Why Should Employers Issue a ROE?

Employers generally issue a ROE when an employee is terminated by them or if it is some type of leave, but employers often debate whether they should issue ROEs when an employee quits. Some employers don’t issue a ROE when an employee quits their job, based on the fact that employees don’t get Employment Insurance (EI) benefits when they quit their job. Let’s start with the basics and see both when and why a ROE should always be issued.

Employers can submit electronic ROEs through:

1. ROE Web by using a compatible payroll software to upload ROEs from your payroll system;

2. ROE Web by manually entering data online through Service Canada’s website; and

3. Secure Automated Transfer (SAT) – normally through your payroll service provider using a bulk transfer technology.

There are two different types of electronic ROEs; they are identified with serial numbers starting with:

1. W – ROE Web

2. S – ROE SAT

Using ROE Web is efficient, trustworthy, secure, straightforward, and effortless as it enables you to work around your pay cycle. If you need to make amendments to your original ROE issued, it is very convenient and quick. To see when you need to issue amendments to a ROE please click here. You do not need to give a copy of the ROE to the employee as they have direct access via My Service Canada account, however, please advise them it is available on the My Service Canada account when the employee logs in, which they will need to register if they do not have an account already.

Issuing paper ROE is a one-page form with three copies of the ROE; the first one is the original – give to employee, the second (blue) – send to Service Canada and the third (yellow) – keep for your records are carbon copies.

There are five different types of paper ROEs; they are identified with serial numbers starting with:

1. A – English or French à this is no longer available but if you still have blank forms it is still accepted by Service Canada

2. E – English

3. K – French

4. L – Laser - format is no longer used and has been replaced by ROE web

5. Z – ROE for fishers

What does Service Canada do with the ROE?

Service Canada uses the information from the ROE to determine whether a person who has experienced an interruption of earnings is eligible to receive Employment Insurance (EI) benefits, the amount, and for how long the person will be eligible to receive benefits.

Service Canada shares the ROE information with the Government of Quebec for the people living in Quebec, as Government of Quebec administers maternity, paternity, parental, and adoption benefits to residents of that province through a program called the Quebec Parental Insurance Plan (QPIP).

Employers only need to issue ROEs for employees who receive insurance earnings and who work insurable hours. If you, the employer, is unsure if an employee’s earnings and hours are insurable, contact the Canada Revenue Agency for an insurability ruling.

What is an interruption of earnings?

An interruption of earnings occurs in the following situations:

1. Seven-day Rule - When an employee has had or is anticipated to have 7 consecutive calendar days with no work and no insurable earnings from the employer. The last day paid is the first day of interruption of earnings.

Exceptions to the seven-day rule -Interruption of earnings does not apply to:

1. Real estate agents*

2. Employees who have non-standard work schedules

3. Commission salespeople*

*Interruptions of earnings only occur due to:

• Illness or an injury

• Pregnancy

• Quarantine

• Caring for a newborn

• Providing care or support for a family member who is critically ill

• The placement of a child for adoption

2. Salary falls below 60% of regular weekly earnings - When an employee’s salary falls below 60% of the regular weekly earnings due to one of the following circumstances:

1. Illness or an injury

2. Pregnancy

3. Quarantine

4. Caring for a newborn

5. Providing care or support for a family member who is critically ill

6. The placement of a child for adoption

Sunday of the week in which the salary falls below 60% of the regular weekly earnings is the first day of interruption of earnings.

3. Employees receiving wage loss insurance (WLI) payments.

When do employers have to issue a ROE?

Employers need to issue a ROE each time an employee experiences an interruption of earnings or when Service Canada requests one, regardless of whether the employee plans to file a claim for EI benefits.

There are ROEs that are issued due to special circumstances:

1. ROE is requested by Service Canada – most common situation is when an employee is working two jobs and experiences an interruption of earnings in one of their places of employment and applies for EI benefits. Service Canada requires a ROE from the current employer, using both ROE information to determine the benefit amount and number of weeks of EI benefits the claimant should receive.

2. Pay period changes – example; the company changes from bi-weekly to semi-monthly payroll.

3. Employer is the same but transferred to another Canada Revenue Agency Payroll Account Number – having more than one Payroll Account Number and the employee’s payroll file is transferred to a different Payroll Account Number within the organization. A ROE is not needed, if there has been no actual disruption in the earnings during the transfer; and you agree to issue a single ROE that covers both periods of employment.

4. Change in ownership – the employer does not have to issue a ROE if the following two conditions are met:

1. there has been no actual disruption in the earnings during the change-over; and

2. the prior employer's payroll records are accessible to the new employer, and the new employer agrees to issue a single ROE that covers both periods of employment.

5. Employer declares bankruptcy.

6. Part-time, on-call, or casual workers – you must issue a ROE when:

• Employee requests a ROE

• Employee is no longer active on the employment list

• ROE is requested by Service Canada

• 30 days have passed, and the employee has not worked and earned any insurable earnings in that period

7. Wage-loss insurance (WLI) plan payments.

8. Self-funded leave – certain workplace employees are able to make agreements with their employers to take a self-funded leave.

What is the deadline for issuing ROEs?

For paper ROEs you must issue within five calendar days of the first day of an interruption of earnings or the day the employer becomes aware of an interruption of earnings.

For electronic ROEs, based on your pay period;

• For weekly, bi-weekly, semi-monthly, you have up to five calendar days after the end of the pay period in which the employee’s interruption of earnings occur.

• For a monthly pay period or 13 pay periods per year you must issue the Roe by whichever day is earlier; five calendar days after the end of the pay period in which the employee experiences an interruption of earnings or 15 calendar days after the first day of an interruption of earnings.

How long should employers keep ROEs and payroll records related to ROEs?

It does not matter if you, the employer, issue the ROE electronically or on paper, you will need to store all ROEs and related payroll records (electronic or paper format) for six years after the year to which this information relates.

Do not make assumptions!

Just because an employee quits their job, does not mean a ROE isn’t required, based on the assumption that the employee will not file for EI benefits. The problem behind this thinking is, the employee may lose their next job and require the ROE from their previous employer to calculate the correct EI benefits.

It is also the correct thing to do as many things can occur resulting in the need for the ROE in which the employee quit their previous job. Employers must also be aware that there are fines and penalties for not issuing a ROE.

I hope this article helps employers and employees understand the importance of issuing a ROE, and also to clarify when ROEs should be issued.

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Stagecoach Payroll Solutions – “Your Canadian Payroll Solution”

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