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 email@example.com 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.
Hi Alan – I have the following question regarding the EI implications for both ROE (insurable earnings and hours) and T4 – Insurable Earnings and EI deduction –
for example > an employee worked 2 hours OT at 1.5 (rate is $15.00 / hour) = $45.00 of earnings in the current pay period but would like to BANK these amounts to be paid out in the future
In this case I have the following question concerning the EI implications.
1 – ROE – when would these earning be considered insurable and how many hours would be applicable ( 2 or 3)?
2- T4 – when would the EI deduction be applicable and when the would the applicable be considered insurable for T4 reporting?
Thanks for your help
Banked overtime is insurable and would appear on a T4 when the time off (insurable hours ) is subsequently taken or the overtime paid out in cash (no hours).
Alan R. McEwen
Alan McEwen & Associates
PO Box 144 Station Main, Qualicum Beach, BC V9K 1S7
250-228-5280 in the Pacific time zone
Where a part time employee is paid 4% vacation on each cheque, meaning that their legislated time entitlement is unpaid are the unpaid hours s considered insurable for EI purposes?
No. The unpaid vacation time taken by employees who are paid vacation on each pay day is not insurable as to hours. Of course, the vacation pay is an insurable earning when paid. But effectively, employees paid vacation pay every pay period don’t get the same number of insurable hours as employees who take paid vacation time.
Hi Alan, an employee who is on WCB gets paid through salary continuance. Are those hours associated insurable? Thank you.
Trying to figure out insurable hours for following situation. We have a regular part time employees who make 16.50 an hour. If they do asleep night shifts they recieve a flat rate of 108.50. These night shifts are 10 hrs long. Because the flat rate calculates out to less than their regular wage how do we calculate insurance hours in this case. Your response would be greatly appreciated.
Tannis, the insurable hours are the 10 hours in the shift. Here, the actual hourly rate doesn’t matter. This means you either have to enter 10 hours at a lower rate or enter both a flat 10 hours and a flat $108.50 in earnings.
Hope this helps, Alan
Trying to find some literature that is a little more specific in regards to when a company chooses to grant paid Bereavement Leave, are those hours insurable? I say yes? I think it could be viewed as salary continuance.
Janice, all forms of paid leave are insurable hours, provided there would otherwise have been insurable hours. This is based on section 10.01 of the EI Regulations. If this leave is paid for at an hourly rate, then the number of hours paid for are insurable. It gets a little more complicated if the pay is not related to the time taken off, i.e. a lump sum payment. In that case, the insured hours are the smaller of either the hours that would otherwise have been worked or the hours taken off divided by the person’s regular hourly rate. Hope that helps. I don’t think you will find anything that specifically address bereavement leave, but so long as the leave is paid for, the reason for granting the leave doesn’t matter.