In Canada, most of workers are paying employment insurance (EI) premium to Employment and Social Development Canada. There would be a maximum amount of money deducted from each of our pay cheques for EI premium, and we would be able to collect unemployment insurance benefits from Canada government if we have worked for a required periods.
By looking at the table at https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-deductions-contributions/employment-insurance-ei/ei-premium-rates-maximums.html
The EI contribution amount is changing from time to time by government. The maximum insurable earning is $60,300 in the year 2022 at the rate of 1.58%. Therefore workers with salaries up to $60,300/year would pay annual EI premium at the rate of 1.58%. The maximum annual contribution would be $952.74. For people making more than $60,300/year, they only need to contribute the maximum of $952.74 per year to EI. This is why higher salary workers would see EI deduction of their pay cheque stop at one point during the year, because the maximum contribution was reached.
We should notice that the employer must also contribute to EI premium in addition to his/her employee contribution. Usually the same rate applies to the employer, i.e. 1.58%.
What is the benefit of paying EI regularly during our employment?
We could apply and collect unemployment benefits from the Employment and Social Development Canada if we lost our job. The employer should give us Record of Employment (ROE), so we could use information provided on the ROE to apply for unemployment benefit.
Some employers hand out paper ROE to their layoff employees, but some employers upload the ROE to government web site electronically. Therefore, layoff workers should create an account in My Service Canada Account (MSCA) at https://www.canada.ca/en/employment-social-development/services/my-account.html in order to download relevant ROE information and apply for EI benefits as mentioned below.
We could visit the web site https://www.canada.ca/en/services/benefits/ei.html and select appropriate situation such as regular benefit, sickness benefit, maternity leave benefits, etc. In Ontario, we could visit a Service Canada’s office in person, if we want to.
According to the current rule posted at https://www.canada.ca/en/services/benefits/ei/ei-regular-benefit/benefit-amount.html
You could get up to 55% of your earnings
We can’t tell you exactly how much you’ll receive before we process your application. For most people, the basic rate for calculating Employment Insurance (EI) benefits is 55% of their average insurable weekly earnings, up to a maximum amount. As of January 1, 2022, the maximum yearly insurable earnings amount is $60,300. This means that you can receive a maximum amount of $638 per week.
You can get benefits for up to a maximum of 45 weeks
You can receive EI from 14 weeks up to a maximum of 45 weeks, depending on the unemployment rate in your region at the time of filing your claim and the amount of insurable hours you've accumulated in the last 52 weeks or since your last claim, whichever is shorter.
How we calculate your weekly benefit amount
The amount of weekly benefits is calculated as follows:
· we calculate your total insurable earnings for the required number of best weeks (the weeks that you earned the most money, including insurable tips and commissions) based on the information you provide and/or your record(s) of employment
· we determine the divisor (number of best weeks) that corresponds to your regional rate of unemployment
· we divide your total insurable earnings for your best weeks by your required number of best weeks
· we then multiply the result by 55% to obtain the amount of your weekly benefits
In regions of Canada with the highest rates of unemployment, we’ll calculate using the best 14 weeks. In regions of Canada with the lowest rates of unemployment, we’ll use the best 22 weeks. In other regions, the number of weeks used to calculate benefits will be somewhere between 14 and 22, depending on the unemployment rate in those regions.
If your net family income is $25,921 or less
If your net family income doesn’t exceed $25,921 per year, you have children and you or your spouse receives the Canada Child Benefit, you’re considered a member of a low-income family. Therefore, you may be eligible to receive the EI family supplement.
The family supplement rate is based on:
· your net family income up to a maximum of $25,921 per year
· the number of children in the family and their ages
The family supplement may increase your benefit rate up to 80% of your average insurable earnings. If you and your spouse claim EI benefits at the same time, only 1 of you can receive the family supplement. It is generally better for the spouse with the lower benefit rate to receive the supplement.
As your income level rises, the Family Supplement gradually decreases, so that when the maximum income of $25,921 is reached no supplement is payable.
There are rules to determine if an unemployment worker qualified for unemployment benefits or not. Those rules have been changing over time; you can check the rules at https://www.canada.ca/en/services/benefits/ei/ei-regular-benefit/eligibility.html. The most common rules are
The information below should be used as a guideline. We encourage you to apply for Employment Insurance (EI) benefits as soon as possible and let us determine if you're eligible.
You need to demonstrate that you:
· were employed in insurable employment
· lost your job through no fault of your own
· are affected by flooding or wildfires
· have been without work and without pay for at least 7 consecutive days in the last 52 weeks
· 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
· are ready, willing and capable of working each day
· are actively looking for work (you must keep a written record of employers you contact, including when you contacted them)
To prove your eligibility and to receive payments you may be entitled to, you're required to complete bi-weekly reports by internet or telephone. Failure to do so can mean a loss of benefits.
You need at least 420 hours of insurable employment to qualify for EI
Number of hours of insurable employment required to qualify for EI
The qualifying period is the shorter of:
· The 52-week period immediately before the start date of your claim. or
· the period from the start of a previous benefit period to the start of your new benefit period, if you applied for benefits earlier and your application was approved in the last 52 weeks
Exception: In some cases, the qualifying period may be extended to a maximum of 104 weeks if you weren’t employed in insurable employment or if you weren’t receiving EI benefits.
By looking at the information above, the EI benefits helps us with some money during our unemployment periods up to a limit period of time. The benefit cannot replace or be equal to our regular pay cheques during employment periods.
If our daily or monthly expense was high during employment periods, we would face hard time without an employment due to sudden drop in income.
It is common that we can not maintain our normal life style’s expense during unemployment periods unless we dip in our rainy or saving funds. Our rainy fund is also limited.
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