Whether you're managing a business in Canada or considering the prospect of hiring remote Canadian employees, delving into the intricacies of Records of Employment (ROE) is an important part of your employer responsibilities.

An ROE is the single most important document used by employees to apply for Employment Insurance benefits, as emphasized by the Government of Canada. In the event of interruption of insurable income, the government relies on the ROE to determine the employee’s eligibility and the duration of the period of their EI benefits.

As an employer, the onus is on you to issue a Record of Employment within a specified timeframe when an employee experiences an interruption in their earnings. Failing to comply with these established protocols can result in penalties and serious consequences.

Therefore, it’s crucial to develop a comprehensive understanding of the steps involved in creating and issuing an ROE. So, let’s take a closer look at what an ROE entails as we shed light on the crucial aspects of when and how one should be issued.

What Is A Record Of Employment (ROE)?

In simple terms, a Record of Employment, or ROE, is a document or form that outlines the employment history of a full-time permanent employee with your company. It includes wages, working hours, and length of employment. 

As an employer, it is mandatory to issue an ROE each time one of your employees experiences an interruption of insurable earnings. It should be issued within a specific timeframe to both the affected employee and the government for Employment Insurance purposes or otherwise.

For example, if your staff are paid biweekly, you must submit the electronic ROE to Service Canada no later than five calendar days after the end of the pay period in which the interruption occurs, as per the Government of Canada.

You can create an ROE either by using paper forms or digitally, online. The latter is preferred by federal agencies like the Canada Revenue Agency (CRA). It also saves time and improves the quality and accuracy of your ROEs. 

If you want to use paper-based ROE forms, you’ll need to obtain blank ROE forms via mail order from the government. You will need to contact the Employer Contact Centre and provide your 15-character CRA payroll account number for identification purposes. The original copy of the form will be sent to the employee, the second copy to the government, and the third should be retained for your personal records.

What Are Insurable Earnings?

It’s important for employers to know which employees receiving insurable earnings need to be serviced. Insurable earnings, under Government of Canada guidelines, include most types of compensation you provide your employees on which Employment Insurance premiums are paid. 

What Pay Period Is Not Insurable?

Employers also need to be aware of which working hours don’t qualify as insurable. For example, when an employee of a corporation controls more than 40% of the corporation's voting shares, their employment is not insurable. It’s always helpful to consult professional payroll service providers and advisors to ensure you’re following the correct methods of identifying insurable earnings and hours.

What Is Interruption Of Earnings?

An interruption of earnings occurs when an employee has had or is anticipated to have seven consecutive calendar days without work and without receiving insurable earnings from their employer. This situation is identified as the seven-day rule by the Government of Canada.

In most cases, the seven-day rule applies when employees quit their jobs, are laid off, or when their employment is terminated. Other instances of interruption of earnings can also occur when an employee’s salary falls below 60% of their regular weekly earnings. This can be due to a number of reasons including illness, injury, pregnancy, or child care.

When Is A Record Of Employment Issued?

Determining when to issue an ROE as an employer can be a challenging proposition. However, there are two general scenarios you can keep in mind when making this call. The first is each time an employee experiences an interruption of earnings, and the second is when Service Canada requests one. 

It is important to remember that it is your responsibility as an employer to issue an ROE regardless of whether your employee plans to apply for EI benefits or not. 

Instances of when you might need to issue an ROE include but are not limited to:

  • Maternity leave
  • Termination of employment
  • Sick leave
  • Retirement
  • Leave of absence
  • When one is requested by Service Canada 
  • Any time the business changes ownership
  • If an employer declares bankruptcy

Employers might also be required to issue ROEs when the regular pay cycle is delayed due to internal administrative changes. Issuing an ROE can be done either electronically or on paper, as mentioned earlier.

How To Issue A Paper ROE?

If you opt for a paper ROE, you can obtain the form from the Government of Canada Employer Contact Centre. Once received, complete all sections with the required information. It's important to note that a Record of Employment is a triplicate form, which will need to be shared with the employee and the government in addition to a copy for your own records.

Different types of paper ROEs are specified by the letters that their serial numbers start with. Some of them are:

  • A – English or French ROE (ROEs in this series can no longer be ordered, but they are still valid)
  • E – English ROE
  • K – French ROE
  • Z – ROE for fishers

How To Issue An Electronic ROE?

Electronic ROEs are the more convenient method to transmit this information, as per the Government of Canada. It certainly saves you the hassle of obtaining hard copies of these forms and is also kinder to the environment. If you choose this method, you have three ways to proceed:

1. Go to the ROE Web on the Government of Canada website, sign up/log in, manually enter the required information, and submit the ROE electronically.

2. Complete and submit the ROE form through payroll software compatible with the ROE Web.

3. Have your payroll service provider complete and submit the ROE using secure automated transfer (SAT).

How To Create An ROE Canada Web Account?

The online creation and submission of ROEs eliminates the need to visit Service Canada for identity verification. Follow these steps to ensure you are doing it correctly:

  • Designate a Primary Officer: The first step for employers towards creating an online ROE account will involve designating a Primary Officer. This individual accepts the ROE Web agreement and oversees various account aspects, including organizational details and folder structure. Additionally, they have the authority to grant access to other representatives and define their user privileges.
  • Validation: The online method allows the Primary Officer to verify their identity online through their Canadian Revenue Agency (CRA) account. Alternatively, they can opt for in-person validation at a Service Canada Centre. In this case, they will need to provide photo identification.

To validate their identity, the Primary Officer can use a valid Canadian or foreign passport, or two pieces of government-issued identification, with at least one containing a photo. If a person has previously validated their identity as the Primary Officer for another organization within ROE Web, they won't need to complete this step again.

Additionally, employees other than the Primary Officer referred to as "representatives," can also be invited to join your organization's ROE Web account. 

How To Fill Out The Service Canada ROE Form?

A Record of Employment (ROE) shares a familiar format with other official documents from Service Canada or the Canada Revenue Agency (CRA). It is structured into distinct "blocks," each containing essential information concerning an employee's tenure, work hours, and wages within the company. There are a total of 22 blocks, encompassing details such as:

  • Relevant employee information
  • Employer information
  • The employee's first and last day of work
  • The end date of the final pay period
  • The employee's total insurable earnings and hours
  • The reason for issuing the ROE and the corresponding code

While not all of these blocks may require completion, you should populate as many as possible. Doing so helps prevent subsequent inquiries or requests for clarification from Service Canada after the ROE has been issued.

You can also refer to an example of a filled-out form here. It can often be a tricky topic for employers, thus, it’s recommended to consult qualified payroll professionals such as an Employer of Record (EOR) to ensure you are meeting specified ROE requirements.

What ROE Codes To Use For Employment Insurance?

When issuing an ROE, you must specify the reason for the employee leaving work. This requires the use of specific codes depending on the reason for the work interruption. Examples of these codes include:

  • Code A: Employee is laid off
  • Code E: Employee quits
  • Code D: Illness or injury
  • Code F: Maternity
  • Code G: Retirement

For a full list of ROE codes, refer to the Government of Canada website. 

Where to Submit Your ROE?

When it comes to submitting Records of Employment (ROEs) in Canada, the method you use will determine where they need to be sent. 

Electronic ROEs

  • If you choose to submit ROEs electronically, you have the option to provide the employee with a hard copy for their records, but it's not a requirement.
  • Electronic ROEs are transmitted directly to Service Canada through a virtual process. This means there's no need for the employee or employer to mail a physical ROE.

Paper ROEs

  • When an employer issues paper ROE forms, they are obligated to provide a physical copy to the employee.
  • A physical copy of the paper ROE must also be sent to Service Canada for processing.
  • You can distinguish between the two types by checking the serial number on the ROE form. Electronic ROEs will have serial numbers starting with "W" or "S," while paper copies will start with "A," "E," "K," "L," or "Z".

For those sending their ROE to Service Canada, there are two options:

  • Mailing Your ROE: If you choose to mail your ROE to Service Canada, you'll find the appropriate mailing address provided on the confirmation and information pages when submitting your virtual application for employment insurance.
  • In-Person Submission: Alternatively, you can personally deliver your ROE to a Service Canada Centre for submission.

What Happens If An ROE Is Not Issued?

Employers might struggle to keep up with issuing ROEs in the event of mass layoffs or terminations. However, it’s crucial to accurately fill out and file the form within five days of an employee's last day at work or payroll disbursement. Non-compliance can lead to fines of up to $2,000 imposed by the federal government and potential prison time of up to six years.

When Can You Skip Issuing A Record Of Employment?

ROEs are only a requirement for full-time permanent employees. They do not need to be issued for the termination of part-time workers and independent contractors. 

How Borderless Can Help You Manage Your International Employees

For employers looking to hire remote Canadian workers, it is a requirement to work with a local legal entity or an Employer of Record. You may also need assistance managing benefits, payroll, and issuing Records of Employment to avoid making costly mistakes that can lead to legal consequences. 

This is where Borderless comes in. Our platform is designed to help companies like yours hire, pay, and manage international workers, remain compliant with local tax and employment laws, and so much more.

If this is something your business requires, contact our team today to set up a demo or call to see if Borderless is a good fit for you and your team.

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Disclaimer: Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.