Canadian Unemployment Benefits

Continuing the discussion from OK im confused about this one … filling out a job app is bad or beneath certain people now?: I think the topic would be fascinating , too. @Northern_Piper , want to give details about Canada

Well, I’ve been an employee, and in limited circumstances I’ve been en employer, but I don’t have a lot of experience with the nuts and bolts of the system, so I could be wrong.

I do know that it’s a national programme, not a provincial one, so the rules are the same across Canada.

The employer deducts a premium from each employee’s paycheque each pay period, and matches it with an employer’s premium, which is 1.4 times the deduction from the employee’s pay cheque. The employer remits the total of the two amounts to Canada Revenue Agency (equivalent to IRS). CRA in turn remits to the EI Commission to handle payments and to manage the fund.

As far as I’m aware, the premium is the same for all employees, anywhere in the country. It’s based on a rate set each year by the Employment Insurance Commission, a year in advance. The basis for the rate is actuarial estimates to keep the EI fund solvent, on a rolling seven year projection, updated each year. The only way to change the premium set by the Commission is by an order-in-council passed by the federal Cabinet.

I’ve never heard of anything like @k9bfriender 's example, where the premiums went up because of the conduct of a former employee. As I say, I’m not really experienced in the nuts and bolts of the system, but I can’t see anything like that from a quick skim of the EI Act, and I’m pretty sure I would have heard of it it, if it happened regularly. My understanding is that once the premium is set for the year, that’s it.

Employment benefits can be triggered by job loss, seasonal unemployment, and other factors. It also covers parental leave, for both new moms and new dads.

The benefits may be reduced for an employee if they don’t seek new employment, or other factors, but I don’t know the details there.

There are a lot of differences. The first is of course, that in the US each state has different rules. So based on that, I’m going to talk about my own state’s program ( New York )

Unemployment benefits only cover people who have been terminated or had their hours reduced by their employer “through no fault of their own.” You are eligible if you are fired for poor performance, but not if you are fired for misconduct. It doesn’t cover certain types of seasonal unemployment - for example, teachers and other school employees who don’t work during the summer are not eligible for benefits if they will have a job to return to in September , but someone who works full-time at a theme park from May to October usually will be if they haven’t been promised a job next season.

Unemployment insurance does not cover family leave , worker’s compensation or disability - those leaves are covered through actual insurance policies. Employees pay the premiums for disability and family leave, while employers pay the premium for worker’s comp and unemployment , which is another difference from Canada.

The premiums are set once a year, but different employers pay different rates based on their claims experience similarly to how car insurance rates go up for at fault accidents. It’s not just the last employer whose rate goes up , it’s every employer during the base period (which I think is a year). So if someone works for Employer A for six months , quits and goes to work for Employer B and gets fired after two weeks, both employer’s rates may go up next year. ( That seems to be what happened to @k9bfriender ) My understanding is that’s its to make employers pay the price of their practices - a store that routinely hires say ten cashiers and only keeps the five best will pay more in premiums than the one that only hires the five that seem most qualified to begin with. It obviously doesn’t work anywhere near perfectly.

Workers compensation is provincial. It’s based on employer premiums only, and covers disability.

I probably wasn’t clear enough - the difference I was referring to was that unemployment premiums in my state are paid by the employer only while if I understand you correctly, both the employer and employee pay in Canada.

I lost it while editing, but by “disability” , I was referring to non-job related illnesses and injuries.

It’s been a few years since I was the employer instead of the employee, but what doreen describes is pretty much a good outline for how it works where I am. The finer details may differ, but the broad strokes are the same.

The side issue of workers compensation insurance(on the job or job related injury/illness) is a whole ‘nother hairy mess, needs its own thread.

Yes, it is an insurance model - employees pay premiums as well as employers.

There is EI for short-term illnesses, up to 15 weeks.

Longer than that, and non-job-related, and you have to look to CPP:

Employees don’t pay premiums for workers’s comp, which is funded entirely by levies on employers. The difference is that workers’ comp replaces the right of employees to sue their employers for job-related illnesses and injuries. Since employees lost the right to sue, the employers fund the system entirely.

I think @Northern_Piper has covered things nicely, but perhaps I can fill in a few gaps.

First of all, Employment Insurance (“EI”) premiums paid by the employer in Canada are definitely not like car insurance, where the more claims are made, the higher the premiums paid. Companies lose people all the time, through restructuring or layoffs, and if a company is downsizing (sometimes necessary in business), it wouldn’t be right to raise its premiums when the EI people suddenly have a hundred claims from former employees. Unlike a careless driver, a company that lays off people does not present a higher risk, especially if the company is only trying to be more efficient, or to divest itself of a money-losing division.

EI is a line item deduction on a pay stub, but there is a maximum amount that can be paid by the employee annually. Any overpayment (and it does happen, such as when one changes jobs in the middle of the year) can be credited against income tax, or refunded.

Short-term disability (STD) and long-term disability (LTD) are often covered by supplementary insurance policies, given to the employee as a benefit. Of course, we do not have private health insurance policies to offer as a benefit here, but we do have supplementary policies that look after things that provincial health care plans don’t: typically, vision, dental, prescriptions, and STD/LTD. As regards disability, these will often kick in before any government program, such as EI/CPP does, and to the best of my knowledge, you cannot collect both at the same time. As far as I know, the EI/CPP option is there for people who have no supplementary STD/LTD private policy.

While EI is run at the federal level, Workers’ Comp is run at a provincial level. As has been said, it is funded by employers only–in exchange for not having to pay premiums, individual employees have given up the right to sue the employer for injuries incurred on the job. However Workers’ Comp will pay for medical treatment outside the provincial healthcare system: as above, but often also physiotherapy, chiropractic, and mental health care, if necessary. Still, I have, on more than a few occasions, had wannabe-clients who “heard from a guy who knows a guy who says that I can now sue Company X for that injury I got on the job ten years ago.” Sorry, that’s not true, and I cannot help you.