In one of the opening episodes of the CBC hit “Schitt’s Creek,” Johnny Creek tries to obtain Employment Insurance benefits but is turned away because he’s never paid into the program. As a small business owner, Johnny could have avoided that situation if he had just signed up for EI special benefits. If you are self-employed, you don’t have to contribute to the EI program, but if you want the peace of mind of these benefits, you should consider signing up.
If you own your own business, you may register for special benefits. This also includes people who own more than 40% of a corporation and farmers. However, if you are a contract worker such as a barber or taxi driver, you should use the regular EI program. Additionally, if you are a fisher, you do not have to sign up for the special program, as you are insured under EI Fishing Regulations.
The Canada Employment Insurance Commission handles this program, and you can apply through your My Service Canada Account. To sign up, open your account and select “Employment Insurance for the Self Employed” on the home page. Then, follow the prompts to create your account.
Calculating EI Premiums
As of 2017, EI premiums are 1.63% of earnings up to $51,300. That means you pay $1.63 for every $100 you earn. However, if your earnings exceed $51,300, you do not have to pay premiums on the excess earnings. The rates and thresholds change annually, so it is important to check for updates.
Note that you pay contributions on your income, not your business revenue. To explain, imagine you earn $1,000 in revenue and incur $200 in expenses. In this case, you only pay EI premiums on $800, as that amount is considered your income.
If you cannot work due to an issue covered by EI such as giving birth or needing to take care of a sick family member, you can submit a claim for benefits. You must pay premiums for at least 12 months prior to making a claim. You can request benefits online. The process takes about an hour, and you need your Social Insurance Number, address, and other relevant details.
Amount of Benefits
If you submit a claim, you receive 55% of your insurance earnings per week. As of 2017, the maximum amount of insurable earnings is $51,300. As a result, the maximum weekly EI benefit is $542.60. If you work part time while receiving benefits, you do not get the full amount of your payment, but the reduction varies based on the type of leave and the amount you are earning.
Working Two Jobs
If you have another job in addition to your self-employment, you may opt to only pay EI premiums through that job. However, in that case, your self-employment earnings are not taken into account when calculating your EI benefit, and as a result, you may receive a lower amount.