How Does Unemployment Work? Plus How to Navigate It

Updated February 3, 2023

Unemployment is a type of benefit paid to eligible workers who lose their jobs. It provides financial security to people who are temporarily out of work and looking for a new job. Understanding the practical steps you can take may help you navigate this difficult time. In this article, we explore what employment insurance is, discover who is eligible for unemployment insurance, and provide several answers related to the question, "How does unemployment work?"

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What is employment insurance and how does unemployment work?

If you're asking yourself the question, "How does unemployment work?", you can look into employment insurance. Employment insurance is an unemployment insurance program offered by the Government of Canada that provides temporary financial support to unemployed individuals who have lost their jobs due to no fault of their own. Employment insurance benefits provide temporary financial assistance and support individuals while they are searching for sustainable employment. The program also extends to individuals who cannot work due to illness, injury, or other urgent circumstances.

To be eligible for EI benefits, you may show that you:

  • Have been without pay and work for at least seven consecutive days in the last 52 weeks

  • Were employed in an insurable job

  • Lost your job and it was not your fault

  • Were affected by wildfires or floods

  • Are actively looking for employment (it would be beneficial to maintain a written record of employers you contact)

  • Have worked for the stated number of insurable employment hours since the beginning of your last EI claim or in the previous 52 weeks, whichever period is shorter

  • Are willing and ready to work

Related: How Long Does It Take to Find a Job? (Plus Helpful Tips)

Who cannot receive unemployment insurance?

Falling under some categories may prevent you from receiving employment insurance benefits. The following categories of individuals may not be eligible for EI benefits:

Employees on strike

If you're part of a labour dispute, and that is why you're unemployed, you may not be eligible for EI benefits. Labour disputes include participating in a lockout, a slowdown, or an essential services interruption. It's important to note that these situations would only prevent you from receiving employment insurance benefits if they are the reason for your unemployment. If you're laid off or fired due to participating in a labour dispute, you may still be eligible for EI benefits.

Employees fired for misconduct

Misconduct at the workplace includes negligence on the job, dishonesty, and insubordination. For example, this could consist of situations in which an employee intentionally destroys or steals property, assaults someone, drinks alcohol on the job when prohibited to do so, deliberately does poor quality of work, or knowingly provides false information. It's important to note that this definition is very broad and can encompass many situations.

Employees who quit their jobs voluntarily

Quitting your job without just cause may make you ineligible for employment insurance. It's important for your reason for leaving your previous job to be reasonable to receive employment insurance. For example, if you quit your job for personal or family responsibilities, illness, pregnancy or because you felt unsafe at work, these would qualify as just causes and you may likely receive employment insurance.

Individuals confined to a penitentiary, jail, or other similar institution

Service Canada may disqualify you from receiving employment insurance if you're currently confined. If you're incarcerated but the court releases you on all counts, your benefit period and qualifying period may extend if you provide proof. The required documents to submit as proof typically include:

  • Proof that the court has found you not guilty of all charges from which you were being detained

  • Documentation proving there are no outstanding charges against you

  • A letter from the institution where you were incarcerated that states the length of time you were confined

Related: What's the Difference Between Furloughed vs. Laid Off?

How much could you receive in EI benefits?

The amount of EI benefits you can receive depends on your application. Typically, most individuals receive 55% of their average insurable weekly earnings up to a certain amount. As of January 1, 2021, the maximum yearly amount is $56,300, which means entitlement to a maximum of $595 every week.

The period of benefits usually ranges from 14 weeks to a maximum of 45 weeks. This period depends on the unemployment rate in the region you live in and the number of insurable hours you have accumulated since your last claim or in the last 52 weeks, whichever is shorter. The period you can receive benefits may remain unchanged if you move to another region after you start receiving benefits.

How can you apply for EI benefits?

You can file your claim using the "Apply for EI Benefits" section of the Service Canada website. The information requested includes:

  • Your Social Insurance Number (SIN)

  • Information about the employer you were working for when your employment ended and why it ended

  • Banking information for direct deposits

  • The last name at birth of one of your parents

  • A detailed account of your dismissal if your employer dismissed you

  • The salary amount you were receiving for the last week you worked, including insurable commission and tips

  • Any other payments you were receiving, such as pension payments, severance pay, and vacation pay


  • What It Means to Be Laid Off vs. Fired and What to Do Next

  • What to Do If You're Fired and Skills for Getting a New Job

What happens when you get approved for unemployment insurance?

Once your application for employment insurance benefits is approved, you may receive a letter from Service Canada, including information about your claim and your access code. You're required to submit biweekly reports to Service Canada, which helps ensure you continue to receive EI benefits. If you start working again or if your work situation changes, you may also have to give those details.

Payments usually start 28 days after you apply for EI benefits and provide all required information. Note that payments may end once you receive all the entitled benefits, stop submitting your biweekly report, or request a claim termination to file a new one. Additionally, if you start working during your benefit period, inform Service Canada to adjust your benefits accordingly, especially if you're working part-time or on a contract.

Related: How to Use Indeed to Job Search During COVID-19

What can you do if your application for benefits gets rejected?

If Service Canada rejects your application for EI benefits, the first thing you could do is request a reconsideration. You can do this by using the "Submit documents" section on the Service Canada website. Service Canada may reject your application for EI if you do not provide information that complies with the legislation. Service Canada may also reject an application if it is incomplete, even though you may believe you have provided all the required information.

Before requesting a review, carefully review the letter regarding your rejection and ensure it explains why Service Canada rejected your claim. If you do not understand the reason, ask Service Canada for an explanation. If you feel an error caused your application to be rejected, it is crucial to provide detailed information to support your review request. You can also ask others like your previous employer or contact previous lawyers who may have worked on your case if they are willing to send a letter of support.

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How to be proactive and prevent EI benefits from ending early

To ensure you continue receiving your employment insurance benefits during the benefit period, follow the recommendations below:

  • Start looking for a job: It's a good idea to keep exploring employment opportunities as soon as you receive your first approval letter and keep on applying until you find a job.

  • Study or upgrade your skills: It might be beneficial to continually learn new skills by taking courses, enrolling in training programs, or doing an internship or co-op program.

  • Look for a job in another region: This will give you access to more jobs and, if it takes longer than expected for you to find a job, it ensures your EI benefits don't run out.

  • Try to be flexible: If you turn down too many work offers or refuse to take a job, even if it matches your skills and experience, Service Canada may look into your actions and decide whether you continue receiving EI benefits.

  • Consider self-employment: Starting your own business may make you eligible for EI special benefits that help self-employed people who are facing reduced earnings.

  • Stay active: Participating in volunteer work, community projects, or attending self-employment workshops helps you stay productive and improve your job prospects.

  • Consider asking for help: Reach out to friends, family, or co-workers for job leads or connections that can help you find a new job. You can also use an employment agency.

  • Evaluate your financial situation carefully: If you think you may have trouble paying your bills or buying food, talk to a trusted family member or friend about it before making any financial commitments.

Please note that none of the organizations mentioned in this article are affiliated with Indeed.

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