Determine if employment is pensionable and insurable

After determining the employment status, the next step is to see if the employment is pensionable under the Canada Pension Plan (CPP) or insurable under the Employment Insurance Act (EIA), or both.

Steps

1. Review what pensionable employment and insurable employment are

   1. What is pensionable employment

      Under the CPP, pensionable employment includes most employment in Canada under a contract of service (employer-employee relationship).

      However, in certain situations:

      • employees in Canada may not have pensionable employment (for example, some employment at a circus or fair)
      • employment that is partly or entirely outside Canada may be pensionable

      When the employment is pensionable, both the employee and the employer contribute to the CPP. However, if the province of employment is Quebec, they both contribute to the Québec Pension Plan (QPP). To learn more, go to Québec Pension Plan Contributions | Revenu Québec.

      Example: Employment outside Canada is pensionable

      Aya works for SunCan in Saskatoon, Saskatchewan. She is an expert on the new payroll program. Her employer asks her to help train colleagues at SunUS, a factory in California, for two months. Because she ordinarily reports for work at her employer's establishment in Canada, her employment is pensionable.

   2. What is insurable employment

      Under the EIA, insurable employment includes most employment in Canada under a contract of service (employer-employee relationship).

      However, in certain situations:

      • employees in Canada may not have insurable employment (for example, when the employer and the employee are related and they are not dealing at arm's length, or when the employee is a shareholder who controls more than 40% of the voting shares of the corporate employer)
      • the employment of certain workers who are not employees may be insurable (for example, the employment of barbers and hairdressers, or fishers)
      • employment that is partly or entirely outside Canada may be insurable

      When the employment is insurable, both the worker and the employer contribute to employment insurance (EI).

      Example: Employment of an employee is not insurable

      Martin and his sister Nadia are both employees of Garage MNO Inc. Martin is in charge of staffing, accounting, and client service. Nadia is a mechanic who supervises the employees. They both receive a set salary every week and are entitled to vacation and health insurance. They each own 50% of the voting shares of Garage MNO Inc. Their employment is not insurable because they each control more than 40% of the voting shares of Garage MNO Inc.

      Example: Employment of a worker who is not an employee is insurable

      Julia works as a hairdresser for Hair Salon Inc., a hairdressing business owned and operated by Miguel. Julia rents a chair, and brings her own tools, such as scissors, hair dryers and hair products. She has her own list of clients. She also sets the price of her services and makes her own schedule. Although she is not an employee, her employment is insurable under the Employment Insurance Regulations.

2. Consider specific situations, professions, or industries that can have an impact on whether the employment or earnings are pensionable or insurable, or both

   Category	References
   Agriculture and horticulture	CPP/EI ruling: Agriculture and horticulture Payroll: Seasonal agricultural workers program
   Barbers and hairdressers	CPP/EI ruling: Barbers and hairdressers Payroll: Payments and earnings related to barbers and hairdressers
   Business restructuring	CPP/EI ruling: Employer restructuring / Succession of employers
   Caregivers, babysitters or domestic workers	Payroll: Employing a caregiver, babysitter, or domestic worker
   Casual employment	CPP/EI ruling: Casual employment
   Circus, fair, or parade	CPP/EI ruling: Circus and fair Payroll: Circus, fair, parade (Employment in)
   Drivers	Payroll: Payments and earnings related to taxi drivers and drivers of other passenger-carrying vehicles
   Employment outside Canada	CPP/EI ruling: Employment outside Canada Canada's international social security agreements Payroll: Employment outside Canada
   First Nations workers	CPP/EI ruling: Indian workers and the Canada Pension Plan Payroll: Payments to First Nations workers
   Fishers	CPP/EI ruling: Fishers Payroll: Payments to fishers
   Not dealing at arm's length	CPP/EI ruling: Not dealing at arm's length for purposes of the Employment Insurance Act Payroll: Hiring a family member or a related person
   Pensionable and insurable earnings	CPP/EI ruling: Pensionable and insurable earnings
   Placement agencies, employment agency workers and temporary help	CPP/EI ruling: Placement / employment agencies Payroll: Placement and employment agency workers Employees of temporary help service firms
   Police officers	CPP/EI ruling: Police forces and extra duty Payroll: Special or extra duty pay for police officers
   Religious sects	CPP/EI ruling: Religious sects and the Canada Pension Plan
   Rescue operations and emergency services volunteers	CPP/EI ruling: Rescue operations / Abating a disaster Payroll: Emergency services volunteers
   Tenure of office and directors' fees	CPP/EI ruling: Tenure of office Payroll: Directors' fees
   Tips and gratuities	CPP/EI ruling: Tips and gratuities Payroll: Tips received by employees
   Wage loss replacement plan payments	CPP/EI ruling: Wage loss replacement plans Payroll: Wage-loss replacement plans

   Additional reference: Determine the tax treatment of payments other than regular employment income.

   Learn how to determine hours of insurable employment: Insurable hours.

3. Make a determination

   Determine if the employment is:

   • Pensionable and insurable
   • Only pensionable
   • Only insurable

   If you are unsure of the employment status (employee or self-employed), or whether the employment is pensionable or insurable, or both, you can ask the CRA for a CPP/EI ruling.

References

Legislation

CPP: 6(1)

Pensionable employment

CPP: 6(2)

Excepted employment

CPPR: 15 to 34.1

Employment included in or excepted from pensionable employment

EIA: 5(1)

Insurable employment

EIA: 5(2)

Excluded employment

EIR: 2 to 6

Employment included in insurable employment

EIR: 7 to 9

Employment excluded from insurable employment