Coming Soon:  EI for the Gig Economy

Marco Iampieri B.A., JD, M.B.A.

Will the federal government soon find a new revenue source for Employment Insurance?  Will gig economy workers soon qualify for EI?  The answer may be yes, based on upcoming consultations on the matter. 

According to the Liberal Party of Canada’s 2021 election platform, the Liberal Party of Canada (“Liberal”) emphasized creating an employment insurance (“EI”) system that works for all Canadians. The platform noted that Canada’s EI system is one of the most important protections available to workers. However, before the onset of the COVID-19 pandemic, 1 in 3 unemployed workers were denied EI coverage. Further, self-employed people, such as freelancers, contractors, and gig workers, are unable to contribute to the employment insurance system.  

In order to address the problem facing 1 in 3 unemployed workers being denied EI coverage, the Liberal’s plan on implementing the following:

• The introduction of a new EI benefit for self-employed Canadians, delivered through the tax system, that would provide unemployment assistance comparable to EI and lasting for as much as 26 weeks. This could provide support of nearly $15,500 when it is needed most.
• Self-employed Canadians seeking to access this benefit would only be responsible to contribute the portion they would normally pay if they were a salaried employee. Further details regarding this benefit will be developed over the coming year with the launch of this new benefit happening in January 2023.
• Strengthen rights for workers employed by digital platforms so that they are entitled to job protections under the Canda Labour Code and establish new provisions in the Income Tax Act to ensure this work counts toward EI and CPP while also making these platforms pay associated contributions as any employer would.
• Move forward with a stronger and more inclusive EI system that addresses gaps made obvious during COVID-19. Based on the input received from consultations on the future of EI that are currently underway, we will bring forward a vision for a new and modern EI system that covers all workers, including workers in seasonal employment, and which is simpler and more responsive for both workers and employers.

In order to address the challenge of providing EI to gig workers, David Gray, drafting for the C.D. Howe Institute, drafted a brief discussing through an evaluative lens the case for providing EI to gig workers or, more broadly, to the unincorporated self-employed without any employees. Professor Gray determined that there are no easy answers concerning gig workers and employment insurance.

Deductions for Gig Economy Workers

Gig-economy workers incurring work-related expenses may deduct their work-related expenses against their self-employment income for the year. Common work-related expenses for gig-economy workers depends upon the nature of the business income source earned via self-employment. For example, common work-related expenses for ride-sharing drivers includes gasoline required to drive one’s vehicle or maintenance costs for one’s vehicle. Common work-related expenses for renting one’s home are reasonable cleaning service fees or replacing hygienic products provided for guests.

Gig-economy workers should caution against reporting unreasonable work-related expenses, such as unreasonable above fair-market-value remuneration paid to spouses for administrative or alike services or claiming unreasonable home office expenses.

Governmental Consultations Underway

Moving forward, the Minister of Labour, Filomena Tassi, has a mandate to protect all workers in the modern economy including developing greater labour protections for people who work through digital platforms, whose status is not clearly covered by provincial or federal laws.

Key Takeway

A new EI benefit for self-employed Canadians will address Mr. David Gray’s concern regarding the problems of providing EI to gig workers. Notably, a new EI benefit will likely reduce the yearly net pay for self-employed workers in the gig economy. However, the EI benefit protections ought to outweigh the slight yearly net pay reduction for the relevant workers.

Additional educational resources:   Learn more at the January 19 CE Summits.  Check out the detailed line-up in our interactive online agenda. .Also note:  Register by December 15 to ensure your food delivery, all included in the tax deductible tuition fees!