What Are Insurable Earnings and Insurable Hours?
Insurable earnings will typically include most of the different kinds of compensation that employers provide to their employees. In most cases, the employers will be providing these kinds of compensations, based on which they will be paying the Employment Insurance (EI) premiums. Service Canada bears the responsibility for determining where they allocate the insurable earnings on the Record of Employment (ROE). However, the Canada Revenue Agency (CRA) is responsible for determining which types of earnings and hours are insurable. For more details, readers could visit the website of Canada Revenue Agency (CRA). Or, they could refer to Annex 1 that details the types of earnings and insurable hours given on the website of Employment and Social Development Canada (ESDC).
What Happens When the Earnings and Hours are not Insurable?
Situations could arise where the earnings and hours are not insurable. For instance, in some cases, the officers might find that an employee does not deal at an arm’s length with the employer. Or, they could find that an employee of a corporation controls over 40 percent of the corporation’s voting shares. In these situations, the employment is not insurable.
Employers need to remember that they would only need to issue Records of Employment (ROEs) for employees who receive insurable earnings and who work insurable hours. Some employers might not be very sure about whether the earnings and the hours of their employees are insurable. In this scenario, the employers would need to contact the Canada Revenue Agency (CRA). The Canada Revenue Agency (CRA) would usually provide them with an insurability ruling. The webpage titled ‘Enquiries about Insurability’ given on the website of Service Canada provides additional information on how employers could contact the Canada Revenue Agency (CRA).
What is an Interruption of Earnings?
An interruption of earnings will typically occur in the following situations:
- When an employee has had or is anticipated to have seven consecutive calendar days with no work and no insurable earnings from the employer
- People typically refer to this situation as the seven-day rule
- For instance, the seven-day rule will apply when employees quit their jobs, get laid off or when their employment is terminated (refer to the exceptions given in the table that follows)
- In case the seven-day rule applies, the authorities consider the first day of the interruption of earnings as the last day for which paid
- For more details, refer to the webpage titled ‘Block 11, Last Day for which Paid’ given on the website of Employment and Social Development Canada (ESDC)
- When an employee’s salary falls below 60 percent of the regular weekly earnings on account of illnesses, injuries, quarantines, pregnancies, the need to care for newborn children or children placed for the purposes of adoption, the need to provide care or support to a family member who is gravely ill with a significant risk of death or the need for a parent to care for a critically ill child
- In these situations, the first day of the interruption of earnings is the Sunday of the week in which the salary falls below 60 percent of the regular weekly earnings
For instance, consider the situation of Kane. Kane usually works 40 hours per week in insurable employment. Kane returns with gross earnings of $1,000 for the hours worked. Kane happens to fall sick. Therefore, he is only able to work for 16 hours per week. Hence, he starts making $400 per week, which is 40 percent of his regular weekly earnings. In this instance, the first week that Kane earns $400 in is the week in which Kane experiences an interruption of earnings. Therefore, the Sunday of that week is the first day of Kane’s interruption of earnings.
It is worth highlighting that whenever an employee starts receiving Wage Loss Insurance (WLI) payments, an interruption of earnings occurs. For more details, readers would need to refer to the webpage titled ‘What to Report on the Block 19 Chart’ given on the website of Employment and Social Development Canada (ESDC).
