Employment Insurance Benefits for the Self-Employed

Up until a few years ago, self-employed people have few options for employment insurance benefits.

Under the Fairness for the Self-Employed Act, self-employed people can voluntarily register for Employment Insurance (EI). This includes employees of a corporation that control more than 40% of the corporation’s voting shares.

If you are self-employed, you may wish to consider registering for Employment Insurance prior to experiencing a major life event like the birth of a child, or if you became sick or injured, or you had to care for a sick family member.

To be eligible for special EI benefits, you must have:

• Registered with Service Canada and waited 12 months from the date of confirmed registration, and
• Reduced the time devoted to your business by at least 40% due to an eligible event such as the birth of a child, care for a newborn or adopted child, or if you became sick or are caring for a sick family member or child, and
• Earned a minimum amount of self-employed earnings in the calendar year prior to the year a claim is submitted.

Special EI benefits for self-employed people are similar to EI benefits for regular employees. Benefits paid are up to 55% of your weekly average earnings to a maximum amount.

If you are thinking of registering for Employment Insurance, you may want to contact a professional to assist you as the premiums can be considerable over a lifetime of self-employment. If a life event happens and you collect special EI benefits, you MUST continue to pay premiums so long as you are self-employed. Also consider that you have 60 days to cancel after a confirmed registration without having to pay any premiums. However, if you cancel after 60 days, and have not made a claim, you must continue to pay premiums for the remainder of the calendar year. So it is a good idea to fully understand the pros and cons of registering before making a decision.