Digest of Benefit Entitlement Principles Chapter 24 - Section 2

24.2.0 Eligible participants

In order to be eligible, an individual must meet the definition of a self-employed person and be a Canadian citizen or permanent resident.

A self-employed person is someone who runs their own business; or controls more than 40% of their corporation's voting shares. A business includes all undertakings of any kind except one of holding an office or employment (EIA 152.01).

Barbers and hairdressers who are not the owner or operator of their establishment, those who drive a taxi or other passenger vehicle who do not own more than 50% of their vehicle, fishers, those employed by a placement agency, union members, apprentice and clergy or members of a religious order do not need to register for the self-employed program. People in these professions should apply for Employment Insurance (EI) benefits as an insured employee (EIR 6).

24.2.1 Registering for the self-employed program (entering into an agreement)

Participation in the EI benefits for self-employed program is voluntary. Before being able to make a claim for special benefits, a self-employed person must first register via an agreement with the Canada Employment Insurance Commission (the Commission). An agreement is a prerequisite to accessing the benefits available (EIA 152.02(1)). At least 12 months must elapse from the time the person enters into an agreement before they may become eligible for EI special benefits.

As soon as the self-employed person has completed the registration process, they receive confirmation of having entered into an agreement with the Commission. Note that there are no provisions in the EI legislation to backdate the date an agreement was entered into or the date it was terminated.

Once registered, the self-employed participant is responsible for ensuring that they pay premiums to the Canada Revenue Agency (CRA) when filing their income tax.

24.2.1.1 Québec residents

The Québec Parental Insurance Plan (QPIP) provides maternity, paternity, and parental benefits to workers who reside in Québec, including self-employed workers. However, the plan does not offer sickness, compassionate care, family caregiver benefits for children or family caregiver benefits for adults. The EI program offers these types of benefits to Québec self-employed persons.

To access these special benefits under the EI program, Québec self-employed persons are also required to register with the Commission and pay premiums (albeit at a reduced rate, in consideration of the fact that residents are already paying an annual premium to receive benefits through QPIP).

In cases where a self-employed person residing in Québec enters into an agreement with the Commission and then moves outside of Québec, the person will have access to all EI special benefits, provided 12 months has elapsed from the time the person entered into an agreement. A regulatory provision was made to recognize the interprovincial mobility of these self-employed persons (EIR 76.43).

For maternity and parental benefits only, a self-employed person who has ceased to reside in Québec is deemed to have entered into an agreement for at least 12 months if the following conditions are met:

• the self-employed person has entered into an agreement with the Commission between 12 months before their move and 3 months after their move; and
• before moving from Québec, the self-employed person was covered under the QPIP for at least 12 months.

For example, a Québec resident moves to another province in July 2018 and then enters into an agreement with the Commission in August 2018. Since the agreement with the Commission was made between 12 months before their move and 3 months after their move, the claimant is eligible to apply for maternity and parental benefits without having to wait an additional 12 months. Note that this example considers that the person was covered under QPIP for the requisite 12 months before their move, that is, from July 2017 to July 2018.

24.2.2 Annual premiums payment

The Commission is responsible for setting the annual EI premium rate that is payable by insured and self-employed workers (EIA 66(1)). The Commission also establishes a maximum yearly insurable earnings level up to which EI premiums are paid by an employee or a self-employed person who has entered into an agreement. 

However, it is the CRA that manages the collection of those premiums through the Income Tax Act (EIA 152.24).

Once registered for the EI benefits for self-employed program, self-employed persons are responsible for completing the appropriate forms and steps through their income tax return in order to pay annual premiums on their income through the CRA, starting with the year they registered with the Commission (EIA 152.23). Regardless of when in the year a self-employed person has registered, the amount of premiums payable will be calculated for that whole year (EIA 152.21(1)).

The total amount payable to the CRA is equal to the employee portion of EI premiums paid by insured workers working for an employer. Since Quebec residents already pay an annual premium to receive benefits through QPIP, they pay a reduced annual EI premium rate.

24.2.3 Ending an agreement

Once entered into, the agreement is valid indefinitely (EIA 152.02(2)). As a result, annual premium payments will also continue indefinitely, unless the person cancels or terminates the agreement, which are 2 distinct actions.

24.2.3.1 Cancelling an agreement (within the 60-day grace period)

If a participant requests ending the agreement within 60 days of making the initial registration, the agreement is considered cancelled. In other words, it is deemed never to have been entered into (EIA 152.02(7)). The 60 days are a grace period allowing participants the opportunity to change their mind without incurring the obligation to pay EI premiums.

24.2.3.2 Terminating an agreement (after the 60-day grace period)

If a participant requests ending the agreement after 60 days of making the initial registration, the agreement is considered terminated. However, this action can only be taken if no special benefits were ever paid (EIA 152.02(4)).

If a notice to terminate an agreement is given after the 60-day grace period, premiums must be paid for the entire calendar year in which the self-employed person initiated the termination. The agreement will continue until December 31 of that year. If a self-employed person requires EI special benefits during the same year they requested termination of their agreement, they may file a claim for benefits until the end of that calendar year without having to register again.

However, if a person establishes a claim for benefits after requesting termination, the initial termination notice is considered withdrawn and premium payments will continue indefinitely (EIA 152.02(6)).

24.2.4 Cessation of self-employment activities

The self-employed person who ceases self-employment activities does not necessarily have to terminate their agreement in order to stop the payment of premiums. There will be no premium for them to pay as a self-employed person as long as they do not declare any self-employment income on their federal income tax return. If at a future date self-employment income is reported, the premium collection will recommence.

24.2.5 Subsequent agreement (after termination)

A self-employed person who has terminated an agreement and whose coverage ended on December 31 of that year can enter into a new agreement. The person will be required to wait 12 months from when they entered into this new agreement before they can qualify for EI special benefits.

[November 2023]