What is a Record of Employment and when do I issue one?

What counts as an interruption of earnings

An interruption of earnings most commonly happens when an employee goes seven consecutive calendar days without any work and without any insurable earnings, whether that is because they were laid off, quit, were dismissed, or the business closed temporarily. It can also happen when an employee's earnings drop below 60% of their regular weekly earnings for specific reasons set out in the Employment Insurance regulations, such as certain leaves.

The trigger is the interruption itself, not the reason behind it; a resignation requires an ROE just as much as a layoff does, and employers sometimes mistakenly assume an ROE is only needed when the employer initiates the end of employment. Whatever the reason, the requirement to issue an ROE follows the same seven-day test.

The five-day deadline for electronic filing

Employers who file electronically through ROE Web, which is now how the large majority of ROEs are submitted, generally have five calendar days from the first day of the interruption of earnings, or the day the employer becomes aware of it, whichever is later, to issue the ROE. Employers still filing on paper face a different and generally tighter timeline tied to the end of the pay period in which the interruption occurred.

Missing this deadline does not just create an administrative backlog; it can delay the former employee's ability to apply for and receive EI benefits, since Service Canada needs the ROE to process a claim. A pattern of late ROEs can also draw attention from Service Canada in a way that a single late filing usually does not.

Choosing the right reason code

Every ROE requires a reason code explaining why the interruption of earnings occurred, and the code chosen affects how Service Canada evaluates the former employee's EI claim. Some of the more common codes include:

• Code A — shortage of work, generally used for layoffs where the employer initiated the end of work due to business conditions.
• Code E — quit, used when the employee voluntarily left the position.
• Code M — dismissal, used when the employer terminated the employment for cause or performance-related reasons.
• Code K — other, used for situations that do not fit the more specific codes, such as the end of a fixed-term contract in some cases.

Choosing the wrong code is one of the more common ROE mistakes, and it matters because certain codes, such as a voluntary quit without just cause, can affect whether the former employee qualifies for benefits at all. When the reason for separation is not straightforward, it is worth confirming the correct code rather than guessing at the closest-sounding option.

Why the insurable earnings and hours matter as much as the reason code

An ROE reports more than just why the employment ended; it also reports total insurable earnings and insurable hours over a specific look-back period, and Service Canada uses those figures to calculate both the weekly EI benefit amount and how many weeks of benefits the former employee qualifies for. Understating hours or earnings, even by a small amount through a data entry error, can genuinely reduce the benefit a former employee receives, which is a different kind of harm than a late filing.

Employers with seasonal or intermittent staff, common in construction, landscaping, and hospitality, end up issuing ROEs repeatedly for the same employees across a working relationship that spans years, since each layoff between seasons counts as its own interruption of earnings. Building the ROE process into the seasonal shutdown routine, rather than treating each occurrence as a one-off task, keeps these employers from missing the five-day window every time work slows down.

Correcting an ROE after it has been filed

Errors happen, whether it is a wrong insurable earnings figure, an incorrect reason code, or a typo in the employee's information, and Service Canada allows employers to submit an amended ROE to correct a previously filed one. The amended ROE generally needs to reference the original so Service Canada can reconcile the two rather than treating the correction as an entirely separate event.

Catching an error before the former employee applies for benefits is far less disruptive than correcting one after a claim is already in process, since a correction mid-claim can delay a decision on the benefit amount. Reviewing the ROE against actual payroll records before submitting it, rather than after, avoids most of these corrections in the first place.

How payroll software handles this automatically

Most payroll platforms used by small businesses, including Wagepoint and QuickBooks Online Payroll, can generate an ROE directly from the payroll data already on file and submit it through ROE Web, which removes much of the manual data entry that used to cause errors. The software still needs the correct reason code and the correct last day for which the employee was paid, both of which require a human decision rather than something the system infers on its own.

Businesses that let payroll software auto-populate insurable earnings should still spot-check the total against their own records before submitting, particularly if the employee had irregular hours, overtime, or bonus pay in their final weeks, since those amounts affect the benefit calculation Service Canada performs. Our answer on which payroll software a small business should use covers how different platforms handle ROE generation and other year-round payroll tasks.

How we handle ROEs for clients

We prepare and file ROEs as part of the standard offboarding process whenever a client's employee leaves, whichever reason applies, so the five-day deadline is met without the employer having to track it separately from everything else involved in an employee departure. Our payroll services cover this alongside T4 issuance and final pay calculations, including any outstanding vacation pay owed at termination, so the paperwork around an employee's exit is handled as one coordinated process rather than several disconnected tasks.

Source: CRA — Payroll.