Every business with Canadian employees must issue a Record of Employment (ROE) to workers who experience an interruption in insurable earnings. The ROE is a critical document in Canada's employment landscape. Service Canada uses it to determine eligibility for an individual's Employment Insurance (EI) benefits. Employers are legally required to issue an ROE whenever an employee's earnings are interrupted.
The ROE form is essential when Canadian workers apply for employment insurance (EI) benefits. It is vital that employers understand the information required to complete an ROE and know when they are obliged to provide a Record of Employment to their employees. These are legislated requirements and are mandatory for every business with employees in Canada.
We guide you through what you need to know about the ROE as an employer in Canada.
What is a Record of Employment (ROE)?
The ROE is an official form employers must complete and issue to employees who experience an interruption of earnings. The ROE provides Service Canada with a detailed account of the employee's work history with that employer, including insurable earnings and hours. Service Canada uses this information to determine:
- Eligibility for EI Benefits: Whether the employee qualifies for EI benefits.
- Benefit Amount: How much the employee is entitled to receive.
- Benefits Duration: How long the employee can receive EI benefits.
Why Your Business Must Issue a ROE
Service Canada views the ROE form as the most important document when applying for EI benefits.
Because each Record of Employment details the insurable earnings (broken down by pay period) received by a specific worker while employed by your business, Service Canada relies on your ROE to:
- determine if that employee qualifies for EI benefits, what their benefit rate should be, and how long they’re eligible to receive benefits,
- ensure all eligible employees receive the correct EI benefits and
- prevent EI benefits from being misused or issued in error
Some key items you’ll be required to provide on the Record of Employment include your pay period type (bi-weekly or monthly, for example), your employee’s total insurable hours and total insurable earnings, and the reason for issuing the ROE.
With that in mind, you should maintain proper employment history records – including social insurance numbers for all employees – to ensure the information on the ROEs you issue is accurate and complete.
What Are Insurable Earnings?
Insurable earnings include most employee payment amounts, as long as they take the form of cash (or cash equivalents like cheques or direct deposits) and the compensation being made for employment with your business.
Remember: as an employer in Canada, you’re legally obligated to:
- deduct EI premiums from all insurable earnings you pay to employees and
- remit those premiums regularly to the Canada Revenue Agency (CRA)
Insurable earnings usually include vacation pay, sick leave and stat holiday pay, commissions, and bonuses, but the CRA has the final say on what does and doesn’t qualify.
When Must You Issue a Record of Employment
Regardless of whether your employee intends to file a claim for EI benefits, you must issue an ROE every time they experience an interruption of insurable earnings - OR any time Service Canada requests one.
An ROE must be issued when an employee experiences an interruption of earnings, resulting from:
- Layoff or Termination: The employee's employment ends or they are laid off.
- Injury or Illness: The employee stops working due to sickness, injury, or quarantine.
- Leave of Absence: The employee takes maternity, parental, compassionate care, or family caregiver leave.
- Reduction in Earnings: The employee's weekly earnings fall below 60% of their regular weekly earnings due to illness, injury, or other situations.
What is an Interruption of Earnings?
An interruption of earnings is considered to occur any time your employee has (or is expected to have) seven consecutive calendar days without work and insurable earnings - or when their salary dips below 60% of their regular weekly earnings.
While most situations that trigger the issuance of an ROE are clear-cut (when an employee resigns, is terminated, or goes on maternity leave), others are less common.
You must also issue an ROE, for example, whenever an employee’s paid internship ends, when your business implements a change in payroll frequency, or when you switch payroll service providers.
How to Issue a Record of Employment
You have two choices when it comes to issuing ROEs. You can submit your employee’s ROE form using your Service Canada account online or as a paper document. Let’s take a brief look at the process for each method.
Submitting a ROE Online
Service Canada provides several options for submitting your ROEs electronically. If you perform your own payroll, you can take advantage of ROE Web online by either:
- using a compatible software program to upload ROE data directly from your payroll system or
- manually entering your ROE data online at the Service Canada website
ROEs can also be submitted on your company’s behalf by a payroll service provider using bulk transfer technology known as SAT (Secure Automated Transfer).
Submitting a Paper ROE
If you prefer to complete, issue, and submit ROEs as paper documents, you must first request the appropriate forms from your Employer Contact Centre.
Paper ROEs consist of three separate but identical copies:
- Part 1 (the original copy) is issued to your employees so they can submit it to Service Canada when they apply for EI benefits,
- Part 2 (the blue copy) is submitted to Service Canada, and
- Part 3 should be kept by your business and filed with your employment records
Information in an ROE
An ROE includes several critical pieces of information:
Employee Information
- Social Insurance Number (SIN)
- Name and contact details
- Occupation
Employer Information
- Business name and address
- CRA Business Number
Employment Details
- First and last day of work
- Total insurable hours
- Total insurable earnings
- Pay period type (weekly, bi-weekly, semi-monthly, etc.)
Reason for Issuing the ROE
- Codes indicating the reason for interruption (e.g., layoff, dismissal, illness)
Earnings and Deductions
- Detailed breakdown of insurable earnings during each pay period
- Vacation pay, severance, or other monies paid on separation
ROE Reason Codes
- A - Shortage of Work: Layoffs are due to a lack of work or the end of the contract.
- B - Strike or Lockout: Work stoppage due to labour disputes.
- C - Return to school: Service Canada is phasing out the use of this code. Use Code E or J instead.
- D - Illness or Injury: Employee is unable to work due to health reasons.
- E - Quit: Voluntary resignation.
- F - Maternity: Leave related to pregnancy.
- G - Retirement: Employee retires.
- H - Work Sharing: Reduction in work hours under a work-sharing agreement.
- K - Other: Any reason not covered by other codes (requires explanation).
- M - Dismissal: Termination due to employee's conduct.
- N - Leave of Absence: Approved time off for various reasons.
Record of Employment Filing Deadlines
The deadline for filing a Record of Employment with Service Canada varies depending on whether you opt for the electronic or paper version of the form.
If you choose to file an electronic ROE, you must do so within five calendar days after the end of the pay period in which your employee’s interruption of earnings occurs. You should note, however, that if your employee pay cycle is monthly (every four weeks), the ROE filing deadline is whichever date comes first:
- Five calendar days after the end of the pay period in which your employee’s interruption of earnings occurs or
- 15 calendar days after the 1st day of their interruption in earnings
When filing a paper ROE, meanwhile, you must do so within five calendar days of:
- the 1st day of your employee’s interruption in earnings or
- the day on which you first became aware of the interruption
Employer Obligations and Compliance
To comply with Service Canada’s regulations, it is your responsibility as an employer to issue ROEs correctly and on time. Like most payroll chores, however, consistently meeting your Record of Employment obligations can mean taking time away from more lucrative pursuits.
- Accuracy: Employers must ensure all information on the ROE is accurate and complete.
- Timeliness: Adhering to the five-day deadline is crucial to avoid penalties.
- Record-Keeping: Employers should keep copies of all ROEs issued for at least six years.
- Confidentiality: Protect employee personal information in compliance with privacy laws.
Failure to issue an ROE accurately and on time can result in:
- Fines: Monetary penalties imposed by Service Canada.
- Legal Action: Potential lawsuits from affected employees.
- Reputation Damage: Negative impact on employer branding and employee relations.
Final Thoughts
At Enkel, we help you manage your payroll process using cloud-based software that is designed to, among other things, take care of ROE duties for you.
With our payroll management services, we can generate complete and accurate employee ROEs as required and submit them to Service Canada on your behalf, allowing you to get back to running your business.
