Employment Insurance (EI) and self-employed, farmers and independent workers
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
Income from self-employment other than farming
Income earned from farming
Farm programs that do not affect your 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
Appealing a decision
More Information is available on Employment Insurance...
What you should know...
Generally, when your main means of living is one of the following:
- self-employment;
- 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 or maternity, parental, sickness and compassionate care 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.
To find out about regular or maternity, parental, sickness and compassionate care benefits...
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 can not 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 of the 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 your are working a full working week or not.
Factors to consider are:
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.
If you are not sure of your status as a self-employed person or if you need more information, you should contact your Service Canada Centre or the CRA .
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 or maternity, parental, sickness and 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.
If you are receiving regular, parental or compassionate care benefits, you can earn up to 25% of your weekly benefit or $50, whichever is higher, without changing the amount you will receive from EI for that week. On the other hand, 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.
Income from self-employment other than farming
Any income you earn through self-employment while you are receiving EI must be declared in the week that the services were performed, or the transaction occurred. Your declared income should be the gross amount from self-employment earnings less your operating expenses for that week.
Operating expenses are the costs of running your business, items used to earn a revenue, such as rent, materials, gas, etc... Expenses also include an allowance for depreciation on capital investments directly connected to that income. Payments for income tax, or for federal or provincial pension plans, cannot be deducted as operating expenses. You must keep records of all operating expenses you deduct, and these expenses must clearly relate to the income earned and reported for that week. See examples 1 & 2...
Situations that determine operating expenses can vary even if the occupations are the same. For example, two bookkeepers do exactly the same work. However, one bookkeeper drives a car to the different sites to do the books. The second bookkeeper has the books brought to his office. The travelling bookkeeper can deduct gas spent on work-related travel; the second bookkeeper cannot.
Money you spend for assets that continue to exist and will benefit future operating periods of business are called capital expenses and not operating expenses. These expenses cannot be deducted from your self-employment income. Examples of capital expenses could include a car or truck used for the business, tools that are re-used from one job to another, equipment such as a tractor or cement mixer, and the purchase price of inventory.
You are getting $300 before deductions a week from EI. In that same week you have earned $100 as self-employment earnings and your operating expenses are $30. After you deduct the operating expenses of $30 from your earnings, you declare $70 of earnings for that week. Since $70 is less than 25%, i.e 300$ X 25% = $75, your benefits are not affected that week.
Example 2
You are getting $300 before deductions a week from EI. In that same week you have earned $200 as self-employment earnings and your operating expenses are $80. After deducting the operating expenses of $80 from the earnings, you declare $120 in earnings for that week. Since $120 is more than 25%, i.e. $120 - $75 = $45, your benefits will be reduced by $45 for that week.
Income earned from farming
Any income that you earn from farm operations as well as earnings from sales of farm products may affect your EI benefits. This applies to all farmers including family members who own any portion of the farm and are involved in the operation of that farm business.
These earnings could be from the sale of produce, livestock, grain, wood, etc., or could come from government payments or subsidies to compensate for lost income. Fifteen percent (15%) of your share of the gross sales, of government payment or subsidy is considered to be your net earnings from the farm business. This rule applies even if the farm business has different net earnings for tax purposes (which may be more or less than 15% of gross revenues). The amount must be declared in the week that the sale or transaction is made or the subsidy or payment received. See examples 1, 2, 3 and 4...
What is your share? If you own 50% of a farm business and sales of farm produce in one week are $500, your share would be $250, i.e.500 x 50% = $250.
You are getting $300 before deductions a week from EI and your share from the sale of farm produce is $250 for one week. You must declare $37.50 in that week, i.e. $250 x 15% = $37.50. Since $37.50 is less than 25% of your EI benefits, i.e. $300 x 25% = $75, your benefits will not be affected that week.
Example 2
You are getting $300 before deductions a week from EI and your share from the sale of farm produce is $600 for one week. You must declare $90 in that week, i.e $600 x 15% = $90. Since $90 is more than 25% of your EI benefits, i.e. $300 x 25% = $75, your benefits will be reduced by $15.
Example 3
You are getting $300 before deductions from EI and earn $150 in a week from farm produce sales and $50 the same week from a job off the farm. You must declare $22.50 in farm income, i.e. $150 x 15% = $22.50, plus your earnings from off the farm work of $50, for $50 + $22.50 = $72.50 in total earnings for that week. Since $72.50 is less than 25% of your EI benefits, i.e. $300 x 25% = $75, your benefits will not be affected that week.
Example 4
You are getting $300 before deductions from EI and earn $150 in a week from farm produce sales and $100 the same week from a job off the farm. You must declare $22.50 in farm income, i.e. $150 x 15% = $22.50, plus your earnings from off the farm work of $100, for $100 + $22.50 = $122.50 in total earnings for that week. Since $122.50 is more than 25% of your EI benefits, i.e. $150 x 15% = $22.50, your benefits will be reduced by $47.50.
Remember to keep records of all costs deducted and save the receipts for all sales of farm produce.
topFarm programs that do not affect your EI benefits
Some farm programs are not considered subsidies and would not affect your EI benefits :
- Elevator company advance payments;
- Canadian Wheat Board advances;
- Crop and hail insurance payments;
- Prairie Crop and Provincial Drought Assistance Program payments;
- Farm Purchase Program — interest rebate — payments;
- Federal excise gasoline tax refunds;
- Advance Payments Program loans — Agricultural Marketing Programs Act;
- Crop insurance payments — Farm Income Protection Act; and
- Loans — Farm Improvements and Marketing Co-operatives Loans Act (FIMCLA).
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.
topYou 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.
topYou 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.
topYou 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, parental, sickness or compassionate care benefits.
topYou 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 or maternity, parental, sickness or compassionate care benefits.
topYou are an elected public official
As a 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.
topProfessional people
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.
Appealing a decision
If you disagree with an EI related decision you have the right to appeal. Or, if you are simply looking for other sites that will give you detailed information about other appeals cases and the principales used by Human Resources and Skills Development Canada (HRSDC) in decision making: