Employment Insurance and self-employed, farmers and independent workers
Table of Contents
- What you should know
- Are you self-employed?
- Are you a self-employed farmer?
- How small are your self-employment activities?
- Types of self-employment
- Natural concerns for your investment
- Family members in the family enterprise
- Earning income while getting EI benefits
- Particular types of independent workers
- You are a tradesperson
- You are a truck owner
- You are a taxi driver
- You are a real estate agent
- You are a commissioned salesperson
- You are an elected public official
- Professional people
- Requesting a reconsideration
More Information is available on Employment Insurance
What you should know
Generally, when your main means of living is one of the following:
- engagement in the operation of your business;
- farming or owning part of a farming business; or
- working as an independent worker.
You are considered to be working a full working week, therefore not unemployed, and cannot be paid EI benefits.
In some circumstances, if you have accumulated enough insurable hours from other work than your self-employment activities you may be paid regular, maternity, parental, sickness, compassionate care, or parents of critically ill children benefits as long as you meet the requirements to receive these benefits.
In order to be paid, you must show that you are actually unemployed for each week you claim EI. You are unemployed if you do not work a full working week. You have to actively look for another job, be willing and able to work at all times. If you are self-employed or if you take up self-employment activities while you are on EI, the work that you do must be so small that you are unable to make a living from it.
For more detailed information on EI special benefits for self-employed people (maternity, parental, compassionate care and sickness benefits), please visit the EI special benefits for the self-employed peoples Web site.
Are you self-employed?
You are self-employed and are considered working a full working week if:
- you work alone as an independent worker or contractor,
- you operate a business, also applies to farming, on your own account,
- you control your own hours of work,
- you are in a partnership or are a co-adventurer.
If you are self-employed, you are not being employed by someone else under a contract of service and having an employer-employee relationship. When there is an employer-employee relationship, a verbal or written agreement exists by which an employee agrees to work, full time or part time, for an employer for a specified or indefinite period of time, in return for salary or wages. The employer decides where, when and how the work will be done, meaning there is a contract of service.
Ruling on employment insurability is the responsibility of the Canada Revenue Agency (CRA). For specific information on whether certain types of work are insurable, please consult Employee or Self-Employed or contact the CRA directly.
Are you a self-employed farmer?
Self-employed farmers are subject to the same criteria as any other self-employment business. But, because the farming sector is unique, there are some special conditions and rules.
If farming is your main means of living, whether as a self-employed farmer or a part-owner of a farming business, you normally cannot receive EI benefits during the period of April 1 to September 30. Regardless of your employment activities off the farm, you are considered as working a full working week.
However, during the period between the week of October 1 and the week following March 31, you may be able to receive EI benefits if you accumulated insurable hours elsewhere while working for an employer and your self-employment activities on the farm are so small that it is not your principal means of living during that period.
How small are your self-employment activities?
When your self-employment activities are so small that a person would not rely on that employment or engagement as a principal means of living, you may not be working a full working week. Therefore, you may be considered unemployed. A full working week is at least the same number of hours worked by other regular workers in that occupation.
Six factors are considered to determine how small your self-employment activities are during the time benefits are claimed. All of these factors need to be evaluated in order to obtain an overview of your situation that will determine if you are working a full working week or not.
Factors to consider are:
- the time spent on these activities;
- the nature and amount of the capital and resources invested;
- the financial success or failure of the employment or business;
- the continuity of the employment or business;
- the nature of the employment or business, i.e., are the self-employment activities in line with your usual occupation or totally different; and
- your intention and willingness to look for and immediately accept other employment.
Types of self-employment
The Income Tax Act of the CRA defines a business and other related arrangements. Here are some types of self-employment that are not usually insured under the EI Program.
- A self-employed worker is an independent worker who contracts services to companies or individuals, controls his or her own working hours and usually does not own the business.
- A sole owner directs all the activities of the business, assumes all authorities and obligations, and is personally liable for its business debts. A sole owner may hire someone to run the operation.
- A partner pools resources with one or more people to operate a business for profit. Partners are jointly liable for the partnership's obligations and debts.
- A co-adventurer in a business, regardless of the legal form of the business, has an interest in it with others and is involved personally in activities deemed necessary for its operation. It makes no difference whether the business is registered or incorporated. This interest in the business can take many forms, from money given or invested to an expectation of gaining from the profits.
In a corporation or limited company, a person who controls more than 40% of the voting shares is not necessarily self-employed, but is still considered uninsurable under the EI Act.
Natural concerns for your investment
If you have no direct involvement or participation in the running of the business, but just a natural concern for your investment you are not necessarily considered to be self-employed.
Simple ownership of all or part of a business does not prove that a person is self-employed. Self-employment is based on a person's work or labour in the business.
Family members in the family enterprise
If you are a family member, i.e. spouse or child, paid as an employee by the family enterprise – business or farm – you are like any other worker and can be paid EI benefits, as long as you meet the requirements for regular, maternity and parental, sickness or compassionate care benefits.
As well, if you are a family member employed outside the business or farm and not personally engaged in any activities necessary to operate the business or farm, you are not considered self-employed even if you own a share of the business or farm.
Earning income while getting EI benefits
If you are self-employed all the hours you work and the total amount before deductions you earn from self-employment or other employment must always be declared while you are claiming EI.
Under the EI Act, if you are claiming regular, parental, compassionate care or parents of critically ill children benefits, you can earn either of the following two amounts without changing the amount of EI benefits you receive:
- 25% of your weekly benefit (if your weekly benefit amount is $200 or more); or
- $50 gross (if your weekly benefit amount is less than $200).
We will deduct any money you earn above that amount from your benefits on a dollar-for-dollar basis.
However, until August 6, 2016, a Working While on Claim pilot project is in place which changes the way earnings you receive while on claim affect your weekly EI benefits.
Under this Working While on Claim (WWC) pilot project, once you have served the waiting period, if your earnings are equal to or less than 90% of your weekly insurable earnings that were used to calculate your benefit rate, your benefits will be reduced at a rate of 50% of your earnings. Any earnings that exceed this 90% threshold, will be deducted dollar for dollar from your benefits.
Any earnings you make while collecting maternity or sickness benefits will be deducted dollar for dollar from your benefits. In both situations, all your earnings must be declared.
Particular types of independent workers
Generally you are an independent worker if you work under a contract for services rather than a contract of service, in this way, you control your own working hours. In this group of workers you have tradespersons, truck owners, taxi drivers, real estate agents, salespersons, elected public officials and professional people.
Types of contract
Contract for services: A contract for services is an arrangement to do a specified job or task for a price for another party or payer usually for a specified period of time. The method for accomplishing the work is determined by the independent worker and not the payer, meaning there is no "boss/employee" relationship.
Contract of service: A contract of service: Is an arrangement, either written or verbal, where an employee agrees to work on a full-time or part-time basis for an employer. The employee performs duties for the employer, in return of a salary or some other form of remuneration. The employer controls and directs the manner in which the employee carries out the duties to be performed.
You are a tradesperson
You are an independent worker pursuing your trade rather than operating a business. Frequently you work in the construction industry under a contract for services and control your own working hours. You are considered to be working a full working week, therefore not unemployed, and cannot be paid benefits for as long as you are engaged in fulfilling a contract.
On the other hand, when you have no contract, you are considered to be unemployed and may be paid EI benefits. You must prove that you are available and looking for work at all times. You must also be willing to accept and seek work as an employee under a contract of service.
You are a truck owner
You are the owner of a single truck that you drive yourself in the hauling of wood, stone or sand on a contract basis. You are considered to be working a full working week, therefore not unemployed, and cannot be paid EI benefits for as long as you are engaged in fulfilling a contract.
On the other hand, when you have no trucking contract, you are considered to be unemployed and may be paid EI benefits. You must prove that you are available and looking for work at all times. You must also be willing to accept and seek work either on a contract basis with your truck or as an employee under a contract of service with or without your truck.
You are a taxi driver
You are working as a taxi driver and your hours of work are not controlled by an employer, you are considered to be working a full working week, therefore not unemployed, and cannot be paid EI benefits.
It does not matter if the taxi is rented, personally owned or driven for someone else, nor the amount of earnings or the number of hours of work you do, as it is an activity which people normally carry out as a principal means of living.
You are a real estate agent
You are employed as a licenced real estate agent selling or purchasing real estate on a commission basis. It is determined that you control your own hours of work. You are considered to be working a full working week, therefore not unemployed, and cannot be paid EI benefits.
If your real estate licence is surrendered, suspended or revoked or if you become unemployed due to illness, maternity or parental reasons, an interruption of earnings occurs for the purpose of starting a benefit period. You may be paid EI benefits, only under these circumstances, as long as you meet the requirements for either regular, maternity and parental, sickness, compassionate care, or parents of critically ill children benefits.
You are a commissioned salesperson
You work as a salesperson under a contract of employment and your earnings from that job consist mainly of commissions, you are considered to be working a full working week, therefore not unemployed, and cannot be paid EI benefits.
If your employment contract terminates or if you become unemployed due to illness, maternity or parental reasons, an interruption of earnings occurs for the purpose of starting a benefit period. You may be paid EI benefits, only under these circumstances, as long as you meet the requirements for either regular, maternity and parental, sickness or compassionate care benefits.
You are an elected public official
As an elected public official within a municipal council, you are in a job where you control your own hours of work. You are considered to be working a full working week, therefore not unemployed, and cannot be paid benefits.
This means that any week contained in the term of an office is a full working week unless the activity required of the mandate is so small that a person would not rely on that employment or engagement as a principal means of living.
Doctors, lawyers or accountants who carry on their activity in their own profession are considered self-employed. Generally they require the services of a least one employee for the clerical work.
If you are a professional worker you are considered to be working a full working week, therefore not unemployed, and cannot be paid EI benefits. It would be very hard for you to show that your employment is so small that a person would not normally follow it as principal means of living.
Requesting a reconsideration
As a claimant, you have rights and responsibilities.
If you disagree with the decision regarding your application for EI benefits, you have the right to request a reconsideration.
Or, if you are simply looking for other sites that will give you detailed information about other appeals cases and the principles used by Employment and Social Development Canada (ESDC) in decision making:
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