There are many aspects employers must consider when an employee stops working due to a resignation, termination, or temporary layoff.
This includes how much (if any) notice or pay in-lieu must be given, who will fill the vacant position, and more. Regardless of the way in which employment ceases, employers will most likely need to issue a Record of Employment (ROE) to the departing staff member. ROEs are viewed as the most important document in the federal Employment Insurance (EI) program. A Record of Employment enables employees to receive income replacement while they are in between jobs.
According to the Government of Canada, each year, more than 1 million Canadian employers fill out more than 9 million Record of Employment (ROE) forms for their employees. Despite the frequency in which these documents are issued, even the most experienced employers have questions surrounding the topic. The remainder of this blog will act as a guide to answer some of the most popular questions regarding ROEs.
What is an ROE?
The ROE is a form (either electronic or paper) that employers must issue to employees receiving insurable earnings who experience an interruption of earnings as a result of the cessation of their work. ROEs must be issued even if the employee does not intend to apply for EI benefits and must include details about the employee’s work history with the employer, such as their insurable earnings and insurable hours.
What are insurable hours?
Insurable hours include the number of hours an employee worked during the established qualifying period. To receive EI, the employee needs to have worked a certain number of hours (usually 420 hours) during the qualifying period.
What are insurable earnings?
Insurable earnings include most of the different types of compensation employers provide to their employees on which EI premiums are paid.
What is an interruption of earnings?
An interruption of earnings occurs when an employee has had or is anticipated to have seven consecutive calendar days (not business days) with no work and no insurable earnings from the employer. This is often referred to as the “seven-day rule” and applies when employees quit their jobs, are temporarily laid off, or are terminated by their employer.
An interruption of earnings also occurs when an employee’s salary falls below 60% of their regular weekly earnings due to illness, injury, quarantine, pregnancy, the need to care for a newborn or a child placed for the purposes of adoption, or the need to provide care to a critically ill family member.
When does the “seven-day rule” not apply?
Like many aspects of employment law, there are exemptions to the seven-day rule as discussed above. Special rules and exemptions apply to real estate agents, employees who have non-standard work schedules and commission salespeople.
Why do you need to issue an ROE?
Employers must issue an ROE to Service Canada so that it can be determined if the employee who has experienced an interruption of earnings is eligible to receive EI benefits. ROEs also help determine what the EI benefit amount will be, how long the individual will receive those benefits and ensure that EI funds are not being misused or received in error.
When do you need to issue a Record of Employment?
As detailed above, the most common time a Record of Employment is issued is when an employee experiences an interruption of earnings. However, there are other times an employer must issue an ROE, including but not limited to:
- When Service Canada requests one
- When the pay period type changes
- When an employee stays with the employer but is transferred to another Canada Revenue Agency Payroll Account Number
- When there is a change in business ownership
- When an employer declares bankruptcy
Employers must ensure they issue the ROE within five days after the employee’s last day of work. If the employer delays in issuing the ROE, they may be liable for nominal damages and/or fines.
Do you need to include the reason for issuing the Record of Employment?
Yes. There are codes that an employer must note on the ROE to indicate the reason for which the document is being issued. Employers should choose the specific code that best fits the reason for the interruption of earnings to avoid additional questions from Service Canada.
What are the ROE codes and what do they mean?
There are currently 30 different ROE codes that can be found on the Government of Canada website. Some of the most popular codes include:
A00 – Shortage of work / End of Contract or Season
D00 – Illness or Injury
E00 – Quit
F00 – Maternity
G00 – Mandatory Retirement
K00 – Other
M00 – Dismissal (typically interpreted as “with cause” dismissal and often makes an employee ineligible to receive EI)
N00 – Leave of absence
When can you skip issuing a Record of Employment?
ROEs do not have to be issued for part-time, on-call or casual workers. Additionally, employers engaged in work with independent contractors do not need to issue an ROE at the end of the service contract.
Do you have questions about issuing ROEs?
Peninsula can help. Our experts can help you develop company policies as well as with any other HR, health and safety, or employment advice you need. See how we have helped other small and medium businesses get their business compliant with provincial legislation. To learn more about how our services can benefit your business, call an expert today at 1 (833) 247-3652.