New rules about working while getting Employment Insurance

Source: 
Community Legal Education Ontario

People can work part-time while getting most types of Employment Insurance (EI) benefits. Some of the rules about how much of their earnings they can keep changed on August 12, 2018.

This month's On the Radar talks about these changes and gives some examples of how the rules apply.

What's changing?

Old rules

In the past, people who worked while getting EI could keep all of their earnings up to 40% of what they were getting from EI. Or, they could keep up to $75 if that was more.

But everything they earned above that amount was taken off their EI benefits.

Pilot project

For the past 2 years, there has been a pilot projectwith a new way of figuring out how much is taken off.

As of August 12, 2018, the law changed to make this pilot project permanent.

What kinds of EI benefits are affected

The new rules apply to:

Also, starting on August 12, the new earnings rules apply to people who work while on:

Before August 12, people on maternity or sickness benefits had the full amount of their earnings taken off their benefits.

Understanding the new rules

Earnings exemption

The new basic rule is that when someone works while collecting EI benefits, half of what they earn is deducted from their benefits. They get to keep the other half, which is called the "earnings exemption".

Earnings threshold

This earnings exemption applies to the person's earnings up to a certain amount called the "earnings threshold".

This threshold is 90% of the average weekly earnings that was used to calculate their EI benefits.

Any earnings above this threshold are fully deducted from their EI benefits.

Here are two examples for a person who earned an average of $600 a week before applying for EI. This person's earnings threshold is 90% of that, or $540.

And because EI benefits are 55% of average weekly earnings, with a maximum of $547, this person is getting $330 a week from EI.

Example for earnings below the threshold

If this person earns $500 in a week while on EI, they're below their earnings threshold. Here's how to figure out how much they'll have that week:

Amount earned: $500
Half of amount earned: $500 ÷ 2 = $250
Total amount taken off EI: $250
Amount they get
from EI:
$330 - $250 = $80
Total for the week: $500 (work) + $80 (EI) = $580

 

Example for earnings above the threshold

But if the same person earns $700 one week while on EI, they're over their earnings threshold for that week. Here's how to figure out how much will be taken off their EI payment and how much they'll have that week:

Amount earned: $700
Earnings threshold: $540
Half of amount
earned, up to threshold:
$540 ÷ 2 = $270
Amount earned over threshold: $700 - $540 = $160
Total amount taken
off EI:
$270 + $160 = $430
Amount they get
from EI:
$330 - $430 = $0
Total for the week: $700 (work) + $0 (EI) = $700

 

People earning small amounts

Some people getting EI can still choose the old rules until August 2021.

If someone earns only small amounts while on EI, they should contact Service Canada to see if they're eligible to use the old rules and if that might be better for them.

They may want to wait until near the end of their claim to decide. This gives them more time to see if the old rules will let them keep more money.

If they want to use the old rules, they must tell Service Canada no later than 30 days after the end of their claim.

If they make this choice, the old rules will apply to all their weeks of benefits, and they can't change back.