What is Employment Insurance in Canada and How Does It Work?
Do you plan to break your leg? Do you plan to have your house catch fire? Hopefully, the answer is no, but sometimes life has other plans. That's why we have insurance.
The Employment Insurance program (EI) provides the safety net and assistance for millions of Canadians while they go through life's natural transitions. Whether it is switching career paths, starting a family, dealing with personal injury or caring for a loved one, EI can help.
This Guide to Employment Insurance covers how EI works, how to apply for EI and your other questions.
What is EI in Canada?
Employment Insurance provides income support for unemployed Canadians, as well as Canadians who are temporarily away from work due to various life events. Canadians who would like to use the EI program must have worked recently and meet certain conditions to qualify for benefits.
Qualifying events can vary, check the list below to see if your situation applies:
- Job lost through no fault of your own
- Newborn or adoption care
- Critical illness or injury care
- Personal Illness
- Family member care in cases of serious illness or close-to-death care
The EI program is overseen by the Canada Employment Insurance Commission (CEIC). The CIEC is responsible for annual EI premium rates as well as reviewing and approving policies.
EI is a valuable program. EI benefits can help keep people financially afloat for 14 to 45 weeks. People out of work due to illness or an injury can in some cases claim EI sickness benefits if they don’t already have them through work or private critical illness insurance or disability insurance. They provide 55% of your earnings (to a maximum of $638 per week) for up to 15 weeks. This is a viable option for short-term disability or critical illness leave.
If EI Sickness benefits don’t sound like enough protection to support you and your family, consider a private disability insurance plan.
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How does employment insurance work?
EI pays a percentage of average insurable weekly earnings. This means that your EI payments will be a percentage of how much you made from your previous job up to a certain amount.
What are standard EI qualifications?
To qualify for EI you and your employer must meet certain requirements. The reason for job loss will also affect your EI eligibility.
EI eligibility requirements:
- Insurable employment
- The job was lost at no fault of the employee
- You have been without work for seven consecutive days
- You are willing and capable to work
- You can prove that you are looking for work
You may be ineligible for EI if:
- You voluntarily left your job without cause
- Were fired for misconduct
- You are participating in a labour dispute such as a strike or lockout
- You are self-employed and did not pay into the EI program
- You were arrested and are in jail or a penitentiary
Alternate types of EI
The above requirements are focused on standard EI requirements for people dealing with unemployment related to their employment status but there are ways to qualify for EI benefits.
Canadians can also apply for maternity benefits, sickness benefits, caregiving benefits and disability benefits. These programs have their own requirements and may require some kind of proof to collect.
How to apply for EI
To apply for EI Canada, go to Canada.ca and make sure you have all the required information at hand.
You will need:
- A social insurance number SIN. You may also be asked for proof of immigrant status and a work permit.
- Full legal birth name
- Mailing and residential addresses
- Banking information to receive payments via direct deposit. This will include the bank's name, transit number and account information.
- Name, addresses, dates of employment and reason for termination/suspension from employers going back 52 weeks.
- If you quit or were dismissed from a job you will need to write a detailed description of the reason for termination.
- Highest earnings in the previous 52 weeks or since the start of your last EI claim. This information and your record of employment ROE will be used to calculate how much your EI will pay.
After all this information is gathered you can start the application process. The application for EI benefits is available on Canada.ca. The process takes around one hour to complete. Your information will be saved for 72 hours from the time you start. If you don’t complete it in this time frame you will need to start over.
Please be careful! While cyber security is constantly being updated, fake government sites still exist. Make sure to check for typos when searching Canada.ca and make sure the site is authentic before filling out any personal information.
How to reactivate an EI claim?
Sometimes you may need or want to renew an existing EI claim from the previous 52 weeks. You will need to meet the qualification of having worked enough insurable hours and meet underlining qualifying conditions.
You can submit an application via Canada.ca to reactivate your claim.
Good to know
Note that if you have not worked since your EI was reactivated and have fewer than four weeks left on your claim, your EI benefits should be automatically reactivated.
What are employment insurance disability benefits?
EI disability and EI short-term disability are commonly searched terms, but Employment Insurance and disability are not the same programs. EI sickness is what is covered under the EI program. Short-term disability and long-term disability insurance are separate and may be provided by your employer or purchased as a private disability insurance plan.
Can you collect EI and short-term disability?
No, unfortunately, you cannot collect both EI and disability insurance at the same time. Disability insurance takes priority in these cases and will supersede any EI benefits. This is good as the short-term disability lasts between 17 and 26 weeks. EI sickness benefits are, however, an option once short-term disability payments have lapsed.
What are EI sickness benefits?
You may be eligible for EI sick benefits for up to 15 weeks if you can't work for medical reasons. You will be required to provide a medical certificate stating that you are unable to work due to illness, injury, quarantine or another medical condition that prevents you from working.
You should check with your employer about paid sick leave and short-term disability before applying for EI sickness benefits. Many employers provide this disability insurance. Their plan may pay more than EI benefits without the wait time.
EI is not designed for long-term disability. If you are interested in long-term disability assistance you should look to the Canada Pension Plan disability benefits (CPP) and a disability insurance policy.
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How much EI will I get?
How much EI pays per month is determined by your weekly income prior to collecting employment insurance. You will receive up to 55% of your previous earnings with a cap of $638 a week or $2,550 a month. That works out to 55% of a salary of up to $60,300 annually.
EI calculators are available online to help you better understand how much your EI payment could be.
How long does EI last?
EI benefits can last between 14 to a maximum of 45 weeks. The length of your EI benefits is dependent on the unemployment rate in your area when you make your claim and the insurable hours worked in the previous year or since your last claim.
How many hours do I need for EI?
You need a minimum of 420 hours of qualifying insurable employment to be eligible for EI benefits. These hours must have been completed within 52 weeks of applying for EI benefits and within the time since you last collected EI benefits.
The unemployment rate in your area determines how many hours you will need to qualify for EI benefits. If your area has an unemployment rate of greater than 13% you will need a minimum of 420 hours. If your area has an unemployment rate of 6% or under you will need a minimum of 700 hours. If you have any prior EI violations the number of hours required will be higher depending on the severity of the violation.
How long does EI take to deposit?
It will take around 4 weeks after applying to start receiving EI payments. Payments are issued every two weeks after your EI online report is completed and processed. If you sign up for direct deposit your payment will be completed within two business days. If you sign up for a mailed cheque it can take up to two weeks or longer depending on where you live and mail services in your area.
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