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There are several advantages to living in Canada — free healthcare, low crime rate, and employment insurance (EI), to name a few.
Employment insurance provides temporary financial assistance if you find yourself out of work through no fault of yours, or take time off work due to illness, pregnancy or other special circumstances.
Like other benefits programs, Employment Insurance offers benefits only if certain conditions are met. For example, to be eligible, you must have worked 420 hours or more in the last year.
Here are the ins and outs of Employment Insurance:
Can I work while on Employment Insurance (EI)?
EI exists to lend a helping hand to Canadians who have recently became unemployed or are unable to work due to special circumstances. Many think that the benefits stop the moment you start doing any payable work, but that is not the case.
You can work while on EI, though there are some restrictions as to how much you can work and how much you can earn.
How working impacts your EI claim
Working while receiving EI is possible, but it will reduce the amount of benefit you are eligible for. Simply put, the higher your income, the lower your EI benefits.
If you work, you will lose 50 cents on the dollar of your EI benefits, up to 90% of what you earned in your previous job. Above this threshold, EI benefits are reduced dollar for dollar.
Here is an example:
Let's say you earned $600 a week before becoming unemployed. Because you meet all EI requirements, you can receive up to $540 a week (90% of your previous earnings) through this program. And you will receive weekly cash benefits even if you earn, but the weekly benefit payments will be reduced.
- You lose 50 cents for every dollar you earn while on EI if your weekly income is $540 or less. So if your weekly income is $200, you will receive $440 a week through the EI program. And if you earn $540 a week (that is, your current earnings are the same as your insurable earnings), your weekly EI benefits will amount to $270 (half of the maximum amount you can receive through EI).
- You lose a dollar for every dollar you earn while on EI if your weekly income exceeds $540. If you earn $640 a week while on EI, you will receive $170 a week in benefits. ($270 like above, minus $100 = $170/week)
How many hours can you work while on EI?
You can only work part-time while you are on an EI claim. If you work full-time, you will lose the EI benefits altogether, regardless of how much you are making.
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What is the EI benefit amount that I will receive?
You can receive 55% of your average insurable weekly earnings, up to $638 a week. The yearly insurable income is capped at $60,300. Even if you earned more than that before you lost your job, the maximum EI benefit you would receive is $638 a week.
Different types of EI benefits
Regular Benefits
Individuals who lose their job through no fault of their own (e.g. layoffs, work shortage) are eligible for regular EI benefits. If you quit your job for a just cause or were fired without cause, consider applying for EI benefits immediately. You can receive regular benefits for anywhere between 14 and 45 weeks.
Sickness Benefits
You are eligible for temporary income replacement if you cannot work for medical reasons. Keep in mind that you will have to submit a medical certificate to prove you have a genuine medical condition. Sickness benefits are paid for a maximum period of 15 weeks.
Maternity Benefits
Maternity Benefits offer temporary financial assistance if you have to take time off work because you are pregnant or have given birth. You are eligible to receive 55% of your average weekly earnings, up to $638 a week. The maternity benefits are payable for up to 15 weeks and cannot be split between parents.
A person who receives maternity benefits may also be eligible for parental benefits.
Parental benefits
If you have to take time off work to care for your newborn or adopted child, you may be eligible for parental benefits through the Employment Insurance program. Parental benefits can be split between parents and are of two types:
- Standard parental benefits
- Extended parental benefits
It is up to you which one of these you want to receive. But both parents must choose the same option and the option cannot be changed later. Your choice will determine the amount of weekly assistance you will receive and for how long.
Caregiving benefits
Caregiving benefits are available for those who take time off work to support someone who is injured, critically ill, or in need of end-of-life care.
Eligible Canadians can apply for three types of benefits:
- Family caregiving benefits for children
- Family caregiving benefits for adults
- Compassionate care benefits
The benefit rate and the weekly maximum amount payable is the same across these three benefits (55% of your average weekly earnings, up to $638 a week), but the payout period varies.
Self-employed benefits
Eligible self-employed professionals can receive special benefits through the EI program if they take time off their business due to sickness or to take care of their newborn or adopted child or other family members.
Are EI benefits taxable?
While EI benefits provide financial relief, they are considered taxable income. You need to report them on your tax return.
How long can you get EI benefits for?
How long the EI financial assistance will last depends on the type of benefits you receive.
Is working while on EI worth it?
Working while on an EI claim can increase your weekly income. But your weekly EI payments will never be more than 90% of your income before unemployment or $638, whichever is higher.
If you earn 90% of your insurable income or less, you forfeit 50 cents of your EI benefits for every dollar you make. If you earn more than 90% of your pre-unemployment income, your EI benefits are reduced dollar-for-dollar.
Keep in mind you can only work part time while on EI. If you do a full week of work, you will not receive EI benefits that week. However, the number of weeks for which you are eligible to receive EI benefits will not change.
Conclusion
Employment insurance protects you if you lose your job through no fault of your own or are unable to work due to pregnancy, illness, or other special circumstances, such as caring for a family member. While on EI, you can work to increase your overall weekly income, but your EI payments will be reduced.
If you do not earn more than 90% of your pre-unemployment income, half of your weekly EI benefits will be deducted. Your EI benefits will be deducted dollar for dollar if you exceed that limit. And, regardless of how much you earn, if you work a full week, you will not receive EI benefits that week.
Frequently Asked Questions
Am I eligible for EI if my hours are reduced?
No, you cannot claim EI benefits if your hours are reduced. You can make a successful EI claim only if you lose your job or are unable to work due to special circumstances, like pregnancy, critical care leave, parental leave, or caring for a sick family member.
When am I eligible for regular benefits through the EI program?
You may collect regular EI benefits if you can demonstrate:
- You were engaged in insurable employment.
- You lost your job because of “no fault of your own”.
- You have been without pay for at least 1 week in the last year.
- You have worked the required number of hours in the last year or since your last EI claim, whichever is shorter. This number varies from one area to another, but is not more than 700 hours. If you have worked for 700 hours or more in the qualifying period, you will qualify for EI payments, regardless of your location. If you have worked between 420 and 700 hours, whether you qualify for EI or not depends on where you live. If you have clocked fewer than 420 hours, you are not eligible for EI benefits. The lower the unemployment rate in your area, the more hours are needed to qualify.
- You are willing to work and are actively looking for a job.
Can you qualify for EI benefits if you quit your job?
Yes, you can. You are eligible for EI benefits if you quit your job for a just cause, provided you meet all other requirements. Quitting a job for a just cause (for example, the employer stopped paying because it went bankrupt) is almost the same as layoff or termination. In both cases, the person in question will be considered to have lost their job through no fault of their own.
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