Canada Pension Plan and Employment Insurance Explained

Insurable hours

Introduction

This document provides information on how to determine hours of insurable employment.

The Employment Insurance Regulations contain provisions that outline how to determine the hours of insurable employment for different situations. In this article, we look at various situations such as: workers paid on an hourly basis, unpaid earnings, workers not paid on an hourly basis, standby time, hours for periods of leave, and hours of occupations limited by statute or regulations.

Background

The general principle underlying the Employment Insurance (EI) system is that each hour worked, for which remuneration is received, is insurable.

The determination of the number of insurable hours is required to establish entitlement to EI benefits. The hours are reported by the employer on a Record of Employment (ROE), which is required when there is an interruption of earnings.

The employment must be insurable in order for the hours to be insurable. When an employment is not insurable, there are no hours of insurable employment.

For general information about determining whether a worker is an employee or is self-employed, see Guide RC4110, Employee or Self-employed?

Worker is paid on an hourly basis

For a worker to have an hour of insurable employment, the worker must have worked that hour and been remunerated for it. In situations where the worker is paid an hourly rate, the number of hours of insurable employment will be the hours actually worked for which remuneration was paid.

Worker is not paid on an hourly basis

This would include situations where a worker receives a fixed weekly, monthly, or annual salary, is paid by commission, or is remunerated on a piecework basis, etc.

In situations where a worker is not paid on an hourly basis, the number of hours of insurable employment is determined as follows:

• When an employer provides evidence of the number of hours worked by a worker, the hours worked are considered insurable hours. Evidence can include time sheets/cards, written contracts, and pay stubs.
• When an employer does not know the precise number of hours worked by a worker or group of workers, the employer and workers concerned can reach an agreement regarding the number of hours that would normally have been required to earn the remuneration paid. If the number of agreed upon hours is unreasonable then the CRA will make a determination on the number of insurable hours.
• When it is impossible to establish or verify the number of hours actually worked, and there is no contract or agreement on the hours normally required to perform the work, or the parties cannot reach an agreement regarding hours normally required, the insurable hours are the number of hours obtained by dividing the insurable earnings by the current minimum wage in the province where the work was performed. The result cannot exceed seven hours a day or 35 hours a week.

Unpaid earnings

In situations where earnings remain unpaid as a result of an employer's bankruptcy, receivership, impending receivership, or as a result of a complaint filed with a federal or provincial labour authority, the number of hours of insurable employment will be the hours actually worked, or the hours to which the unpaid remuneration is related. Unpaid overtime hours are not insurable.

Note
If the federal or provincial labour authority determines that a complaint was unfounded before CRA makes a determination, we will not recognize the unpaid hours as being insurable. When the labour authority renders a decision regarding the complaint before the CRA makes a determination, the unpaid hours of insurable employment will not exceed the ones recognized by the labour authority.

Standby time

Certain types of employment require a worker to be available for a specific period of time awaiting a request from their employer to work. In these situations, the worker is considered to be on stand-by.

Standby hours will be insurable in the following situations:

• They are paid at a rate equal to or above the rate that would have been paid if the hours were actually worked; or
• When the employee is present (as required under a contract of employment) at the employer's premises waiting for the employer to request his services, these hours, if paid, regardless of the rate paid, are insurable.

Please note that the expression "employer's premises" includes the location where the worker has to execute his work, for example, a forestry worker who is required to be at a cutting site.

Hours for periods of paid leave

All leaves paid for by an employer, such as vacation and sick leave, are included in the total hours worked by the worker. The number of hours of insurable employment will be the hours the person would normally have worked, and for which the person would normally have been remunerated during that period.

In situations where the worker received a lump sum payment for a period of leave, the number of hours of insurable employment will be the lesser of:

• The number of hours that the person would normally have worked and for which the person would normally have been remunerated during the period; or
• the number of hours obtained by dividing the lump sum amount by the normal hourly rate of pay.

Situations involving vacation pay and statutory holidays

Vacation pay

Some employers offer paid vacation leave and other employers offer a minimum 4% vacation pay to their workers.

In situations where a vacation request has been approved by the employer, the hours that the person would normally have worked and for which the worker was paid are considered insurable hours.

There are no insurable hours in situations where payment is made and no leave has or will be taken.

In situations where a worker's vacation pay is paid out on termination of employment, there are no insurable hours.

Statutory holidays

In situations where a statutory holiday is paid in straight time and the holiday is not worked, the insurable hours will be the hours that person would have normally worked.

In situations where a holiday is worked and no leave is given, the day worked equals the actual number of hours worked. The insurable hours will be the higher of either the number of hours worked or the regular hours of the statutory holiday as stated in the employment contract.

In situations where the holiday is worked and paid at time and a half plus leave is given on another day, the holiday worked represents normal insurable hours for the time worked, plus the hours of leave when the leave is taken would also be insurable.

In situations where the holiday time is banked and paid on or after termination of employment, no insurable hours are given as the employee would have been credited with the hours actually worked on the holiday.

Occupations limited by statute or regulations

In some occupations the number of hours worked is limited to less than 35 by a federal or provincial statute. Employees who are employed on a full-time basis, in other words for the maximum number of hours permitted by the legislation, will be considered to work 35 hours a week.

If an employee works fewer hours than the legislated maximum, the number of insurable hours will be proportionate to the number of hours worked in a 35-hour week.

Amounts paid for which no hours are earned

No hour is considered to have been worked when the remuneration is not attributable to a specific work hour:

• advance payments of salary or wages
• incentive payments
• payments for long service
• awards
• four over five plans (year or period of non-work)
• pay equity payments
• pay in lieu of notice
• retroactive pay.

Requesting a ruling

If a worker or payer is not sure of the worker's number of hours of insurable employment, either party can request a ruling to CRA. More information on the ruling process is available in How to obtain a ruling for Canada Pension Plan and Employment Insurance purposes .

For more information

To get more information, call 1-800-959-5525 .

Legislative references

• Section 55 and subsection 97(1) of the Employment Insurance Act
• Section 9 through 11 of the Employment Insurance Regulations
• Subsection 2(2) of the Insurable Earnings and Collection of Premium Regulations

Date modified:

2016-12-20