take parental leave.
- To receive Employment Insurance benefits, applicants must have worked a minimum number of insurable hours in the last 52 weeks or since their last EI claim. The number of required hours ranges from 420-700 depending on the unemployment rate.
- The duration of Employment Insurance benefits varies based on the regional unemployment rate, ranging from 14-45 weeks for regular EI benefits. Special benefits like maternity/parental leave can provide up to 50 weeks of income support.
- The basic Employment Insurance benefit rate is 55% of average weekly earnings, up to a maximum amount. Taxes are deducted from EI payments.
- Employment Insurance plays an important role in providing income security to Canadian workers in different situations, whether they lost their job, fell ill, or needed to take extended leave.
Frequently Asked Questions about Employment Insurance in Canada
Q: How and where can I apply for regular EI benefits?
A: You need to submit an online application for EI, which you can do from home, a public internet site like a library, or a Service Canada Centre.
Q: What are the requirements to qualify for regular EI benefits?
A: Typically you need 420 to 700 insurable hours worked, depending on your location in Canada and the unemployment rate when you apply. You also need to have been without work and pay for at least 7 days in a row.
Q: How long can I get EI benefits for?
A: It depends on the unemployment rate when you were laid off and your insurable hours worked in the last 52 weeks or since your last claim, whichever is shorter. Different rules apply if you get sick or take leave while on EI.
Q: How much will I receive on EI?
A: The basic rate is 55% of your average insured earnings, up to a maximum insurable amount of $61,500 per year as of January 1, 2023. So the max payment is $650 per week. Taxes are deducted from your EI payment.
Q: When should I apply for EI?
A: The day you are laid off. You have 4 weeks after your last day of work to apply. Delaying risks losing benefits. Submit an online application from home, a library, or Service Canada Centre.