Employment Insurance — Ontario Employment Law
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About Employment Insurance
While Employment Insurance (EI) is a federal program designed to provide temporary income support to Canadians who have lost their jobs, it frequently intersects with provincial employment law in Ontario. When an Ontario worker is terminated, the immediate administrative bridge between the employer and the federal EI system is the Record of Employment (ROE). Employers are legally required to issue an ROE promptly after an interruption of earnings, and the code placed on this document—such as 'Code A' for a shortage of work or 'Code M' for dismissal—has a profound impact on a worker's ability to access benefits.
One of the most complex areas of overlap involves terminations for alleged misconduct. If an employer marks the ROE as a dismissal for misconduct, Service Canada may deny the worker's EI application. However, a federal EI officer’s refusal of benefits does not definitively decide the worker’s civil rights in Ontario. Due to a legal doctrine known as issue estoppel, an EI determination that a worker committed misconduct does not prevent an Ontario court from examining the facts afresh in a wrongful dismissal lawsuit. The threshold for 'just cause' under Ontario common law is exceptionally high and distinct from Service Canada's internal criteria.
Another critical intersection is how EI payments interact with severance packages and wrongful dismissal awards. Broadly speaking, workers cannot "double dip" by keeping both EI benefits and severance pay intended to replace wages for the exact same period. If an individual receives a lump-sum settlement or salary continuation after already collecting EI, they generally face an obligation to repay the federal government. Interestingly, in civil litigation, Ontario courts have consistently ruled that receiving EI benefits should not reduce the damages an employer owes for failing to provide reasonable notice of termination. The employer must pay the full damages awarded, leaving the repayment of any overlapping EI to be settled between the worker and Service Canada.
Employers also have distinct financial obligations regarding the EI system itself. For instance, businesses providing qualifying short-term disability plans may receive a reduction in their EI premiums, a portion of which must legally be shared with their employees. Failure to comply with these statutory sharing requirements has even led to class-action litigation in Ontario.
Because the rules surrounding federal benefits and provincial termination rights are deeply intertwined, the financial repercussions of a mishandled ROE or a poorly structured severance package can be significant. Navigating these overlapping jurisdictions is rarely straightforward, so consulting a legal professional is highly recommended to protect your income and better understand your entitlements after a job loss.
Frequently Asked Questions
Does my severance package delay my Employment Insurance benefits?
Yes. Any severance pay or termination pay you receive is generally treated as earning income by Service Canada. This amount is allocated over a specific period following your job loss, meaning your EI benefits will typically not begin until that allocated period has expired.
Can I get EI if my employer fired me for cause?
Service Canada usually denies regular EI benefits if they determine you lost your job due to your own misconduct. However, the federal government's definition of misconduct is not identical to the strict legal standard for 'just cause' under Ontario employment law, meaning a denial of EI does not legally bar you from pursuing a wrongful dismissal claim.
Will EI payments be deducted from the damages I win in a wrongful dismissal lawsuit?
Ontario courts generally do not deduct regular EI benefits from the reasonable notice damages an employer is ordered to pay. The employer is responsible for the full judgment amount, but you may be required under federal law to repay Service Canada out of your settlement or award for the overlapping period.
When does my employer have to issue my Record of Employment (ROE)?
Under federal rules, an employer must issue an electronic ROE within five calendar days after the end of the pay period in which your earnings were interrupted. If they issue a paper ROE, they have five calendar days from your first day of interrupted earnings.
What if Service Canada approves my EI after my employer claimed they had just cause?
While an EI approval is helpful for your personal finances, it does not guarantee a victory in a civil lawsuit. An adjudicator's decision to grant you federal benefits does not legally bind an Ontario civil court when determining if your employer had lawful grounds to terminate you without severance.
At what point should I ask an employment lawyer to review my situation involving EI?
If you are terminated and your employer codes your Record of Employment inaccurately—such as stating you 'quit' when you were forced out, or labelling a minor error as 'misconduct'—it is wise to have a lawyer assess your circumstances before you sign any final release.
Common Scenarios
- A warehouse worker is terminated and files for EI immediately, but their employer severely delays issuing the necessary Record of Employment, causing the worker financial hardship and prompting them to seek legal help to compel the employer's compliance.
- An IT professional is fired over alleged performance issues and their ROE is coded as 'Dismissal', resulting in Service Canada freezing their benefits. They subsequently launch a wrongful dismissal suit in Ontario because mere poor performance rarely meets the legal threshold for just cause.
- A retail manager receives a large lump-sum severance settlement months after being let go. Because they collected EI while negotiating the deal, they must now report the settlement to Service Canada, triggering an obligation to repay the federal government the benefits received during that overlapping timeframe.
- Employees in a logistics company discover that their employer has been receiving a reduction in employer EI premiums due to the company's sick leave plan, but the employer has not remitted the mandatory employee portion of those savings back to the workforce.
What You Should Know
- Always apply for Employment Insurance as soon as you stop working, even if you are fighting over severance or waiting for your employer to issue your Record of Employment, to ensure you do not miss strict federal deadlines.
- If your employer pressures you to resign rather than be fired, be aware that a 'Quit' code on your ROE will generally disqualify you from receiving regular EI benefits unless you can prove you had no reasonable alternative but to leave.
- Keep thorough logs of your daily job applications and interviews, as this paperwork is necessary to maintain your active EI claim with Service Canada and simultaneously proves your mitigation efforts in an Ontario wrongful dismissal lawsuit.
- Refrain from signing a severance offer without understanding the federal tax and EI implications; having employment counsel structure your settlement as either a lump sum or salary continuation can significantly alter your repayment obligations.
Featured Cases
B. v. University of Windsor
2015 ONCA 311 (CanLII) · 2015-05-04Appeal Dismissed: Adding Attorney General to Employment Insurance Dispute
This is an appeal from a procedural ruling in an action concerning employment insurance premium reductions between an employer and employees. The appellant sought to add the Attorney General of Canada as a defendant, alleging breach of fiduciary duty, breach of trust, and negligence. The Court of Appeal dismissed the appeal, upholding the motion judge's decision that the proposed claims were not tenable and that the correct test for adding parties had been applied.
C. v. 580 Christie Street Co-Ownership Inc.
2014 ONSC 4649 (CanLII) · 2014-08-11Wrongful Dismissal: Issue Estoppel from EI Decision
This wrongful dismissal case addressed whether an Employment Insurance determination of no misconduct precluded re-litigation of the issue in civil court via the doctrine of issue estoppel. The court found the preconditions for issue estoppel were not met and that EI determinations serve a different purpose than civil liability. Additionally, the court affirmed the exclusive jurisdiction of the Ontario Labour Relations Board over OHSA reprisal claims and denied a request for direct production of asbestos records.
D. v. E-D Roofing Limited
2008 CanLII 48130 (ON SC) · 2008-09-25Wrongful Dismissal: 18-Year Employee Awarded 13 Months Notice
A wrongful dismissal case where the plaintiff, who had 18 years of service, was dismissed and sought a reasonable notice period. The court determined 13 months was appropriate based on Bardal factors. The plaintiff also sought employment before and after a pre-planned vacation, and the court found their efforts to mitigate damages were reasonable. The case also addressed whether Employment Insurance benefits should be deducted from damages, with the court ruling they should not.
F. v. Canada (Attorney General)
2005 CanLII 47783 (ON SC) · 2005-12-23Employment Insurance and SAWP Workers: Charter Discrimination Case
A case involving the application of the Employment Insurance Act to SAWP workers, who are required to pay EI premiums but cannot access regular benefits. The court examined whether this differential treatment violates section 15 of the Charter and whether the UFCW has public interest standing to challenge the policy. The motion to strike was dismissed as the application raised justiciable issues.
R. v. Hershey Canada Inc.
2000 CanLII 2071 (ON CA) · 2000-07-07Class Action: EI Premium Reductions & Statutory Benefits
This is a procedural ruling in a class action lawsuit brought by employees against their employer, Hershey Canada Inc., regarding alleged non-compliance with statutory obligations to share Employment Insurance premium reductions. The Court of Appeal for Ontario held that the claim was not barred by issue estoppel or res judicata and that the court had jurisdiction to determine compliance, allowing the case to proceed to trial.
Minott v. O'Shanter Development Company Ltd.
1999 CanLII 3686 (ON CA) · 1999-01-07Minott v. O'Shanter: 13 Months Notice for 11-Year Employee
This is an appeal from a wrongful dismissal decision involving a maintenance worker with 11 years of service who was dismissed at age 43. The Court of Appeal upheld the trial judge's award of 13 months' notice, rejecting the employer's argument that a single day's absence constituted just cause and clarifying that issue estoppel did not bar the claim despite a prior Employment Insurance finding of misconduct.
S. v. Canada (Attorney General)
1996 CanLII 8150 (ON SC) · 1996-05-31Unemployment Insurance Discrimination: Adoptive Parents Receive Fewer Benefits
A case addressing whether provisions of the Unemployment Insurance Act that provide unequal benefits to adoptive parents compared to biological parents violate section 15(1) of the Charter. The court found the discriminatory provisions not justified under section 1 of the Charter and issued a declaration of invalidity for the affected sections.
S. v. Canada (Attorney General)
1996 CanLII 8013 (ON SC) · 1996-05-31A constitutional law case challenging the validity of unemployment insurance provisions under the Charter of Rights, focusing on equality rights and the application of the limitation clause.
K. v. Mutual of Omaha Insurance Co. et al.
1988 CanLII 10394 (ON SC) · 1988-03-31Collective Agreement Disability Benefits Dispute
A labour and employment case involving a dispute over long-term disability benefits under a collective agreement. The employee alleged the employer violated the agreement by failing to provide benefits, while the employer argued it fulfilled its obligations by purchasing the insurance plan. The Ontario Labour Relations Board ruled in favor of the employer, and the case addresses whether the claim is governed by the collective agreement or is independent of it.
Re The Queen in right of Ontario and Ontario Public Service Employees Union et al.
1986 CanLII 2476 (ON SC) · 1986-12-18Grievance Arbitration: Authority of Board to Award Interest and Higher Pay
A merits decision involving grievance arbitration under the Crown Employees Collective Bargaining Act, addressing whether the Grievance Settlement Board has authority to award interest on lost wages, order higher pay for substantial equivalence, and interpret 'remuneration' under the Unemployment Insurance Act.
P. v. Levesque Plywood Ltd.
1979 CanLII 2055 (ON CA) · 1979-07-12P. v. Levesque: Deduction of Unemployment Benefits
The Court of Appeal for Ontario heard an appeal regarding the calculation of damages in a wrongful dismissal action. The central issue was whether unemployment insurance benefits received by the wrongfully dismissed employee should be deducted from the damages awarded against the employer. The court held that such damages are not 'remuneration' under the Unemployment Insurance Act, 1971, and public policy prevents the employer from benefiting from the employee's insurance payments.
R. v. Reed Ltd.
1978 CanLII 1449 (ON SC) · 1978-06-27Wrongful Dismissal: Senior Employee Entitled to 12 Months Notice
A wrongful dismissal case involving a senior employee who was dismissed without cause and was entitled to 12 months’ notice. The court addressed whether the notice period offered was reasonable, whether unemployment insurance benefits should be deducted from damages, and whether expenses incurred in mitigation were recoverable.
S. v. Facit-Addo Canada Ltd.
1977 CanLII 1302 (ON SC) · 1977-08-16Wrongful Dismissal: Senior Salesman Awarded Nine Months Notice
A wrongful dismissal case involving a senior salesman employed for seven years who was terminated without cause. The plaintiff was awarded nine months’ notice based on age, length of service, and employment circumstances, with the Bardal factors applied. The case also addresses whether unemployment insurance benefits should be deducted from wrongful dismissal damages and whether pension contributions should be excluded from damages calculations.
G. v. Rockwell International of Canada Ltd.
1975 CanLII 732 (ON SC) · 1975-08-25Wrongful Dismissal: Senior Engineer Awarded One Year Notice
A wrongful dismissal case involving a senior employee, a professional engineer earning $20,000 annually, who was terminated without written agreement or notice. The court determined one year’s notice was reasonable based on position, salary, age, and employer assurances, applying Bardal v. Globe & Mail Ltd. and Johnston v. Northwood Pulp Ltd. The case also addressed whether unemployment insurance benefits received during the notice period should be deducted from damages, with benefits deducted due to employer contributions, applying Parsons v. B.N.M. Laboratories Ltd.