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Under regular EI benefits, your weekly benefit is deducted roughly by 50% of your weekly earned gross income. This same rule applies to special benefits as well.

Earnings paid or payable by your employer at the end of your employment, while you are receiving benefits or later for a period that benefits were claimed, generally affect payment of your benefits. Furthermore, some earnings paid or payable upon separation can:

  • Delay the start date of your claim
  • Delay the 1-week waiting period to serve
  • Delay the date on which you begin receiving benefits
  • Reduce the amount of benefits
  • Provide the right to an extension of the benefit period

It is important to note that section 35 of EI Regulations determines what income constitutes earnings, while section 36 of EI Regulations sets out how those earnings are to be allocated.

What is “earnings” under EI context?

Earnings are any amount paid or payable that is related to or originated from employment, such as:

  • Wages or salary and commissions
  • Monetary employment benefits, such as vacation pay, severance pay, wages in lieu of notice, retirement pension, statutory holidays, bonuses, etc
  • All other employment benefits, monetary or otherwise, such as housing, meals, insurance coverage, etc
  • Self-employment income

Compensation received following loss of your employment or from other sources may also be considered as earnings for benefit purposes, for example, certain workers’ compensation benefits, group wage-loss insurance. However, other moneys and payments for benefits not related to employment do not constitute earnings for benefit purposes, for example, alimony payments, lottery winnings or inheritances.

You are responsible for reporting all your income

You are responsible for reporting any income paid or payable to you, as well as any benefits, cash or other, received from an employer or income that you earn from any self-employment activities.

For us to be able to determine whether the amounts or benefits paid or payable are earnings for EI benefit purposes, we must determine the true nature of the payment. To reach this decision, we may ask the following questions:

  1. What does the payment represent, meaning, the amount and type of payment?
  2. Who made the payment?
  3. Why was the payment made? Meaning the reason for the payment and the terms and conditions under which the payment was made.
  4. Where did the payment come from and where is it going?

The earnings considered are the amount before deductions. Earnings paid in foreign funds are converted into Canadian dollars at the current exchange rate at the time the earnings were paid or became payable.

The various types of earnings

Several types of earnings may be paid or payable upon separation or during a benefit period. A type of earnings, however, can be paid for different reasons. You can refer to the earnings chart to find out if a payment constitutes earnings for benefit purposes and, if so, how those earnings are allocated.

Your normal weekly earnings

Some earnings shown on the earnings chart are allocated at the rate of your normal weekly earnings. Generally, your normal weekly earnings correspond to your regular weekly salary, before deductions, from your employment that paid the earnings. When you receive a weekly wage, the normal weekly earnings are calculated by multiplying the number of hours normally worked per week by the hourly wage rate.


What are earnings paid or payable?

When it is determined that a payment is earnings, we must allocate those earnings. To be able to do this, it must be determined whether they have been paid or are payable.

Earnings are considered “paid” when you have actually received and accepted the payment. The concept of “paid” combines the offer of payment from your employer or other individual with your acceptance of the payment. Earnings are also considered “paid” when you are expecting the payment to be in your possession shortly, usually in the employer’s next payroll run. This is generally the case with the following earnings: wages and salary, vacation pay paid with each pay, periodic pensions and separation pay. Earnings are also considered to have been paid when the amount is directly deposited in your bank account or used as satisfaction of a debt of yours.

Earnings are “payable” when your employer is required to pay you and you can legally demand payment. For EI purposes, earnings are only considered payable when the obligation of the employer or other person to pay the earnings is immediate and not when the obligation to pay occurs at a later date. This means that only earnings that are payable immediately will be allocated for EI benefit purposes. Earnings that are due sometime in the future will be considered and allocated when the employer is obligated to pay them and only if the payment is for a period when benefits were claimed.


Statutory holidays

The term “Statutory holidays” refers to legal holidays and provincial holidays designated by the federal or provincial government. Employers often use the same term to refer to those holidays set out by a custom or a collective agreement.

Earnings for a statutory holiday are part of the overall earnings from any job. Payment received for a statutory holiday is allocated to the week in which the statutory holiday in question falls.

A statutory holiday can fall before or after lay-off or separation or during the benefit period. Payment made for specific statutory holidays is, nonetheless, always allocated to the week in which the statutory holiday falls because the reason for the payment is, in fact, your entitlement to the statutory holiday and not by reason of any lay-off or separation.

When the employer and the union agree that a statutory holiday be observed on another day, the earnings paid for that statutory holiday are allocated to the week in which that new day falls, to the extent that such terms are dictated by a custom or a collective agreement. However, if it is shown that the change in statutory holiday was made solely to bypass the EI Act, the earnings will be allocated to the week of the actual statutory holiday.

For Example

You have been receiving EI benefits since September 22, 2019. On November 20, 2019, your former employer pays you $375.00 for the statutory holidays of December 25, 26, 2019 and January 1, 2020.

This income constitutes earnings and is allocated as follows:

  • December 22 to 28, 2019: $250 for the statutory holidays of December 25 and 26, 2019
  • December 29, 2019 to January 4, 2019: $125 for the statutory holiday of January 1, 2020

In this example, even though your employer paid the 3 statutory holidays as a lump sum amount, it is allocated to the week in which each statutory holiday in question falls.

Pensions (Exempted earning)

Pension income resulting from any employment constitutes earnings for benefit purposes. These include:

  • Employer pension plans, including employment as a member of the Armed Forces or any police force. This also applies to pensions from employment in another country, whether or not the employment was insurable
  • The Canada Pension Plan
  • The Quebec Pension Plan

Pensions income resulting indirectly from employment do not always constitute earnings. In the following cases, all or part of the pension is not considered to be earnings:

  • The pension of an individual who requalifies for EI benefits after the date on which payment of the pension begins
  • Disability pensions from employment as well as disability pensions from the Canada Pension Plan or Quebec Pension Plan

The following pensions do not arise from your employment and, for that reason, do not constitute earnings for EI benefit purposes:

  • Personal Pension Plans such as a Registered retirement savings plan (RRSP) or a Registered retirement income funds (RRIF)
  • Additional Voluntary Contributions (AVC) to a pension fund
  • Survivor’s pensions or dependant’s pensions
  • The portion of the pension payable to you as a spouse — in the case of legal separation or divorce
  • Veteran’s pensions from the Department of Veterans Affairs

The following pension earnings are not considered payable until the pension or annuity arising from these pension credits becomes payable:

  • Pension credits left in a pension plan to support a deferred pension or used to purchase an annuity. These pension credits are not considered as earnings for EI benefit purposes until the person applies for the deferred pension or the deferred annuity becomes payable.
  • Pension credits transferred by the employer to a locked-in, non-commutable RRSP, such as a Locked-in Retirement Account (LIRA) in Manitoba or a Compte de Retraite Immobilisé (CRI) in Quebec that is locked in and non-commutable until retirement age. These pension credits are not considered as earnings for EI benefit purposes until an annuity is purchased with the proceeds from the account.
  • Pension credits transferred to the pension fund of another employer if the new pension plan permits this transfer. The pension credits are not considered as earnings for EI benefit purposes until a pension arises from the new pension plan.

The pension amount before deductions is allocated to the period for which it is paid or payable, no matter when or how it is paid. How the pension amount will be allocated varies according to whether it is paid on a periodic basis or as a lump sum.

Click here to find out the list of deductible earning chart on Service Canada website.