Pay your Employee an EI Benefit Top up amount
Employers can offer supplemental payments to maternity, parental (including adoption) or caregiving benefits (including compassionate care, family caregiver benefit for children and family caregiver benefit for adults). These plans do not have to be registered with Service Canada. The top-up amounts are not considered as earnings and are not deducted from the employees’ EI benefits when certain requirements are met.
The supplement is not deducted from the employees’ EI benefits if the plan meets the following 2 conditions:
- when the payment is added to the employee’s EI weekly benefits, the combined amount does not exceed the employee’s normal weekly earnings from employment— 100% of gross salary
- the payment is not used to reduce other accumulated employment benefits such as banked sick leave, vacation leave credits, or severance pay
Please note that only active employees can receive payment through Knit. If you wish to continue issuing payments to an employee on leave, do not remove them from payroll and keep them active.
Set up an Income type for the EI top-up amount
You will have to create a new income type for the EI benefit top-up since they have different tax properties than regular pay. Here are instructions on how to set up an EI benefit top-up amount:
- Open Run Payroll > Income type and select Add new Income Type.
- The Add Income Type window will open, enter a description for the income type and select "Custom" from the Income Type drop-down menu.
- For the Payment unit, select "Amount" and select "No" for record hours.
- For the Tax Properties, check off the following: Pensionable, payable, taxable.
- Select Create.
Add the EI top-up to the employee's Profile
Once the employee has had their final regular payroll processed, set their regular pay rate to 0, add the custom income type to the employee's additional income settings.
Please note that if an income type is added to the employee's additional income in the middle of a pay period, the input payroll page will not automatically include this newly created income type. The income type and the set amount will be automatically included in the following pay period. Depending on the timing of this employee's income type settings, you may have to add this payment the first time manually.
Recording EI top-up amounts on an ROE
EI benefit top-up payments are recorded on the ROE's Seperation Payments section; they are classified as "Other Monies." For the payment type, select "SUB Maternity/Parental/ Family Caregiver/Compassionate Care earnings." However, the amount and the date are not mandatory since you may not know this information.