Employment NOT subject to EI premiums

Even if there is a contract of service, employment is not insurable and is not subject to EI premiums in the following situations:

• casual employment if it is not for your usual trade or business;
• employment when you and your employee do not deal with each other at arm's length. There are two main categories of employees who could be affected: related persons and non-related persons.
  • Related persons: are individuals connected by blood relationship, marriage, common-law relationship, or adoption. In cases where the employer is a corporation, the employee will be related to the corporation when the employee is related to a person who either controls the corporation or is a member of a related group that controls the corporation. However, these individuals can be in insurable employment if you would have negotiated a similar contract with a person that you deal with at arm's length.
  • Non-related persons: an employment between you and a non-related employee can be determined to be non-insurable if it is apparent from the circumstances of employment that you were not dealing with each other in the way arm's length parties normally would.

If you have any doubts as to whether or not you should deduct EI premiums when employing family members or other non-related employees whose circumstances of employment are unusual, we suggest that you request a ruling either through My Business Account (MyBA), or by completing form CPT1, and sending it to the CPP/EI Eligibility Division of your tax services office.

• when a corporation employs a person who controls more than 40% of the corporation's voting shares;
• employment of a person holding an office in the private sector (except for an individual who holds an office in a union or an association of unions). This list is not exhaustive: mayors, municipal councillors, school commissioners, chiefs of Indian bands, band councillors, executors, liquidators, or administrators for settling estates, members of a board of referees at the Commission of Canada Employment Insurance, corporation directors, chief firefighters or any other position when a person is elected or appointed to that office;
• employment that is an exchange of work or services;
• employment by an employer in agriculture, in an agricultural enterprise, or in horticulture when:
  
  • the person receives no cash remuneration; or
  • works less than seven days with the same employer during the year
    
    
• employment of a person in connection with a circus, fair, parade, carnival, exposition, exhibition, or other similar activity, except for entertainers, if that person:
  • is not your regular employee; and
  • works for less than seven days in the year;
    
    

    Note
    If the employee works seven days or more, the employment is insurable from the first day of work.

• employment of a person in a rescue operation, as long as you do not regularly employ that person for that purpose;
• employment by a government body as an election worker if the worker:
  • is not a regular employee of the government body; and
  • works for less than 35 hours in a calendar year;
    

    Note
    If the employee works 35 hours or more, the employment is insurable from the first hour worked.

• employment in Canada under an exchange program if the employer paying the remuneration is not resident in Canada;
• employment of a member of a religious order who has taken a vow of poverty (this applies whether the remuneration is paid directly to the order, or the member pays it to the order);
• any employment when premiums have to be paid according to the unemployment insurance laws of any state of the United States, the District of Columbia, Puerto Rico, or the Virgin Islands, or according to the Railroad Unemployment Insurance Act of the United States;
• employment in Canada of a non-resident person if the unemployment insurance laws of any foreign country require someone to pay premiums for that employment;
• employment in Canada by a foreign government or an international organization, except when the foreign government or international organization agrees to cover its Canadian employees under Canada's EI legislation (in this case, the employment is insurable if Human Resources and Skills Development Canada agrees); or  
• employment under the "Self-employment assistance" and "Job creation partnerships" employment benefits established by the Canada Employment and Immigration Commission under section 59 of the Employment Insurance Act, or under a similar benefit that a provincial government or other organization provides and is the subject of an agreement under section 63 of the Employment Insurance Act.

For information on situations when EI premiums are required, go to Amounts subject to EI premiums.

If you are not sure whether you should deduct EI after reading this page, you can request a ruling.

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