Digest of Benefit Entitlement Principles Chapter 24 - Section 3

24.3.0 Qualifying for EI benefits

Once a self-employed person has been registered with the Canada Employment Insurance Commission (the Commission) for 12 months, and their agreement has not been terminated or deemed to have been terminated, they may qualify for special benefits (EIA 152.07(1)).

A claimant must first be able to establish a benefit period, which is the 52-week period, from the start date of an employment insurance (EI) claim, during which a claimant may be paid weeks of benefits to which they are entitled (section 24.4.0 of the Digest; EIA 152.1, EIA 152.11).

An application for benefits must first be completed, and the specific conditions for establishing a benefit period, called entrance requirements, must be met. These are:

• the person must have had an interruption of earnings (EIA152.07(1)(c);  EIR 14.01); and
• the person must have the legislated amount of self-employment earnings in their qualifying period (EIA 152.07(1)(d)).

Once a benefit period is established, for each week they claim benefits, claimants must satisfy the specific conditions according to the special benefits that they are requesting. Additionally, they must continue to experience a reduction in their business activities (that is, a week of unemployment) for each week of benefits claimed.

24.3.1 Choosing between programs

A self-employed person who has registered for the self-employed program may also have had other employment that is insured. They must choose under which part of the EI legislation they want to make a claim for special benefits. If the person qualifies for benefits under EI benefits for the self-employed (EIA Part VII.1) and as an insured worker (employee) (EIA Part I) or as a self-employed fisher (EIA 152.09(1)), they may receive benefits under one part only. In this case, the person must choose on their initial claim for benefits under which part special benefits will be paid. 

In order to receive benefits under Part I of the Employment Insurance Act, a person does not have to enter into an agreement with the Commission and then wait 12 months to make a claim for benefits, as they do under Part VII.1. This can be an important consideration in making the choice between claiming benefits under Part I or Part VII.1.  

It is the Commission's responsibility to provide an individual with sufficient information so that they are in a position to make an informed choice. The choice between self-employment benefits or benefits for employees (including fishers) is final and binding (EIA 152.09(2)).

24.3.2 Interruption of earnings

In order to establish a benefit period, the self-employed person must have experienced an interruption of earnings, and must attest to this in their initial EI application.

An interruption of earnings is considered as having occurred at the beginning of a week where the time devoted to a person's business activities has been reduced by more than 40% of their normal level (EIA 152.07(1)(c); EIR 14.01).

The reason for this reduction in activities must be related to illness, injury, quarantine, pregnancy, the need to care for a child or children referred to in subsection 152.05(1) of the Employment Insurance Act, the need to provide care or support to a family member referred to in subsection 152.06(1) of the Act or the need to provide care or support to a critically ill family member referred to in subsections 152.061(1) and 152.062(1) of the Act.

For example, if a person adopts a child and reduces their usual 40-hour work week to 10 hours per week, they have reduced the time they devote to their business by 75%. In this case, therefore, the person would experience an interruption of earnings.

The reality for the self-employed is that regardless of their need for special benefits, the business may be required to continue or it could face risk of closure. The business of farming is an example where, despite an illness, the farm must be maintained. Accordingly, it is not required that self-employed persons completely cease their self-employment activities in order to be eligible for benefits.

A self-employed person must advise the Commission if their participation in the business increases and they no longer meet this condition. This is because, in order to continue to be entitled to special benefits, a self-employed claimant must prove on an ongoing basis that they are unemployed. A self-employed person is no longer considered unemployed if their participation in the business increases such that they no longer have decreased the time devoted by more than 40% of the normal level (EIR 30).

24.3.3 Self-employment earnings in the qualifying period

In order to establish a benefit period, claimants need to meet at least the minimum required annual earnings from self-employment within their qualifying period.

The qualifying period is the entire calendar year prior to the year in which a claim for benefits commences (EIA 152.08(1)). This is the case regardless of when during the year the self-employed person makes a claim for benefits.

For example, if a self-employed person makes a claim at any point during the year 2019, their qualifying period is from January 1, 2018 until December 31, 2018.

Within their qualifying period, the claimant must meet the set minimum annual earnings, which is the higher of either:

• $6,000
• or the amount fixed or determined in accordance with EIR 11.1, announced yearly in the Summary of the Actuarial Report on the EI Premium Rate. This amount is determined in concert with the indexation of maximum insurable earnings and so it may increase as the average wage in Canada increases

The minimum annual earnings amount must be met with earnings gained from self-employment only; it cannot be combined with earnings from fishing and/or insured earnings from work with an employer (EIA 152.07(1)(d)).

Earnings which fall in one's qualifying period may be only be used once for the purposes of establishing a claim for benefits (EIA 152.08(2)).

The year's earnings are not only required for a self-employed person to meet the entrance requirements but also serve to determine the weekly benefit rate, discussed further in section 24.5.0 of the Digest.

24.3.4 Increased entrance requirements

For those persons who commit misrepresentation against the EI system, resulting in a violation, the Employment Insurance Act prescribes a sanction in the form of an increased entrance requirement (section 18.10 of the Digest).

Depending on the kind of violation (section 18.10.2 of the Digest) and the level, there is a related increase in the amount of self-employment earnings required to qualify for benefits (EIA 152.07(1)(d)(ii)):

• a minor violation requires 25% more earnings
• a serious violation requires 50% more earnings
• a very serious violation requires 75% more earnings
• a subsequent violation requires 100% more earnings

A violation will impact a self-employed person's entrance requirements from the date of the violation for the next 260 weeks or the next 2 established claims, whichever occurs first (EIA 152.07(7)).

The objective of this measure is to eliminate any advantage gained by the person as a result of making false statements and to deter repetition of such conduct. In addition to the increase in self-employment earnings, the Commission can impose penalties or prosecute persons who receive or try to receive benefits by knowingly making false or misleading statements (EIA 38). Any finding for a false or misleading statement may have a notice of violation issued.

[November 2023]