Employment Insurance (EI) provides short term financial assistance to Canadians who are without income due to job loss, sickness, parental leave or compassion care related absence. The program is financed by employer and employee contributions deducted at source and overseen by the Federal government.
EI benefits represent 55% of employees’ weekly earnings. Changes to the maximum annual insurable earnings were recently announced which has a direct impact on the maximum benefit amount.
What is Changing
Effective January 1, 2020:
- the maximum annual insurable earnings will increase from $53,100 to $54,200
- the maximum weekly benefit amount will increase from to $562 to $573
A detailed history of EI insurable earnings by year is available on the Canada Revenue Agency (CRA)’s website.
Impact to Employers that offer Short Term Disability Plans
In order to be eligible to the EI premium reduction program, employers that offer a private short-term disability (STD) or salary continuation plan must ensure the maximum benefit is at least as generous at the EI maximum benefit. If the maximum weekly benefit is less than $573, the recommendation course of action is to amend the STD policy in order to ensure compliance.
If you do not have a short-term disability policy in place, have not updated your policy since implementation, or have noticed an increase in plan utilization, this could be a good time to review.