As the ranks of self employed Canadians increases, there is a growing problem of employment insurance coverage.  What is the problem?  Self employed business owners previously were not eligible for employment insurance coverage.  As it’s especially applicable to the female entrepreneurs, business income could dry up quickly while on maternity leave.  With no business income or employment insurance benefit, the financial situation could get ugly unless there is substantial savings.

This has recently changed however with a new bill introduced for employment insurance for the self employed.  This bill extends to maternity, parental, sickness and compassionate care leave for the self employed.

According to The Telegram, here are some of the details:

..entitled the Fairness for the Self-Employed Act, would provide the following:

Maternity benefits of up to 15 weeks for mothers, beginning up to eight weeks before the expected birth date.

Parental benefits of up to 35 weeks for biological or adoptive parents while they are caring for a newborn or newly adopted child; they may be taken by either parent or shared between them.

Sickness benefits of up to 15 weeks for those unable to work because of sickness, injury or quarantine.

Compassionate-care benefits of up to six weeks for those who have to be away from work temporarily to provide care or support to a family member who is gravely ill with a significant risk of death.

The article goes on to state that the self employed individual would have to pay the same premium as a salaried worker.  However, I assume that the business would have to cover the employer portion of the EI premium.

For example, the maximum insurable earnings for 2010 is $42,300.  The employee rate is 1.73% ($731.79) with the employer rate being 2.422% ($1024.51).  If a self employed person were to opt into the employment insurance program, I would suspect that they would have to pay the full 4.152% or $1756.50 per year.

Another important point is that self employed individuals can also opt in or out of the program at the end of any tax year unless they have claimed benefits.  If they have claimed benefits, they must continue to pay EI premiums as long as they are self employed. Depending on how long term the business is expected to last, paying the premiums can get expensive.

I may be 100% self employed someday and it’s always comforting to know that there is a safety net out there.

What are your thoughts on employment insurance for the self employed??


  1. Ramona on November 16, 2009 at 9:29 am

    It’s way too expensive if the self employed person has to fund the entire premium themselves. 15 weeks of benefits at the maximum rate would be about $6,700. The yearly premium, assuming no increases is $1,756. In four years you could self insure, and have the money for other things if not needed for maternity or sickness. The self employed have always known there are no EI benefits, and plan accordingly.

  2. mp on November 16, 2009 at 10:01 am

    The opting in and out part means waged workers and their employers will be subsidizing the self-employed. Hardly seems fair, especially since many waged workers who pay into EI don’t even qualify for benefits when they’re laid off. If EI is going to be extended to the self-employed it should be on the same terms as CPP – mandatory, no opting in and out. After all it is an insurance.

  3. This is why I signed up with ING Direct on November 16, 2009 at 11:08 am

    @ Ramona: I agree

    Thanks for the useful article FT !

  4. andrewbpaterson on November 16, 2009 at 11:11 am

    I will look into this and possibly set it up for my wife – a stay at home hair dresser.
    Thanks, FT!

  5. Four Pillars on November 16, 2009 at 11:13 am

    It’s not worth doing for the mat leave alone but there is the possibility of true unemployment where you could get 50 weeks of benefits which might make it worthwhile.

    Even in that case I would probably self-insure.

  6. ldk on November 16, 2009 at 12:25 pm

    I was self-employed for 12 years (owned a retail store) and while the option of EI benefits/mat leave would have been nice, they don’t begin to address the bigger problem of “who’s minding the store?” while we are off work.

    As with all of the other ‘safety nets’ (pensions, health/dental benefits, workers comp, sick days, etc.) the self-employed/small business owner is best served by careful planning and self-insuring. (and really, “mat leave” is just something you give up in the trade off when you decide to forgo traditional employment….at least in my experience.)

  7. Kevin Beitel on November 16, 2009 at 12:40 pm

    Since moving to Alberta and entering the workforce after graduating from Post-Secondary school in 1996, I have paid in to the EI. I had been fortunate to have worked and built my skill set. Come April 2009 I was laid off for the first time in my life. I put in my claim for EI and was only eligible for 39 weeks of benefits… Paying EI premiums for 13 years and not one claim for only 39 weeks. What a Joke!!!!! I was called back not 20 days later and did not recieve any benefits. That is understandable, I am just burned that I was only eligible for 39 weeks of benefits…I know that this does not have much to do with self-employed EI benefits, but I would not trust any government agency for anything. The cost of relying on something(that isn’t very much) is just to expensive.

  8. Mike on November 16, 2009 at 12:52 pm

    The fact that they don’t cover losing your job definitely doesn’t make it appealing to me. I’m a consultant working for a high tech firm – they don’t want to make me full time because they don’t want to increase their headcount. But if the contract was not renewed I’d be out of work and even if I was paying into EI, I wouldn’t qualify for benefits. Might as well save my money.

  9. Subversive on November 16, 2009 at 12:55 pm

    As an IT contractor, I doubt I’d opt into this, even though I believe I technically would qualify as self employed. It seems unlikely that I’d be eligible to make a claim under most of the circumstances where my contracts might end. I’ll need to look into the details more closely, but my sense is I wouldn’t likely opt in.

  10. Tim Landry on November 16, 2009 at 12:56 pm

    OH BOY WILL THEY EVER BE FLOODED WITH DISABILITY CLAIMS FOR STRESS! Another “we do not think” move by a government

  11. Alexandra on November 16, 2009 at 1:54 pm

    I don’t really think it’s a good idea to enable people to opt in and opt out. If I were a self-employed woman, I would simply opt-in when I became pregnant, go on maternity leave, and then opt-out as soon as the leave was over. This is a loophole that needs to be addressed.

  12. FrugalTrader on November 16, 2009 at 2:04 pm

    Alexandra, that’s the catch, once you opt in and obtain benefits, you cannot opt out.

  13. jt on November 16, 2009 at 2:37 pm

    I thought being “self employed” was to avoid paying payroll taxes and earning income, less expenses for a profit. The profit is your EI fund. Save your money. I’ve been self employed for 30 years. Any downturn in the economy, I’ve always drawn money saved from my profitable self employment to offset any decrease in earnings. I my POV, you’re no longer “self employed” paying payroll taxes. It’s bad enough paying GST on your earnings, over and above what taxes on net income are. Just a Bar Code on my forehead stamped “property of the federal government” like I was a piece of rental equipment. Don’t forget that governments use those EI premiums to “balance” their books, too.

  14. Cam Birch on November 16, 2009 at 2:52 pm

    I would definitely not opt in for those benefits. Unless I was on sick leave half of the time there would be no real benefit from EI. Since it doesn’t appear to actually protect you against job loss which is the only area that would really matter to me. The benefits they are talking about are interesting but a terrible waste of money. If you are eligible for half the benefit you should pay half the costs.

    Actually for that amount of money you should be able to get pretty decent wage replacement insurance from an insurance company. Real insurance might be a much better option because the terms are “negotiable” (or at least printed out on a document you sign) and most have return of premium if you never make a claim.

  15. zud on November 16, 2009 at 3:56 pm

    i thought most mothers take a year off for maternity, is this because they combine the 15 weeks maternity (ie female only) then take the other 35 weeks parental leave for themselves? so a total of 50 weeks of benefits?

    are both leaves paid at the same rate?

    the first commenter noted that the 15 weeks paid at 6700$ would be covered by 4 years of premiums however what would the total be after 15+35 weeks?

    i’m self employed and already have to pay all my cpp, plus business expenses but i remit gst via quick method.

    how long before we know if it passes?

  16. Mike Graf on November 16, 2009 at 4:33 pm

    I think they should just turn EI into a account that you can access when you have a legitimate need. You/the Employer (one and the same in the case of self employed) pay into it, and they keep it in an account. When you need it you can remove money until the account is empty, then no more free ride. And you can empty the account when you retire.

    It forces people to save for when they might be unemployed and it stops any form of abuse because in the end its just your money you’re spending.

    my 2c
    -Mike Graf

  17. Tax Guy on November 16, 2009 at 5:15 pm

    My wife is self employed. I can tell you this would have been a blessing if it were in place 10 years ago. We had a baby three years ago and she had to go back to work after 6 weeks.

  18. Kate on November 16, 2009 at 6:10 pm

    I remember reading somewhere that a self-employed person will be paying only employee premium though I am not sure. If somebody could dig into the bill itself and find this out, that would be great.

  19. Canadian Free Stuff on November 16, 2009 at 6:43 pm

    ouch!!!!. Thats what I say. There are perks to being Self Employed, and then there are disadvantages. and IE is both an advantage and disadvantage to paying. Its nice to self employed, and skip out on the premium payments, but when and if the well runs dry, it sucks not to have the back up.

    One thing I have noticed about “Child Benefit” thing a lot of parents get, is that every single one of my self employed family friends, seem to collect every possible cent from the gov’t every month, because they can cook the books to make themselves into a lower tax bracket.

    Just food for thought is all

  20. Subversive on November 16, 2009 at 8:35 pm

    @ 19 CFS: I think that’s one of the benefits of being self employed, beneficial tax treatment. However for many people it is simply too stressful taking care of their own finances to this level. This year is my first year of self employment, and I can definitely say the tax benefits are enormous, and well worth a couple of evenings sorting out paperwork.

  21. Gordon Biddy on November 16, 2009 at 8:50 pm

    I think the self employed individual is infinitely better off bypassing the federal system where possible and looking at other sources of unemployment ‘insurance’…like rental income.

    Relying on the Govt for anything related to your financial well being is a risky approach at best.

  22. used tires on November 17, 2009 at 1:25 am

    I am not too sure to be honest with you about this program, personally I am a big believer of less government involvement. I mean why do we need the government to “share the wealth” around, which is essentially what most government programs do. We all put up the money, some benefit alot more when compared to others, so its never “fair”… I don’t know… I guess I tend to think more different than others and probably more in line with my economic professors at my college.

    Till then,


  23. on November 17, 2009 at 12:32 pm

    If the self-employed won’t have access to *regular* unemployment benefits and only parental and other “special” benefits, then I don’t think they should be paying the same premium — that’s simlpy not equitable.

    I actually like the Quebec model, where parental benefits have been factored out into a separate premium and plan, QPIP “Quebec Parental Insurance Plan”, separate from regular EI. That way, you’re paying just for the “special benefits” and not wasting money on regular benefits you’d never be able to claim as a self-employed individual.

    However, the Quebec model isn’t voluntary – you must participate in QPIP if you are self-employed. Nevertheless, factoring out the benefits that self-employed people would get makes more sense than bundling them together with non-applicable benefits and corresponding premiums.

  24. Robert on November 17, 2009 at 11:24 pm

    Personally, I wouldn’t touch this with a 10 foot pole. I am fullt self-employed now and have been for 6 years. I have taken all that EI premiums and self-insure. Prior to being self-employed I enquired about EI benefits and it was far less than 39 weeks … I am past the child/maternity age age too … This program will b e used by the self-employed who are really on the lower wage end and are seasonally unemployed … Professionals earning over the max. allowable will not go into this.

    More politics than policy.

  25. vicki on February 18, 2010 at 3:43 pm

    I have a question if anyone knows the answer that would be so helpful! I am currently a self employed home daycare provider. I am pregnant and due October 2010. Everything I am reading on the gov’ websites are saying that I can start paying into the self employment program before April 1st and claim benefits starting Jan 1 2011. Since I am having the baby in October before I can make a claim will I be eligible to make a maternity or parental leave claim 3 months after the baby is born?? Thanks =)

  26. Kyla on April 27, 2010 at 8:57 am

    Hi Vicki,
    I am in the exact same position, I am due in september, and I have opted into the program…I don’t think we can start drawing benifits until January 2011, (provided you signed the right paperwork on or before april first of this year saying you were opting into the program)
    I am just going to tough it out and go back to work 2-3 weeks after I have my baby..and my husband will stay at home with our baby..once January comes, I will apply for both maternity and parental…but may only be eligable for parental benifits..I might try applying in september…just so they are aware I am trying to establish a claim..and see what happens..I can only assume we will have to wait until January…

    To all of you who disagree with this…I respect..and understand your options..but from the point of view of a young entraprenuer and soon to be mother..until now I have had to put my plans of starting a family on hold. This program is exactly what is needed. Self employed women make up 80% of the self employed statistic..and some of us do have a desire to maintain our careers and raise our families.
    This program is not for everyone..and does not apply to everyone…but the expense of opting into the program..and paying the price self employed mothers to be may be willing to pay in order to take time from work and raise a child…
    in my opinion….this program is very fair. Your either someone who opts out entirely now..with no changing your mind later…. or your someone who *may* need to use the program someday..if you decide to start a family or have a family member with major health issues.
    You can’t just decide to opt out now…get pregnant..opt in later..and then opt out when it’s all said and done, so to whomever posted that comment…you should check out the service canada website under self employed and read up on the program first…
    I still have the issue of who is going to run my business while I am off…and I am making arrangements to do so…hopefully…having benifits to cover some of my own wages while i am off…will allow me to hire someone who can work for me until I am able to come back to work…my business IS probably going to suffer…but…you only get one chance at being a mom..and right now raising a family is more important to matter HOW hard I’ve worked to establish my career.
    I’m sure there will always be divided options on this topic..but some of us need this program..and if you disagree, or it is not for you…just OPT out and let those of us who need it support it.

  27. Larry Entrepreneur on June 17, 2012 at 8:55 pm

    How can the government single out one group of individuals when there are so many other hard working people looking for work but are in a different career category. It seems that Fishermen get the best benefit of all as they claim EI and only have to show that they have made little money fishing during the duration. Some of these Fishermen now take work under the table and claim everything, get EI and get paid cash with no tax. I see that this is very unfair as there are so many individuals that work in Technology fields like Graphic Designers/Web Designer, Art fields such as painters and many more that would really benefit themselves for receiving EI just like fishermen.

    This is my rant for the day but if you do not believe me please check out It may change your career path to having a year-round vacation, kicking up your feet and grabbing a cold case of beer.

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