As a Canadian worker, you may have come across the term “insurable earnings” in the context of Employment Insurance (EI) benefits. But what exactly are insurable earnings, and why are they important? In this blog post, we will delve into the concept of insurable earnings, explaining what they are, how they are calculated, and why they matter for Canadian employees. Let’s get started!

  1. What are Insurable Earnings?

Insurable earnings refer to the portion of your employment income that is subject to Employment Insurance (EI) premiums. These earnings include your salary, wages, and other taxable benefits provided by your employer. The Canadian government uses insurable earnings as the basis for calculating the amount of EI premiums you and your employer must contribute to the EI program.

  1. Why are Insurable Earnings Important?

Insurable earnings play a crucial role in the Employment Insurance program, which provides temporary financial assistance to workers who lose their jobs through no fault of their own. The amount of EI benefits you may be eligible for in case of job loss depends on your insurable earnings during a specific period before your claim.

  1. How are Insurable Earnings Calculated?

The calculation of insurable earnings is based on your gross employment income, including regular wages, overtime pay, commissions, and taxable benefits. However, certain types of income, such as non-cash gifts and non-taxable allowances, are not considered insurable earnings.

  1. Maximum Insurable Earnings:

The Canada Employment Insurance Commission sets a maximum insurable earnings amount each year, beyond which you and your employer no longer need to pay EI premiums. Any income earned above this threshold is not subject to EI deductions. The maximum insurable earnings amount is typically adjusted annually to account for inflation and changes in the average wage.

  1. EI Premiums:

Both you and your employer are required to contribute to the EI program based on your insurable earnings. The EI premium rate is set by the government and is subject to change. Your employer deducts the EI premium from your paycheque and submits it to the Canada Revenue Agency (CRA) along with their share of the premium.

  1. Benefits of Insurable Earnings:

a. EI Eligibility: Your insurable earnings determine whether you qualify for EI benefits in case of job loss or other eligible situations.

b. Benefit Amount: The amount of EI benefits you may receive is based on your insurable earnings during a specific period, known as the “qualifying period.”

c. Job Security: Having access to EI benefits can provide a safety net during periods of unemployment, offering financial security and peace of mind.


Insurable earnings are an essential aspect of the Employment Insurance program in Canada. They represent the portion of your income subject to EI premiums, which directly impacts your eligibility for EI benefits and the amount of benefits you may receive in the event of job loss. Understanding the concept of insurable earnings can help you plan for the future, ensuring you have financial support during challenging times. As a responsible worker, staying informed about your insurable earnings and the EI program can empower you to make informed decisions about your financial well-being.