It might seem odd, that while the primary requirement for EI insurable earnings is that they be paid to employees, by contrast insurable hours aren’t always hours actually worked. A good example of this is banked overtime, taken subsequently as time in lieu; in this situation, the overtime hours worked aren’t insurable, while any later time off is.
If time doesn’t have to be actually worked to be insurable, how then are insurable hours determined? There are four basic variants on these rules.
Hourly Paid Employees
For employees paid by the hour, insured hours are those which are both worked and paid. Here the phrase “paid by the hour” also covers employees we might ordinarily think of as being paid by salary. For example, while regular pay might be a salary, such employees may also receive overtime pay or have their regular pay reduced for absences, starting late or leaving early. When salaries are converted to an hourly basis and paid only for the actual hours worked, these are effectively employees “paid by the hour”. By contrast, for salaried employees whose pay doesn‘t vary based on the actual time worked, insurable hours are normally the regular hours of work, as defined in the terms and conditions of employment.
On-Call and Waiting
Some employers require their employees to be available on an “on-call” basis. IT staff are often required to carry a cell phone during the weekend, to respond to urgent systems or support issues. In such circumstances, insurable hours are only recognized if the pay associated with being on-call is at least as much as for regular work hours. It‘s common for employees to be paid a flat rate for being on-call, i.e. $125 for an on-call weekend. As such, there would be no insurable hours, since this payment would normally be considerably less than employee hourly rates for the equivalent time.
Employees sometimes report for work and are asked to wait, on the premises, while the employer determines if they‘re going to be needed. For example, in a shipping and receiving department, an important delivery may be late and there may be nothing to do until it arrives. If the waiting happens on the employer premises, the full waiting time is insurable, so long as employees are paid at least something for that time. In these circumstances, the employment standards may require that employees be paid at least the minimum wage for 2 or 3 hours (depending on the jurisdiction), when employees report for work. However, if employees are sent home after waiting for 30 minutes, this half-hour is insurable, even if employees have to be paid for 3 hours at the minimum wage. However, there are no insurable hours if the waiting happens other than on the employer’s own premises.
Paid Leave and Non-Working Days
For ROE reporting purposes, the term “paid leave” covers several different situations: paid time off in lieu of overtime; paid days off work for statutory holidays; notice periods, paid as salary continuance without actual work; and paid vacation time taken. All of these are situations where employees are paid, but not required to perform actual work.
When employees are still employed, and paid, but excused from work, the insurable hours are the regular hours of work for which they are absent. Again, the simplest example is paid time off in lieu of overtime. If overtime hours are banked and subsequently paid out, time taken in lieu is recognized as insurable hours, not the actual overtime worked.
However, there are two exceptions to this rule.
First, if the day, typically a statutory holiday, would not normally have been a working day for the employee or employees concerned, there are no insurable hours. In Ontario, when a statutory holiday falls on a non-working day, employers may either pay statutory holiday pay for that day (with no further time off) or recognize another, otherwise working day as the statutory day and pay statutory holiday pay for that day.
Janice works in a women’s clothing store, as a sales associate, in Waterloo, Ontario. Her normal hours of work are Tuesday to Saturday. Monday, September 8 is Labour Day in 2015. Janice’s employer pays her the statutory holiday pay owning for the 8th and Janice worked her regular hours during the remainder of that week. For ROE reporting purposes, there are no insurable hours for Janice’s Labour Day statutory holiday pay.
The other exception deals with work on a statutory holiday. When a person works a statutory holiday, the insurable hours are the greater of the hours actually worked and the hours that the person would otherwise have normally worked on that day.
Rodrigo works on a casual basis in an Edmonton warehouse. He doesn‘t normally work Mondays, as that tends not to be a busy day for deliveries or shipments. However, October is an unusually busy month and the employer asks Rodrigo to work 5 hours on Thanksgiving. Those 5 hours are insurable, because they are greater than the hours that Rodrigo would normally have worked on a Monday (which is zero).
Alan McEwen is a Vancouver Island-based HRIS/Payroll consultant and freelance writer with over 25 years’ experience in all aspects of the payroll industry. He can be reached at firstname.lastname@example.org or (250) 228-5280. Alan McEwen & Associates is currently offering a series of Vancouver Island payroll training seminars. For information on upcoming seminars, signup to our email list.