EI allocation rules for ROE reporting

The Record of Employment (ROE) is the document Service Canada uses to determine whether claimants will get EI benefits, the weekly rate for any such benefits and for how many weeks claimants may be paid regular EI benefits.

Correctly completing the ROE means, first of all, identifying the right earnings as being EI insurable, whether for dollars and hours or just dollars alone. But it’s equally important that the correct payroll history is reported for these insurable earnings.

The payroll history reported on ROEs is determined by pay period frequency. For bi-weekly payrolls:

  • Insured hours for up to 27 pay periods are reported in Block 15A;
  • Total insurable earnings for up to 14 pay periods are reported in Block 15B; and
  • Insurable earnings may be listed in Block 15C for either 14 or 27 pay periods.

These limits apply whether there are 26 or 27 biweekly pay periods in the current or prior tax year. Of course, fewer pay periods will be reported, if the period of employment is shorter than these limits.

The pay periods in payroll history reported in Blocks 15A, B and C start with the current period (defined by the pay period ending date in Block 12) and work backward. For an ROE where Block 12 is Friday, May 16, 2014, the pay periods covered by that ROE run back to a pay period starting no earlier than Saturday, May 4, 2013. These two dates, May 4, 2013, and May 16, 2014, mark 27 bi-weekly pay periods.

But how are the correct earnings and hours in the payroll history marked by these two dates defined? Assume an employee worked regular hours on Tuesday, April 30, 2013. If those hours were paid for on the payday for the 1st bi-weekly pay period covered by this ROE (May 4 to 17, 2013), would those hours be included in Block 15A? Would it matter if the hours were overtime instead of regular wages?

To answer these questions we have to look at the insurable earnings allocation rules in section 23 of the Employment Insurance Regulations. For most employees, there are three separate possibilities:

  1. Paragraph 23(1)(b) lists earnings that can roughly be described as exception pay (overtime, bonuses and vacation pay without taking time, etc.). These are allocated in one of two ways:

(a)    The first applies when these earnings are paid because of or after a voluntary leaving, termination or layoff or during an unpaid leave.

Given one of these events, earnings listed in 23(1)(b) are allocated back to the last pay period that regular wages were paid. For example, for an employee laid off on May 16, 2014, where the balance of any vacation pay owing was paid on August 16, 2014, that vacation pay would have to be allocated to the last pay period, prior to lay-off, for which regular wages were paid. Such earnings could last have been paid on the pay period ending Friday, May 2, 2014.

(b)   Otherwise, the earnings listed in 23(1)(b) are allocated to the pay period in which they are paid. For regular pay days, this means the pay period associated with that payday. For off-cycle payments, this means the pay period within which the off-cycle payment is made. For example, for semi-monthly payrolls, if an off-cycle bonus is physically paid on the 1st of the month, that bonus has to be allocated to the pay period that runs from the 1st to the 15th of that month.

  1. Regular wages and salary (i.e. earnings not listed in 23(1)(b)), including statutory holiday pay, are allocated to the pay period when the related time was worked. In the example above, for ROE reporting purposes, regular wages worked on April 30, 2013, have to be allocated to the pay period April 20 to May 3, even though payment for these hours may have been made on the payday for the next pay period (May 4 to 17, 2013).

You would be right in thinking that the above are probably one of the most complex set of rules in any area related to Canadian payroll compliance. So what are the consequences if these rules aren’t followed? I am not aware of any situation where employers have suffered a penalty for wrongly completing an ROE, even if this wrong completion was deliberate. The real impact is on employees. The EI entitlement rules are quite strictly enforced. Employees need a minimum 600 insurable hours to qualify for special benefits, including maternity and parental benefits. If the hours reported on the ROE are short by just one hour, i.e. 599, the claimant will not qualify for special benefits. In other words, allocating insured hours to the wrong pay period can prevent an employee from claiming EI benefits they would otherwise be entitled to.

Alan McEwen is a Vancouver Island-based HRIS/Payroll consultant and freelance writer with over 20 years’ experience in all aspects of the industry. He can be reached at armcewen@shaw.ca, (250) 228-5280 or visit www.alanrmcewen.com for more information.

About Alan R. McEwen

HRIS/Payroll consultant and freelance writer
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