Employment Insurance (EI)

Decision

[1] The appeal is dismissed. I disagree with the Appellant.

[2] The Appellant doesn’t qualify for Employment Insurance (EI) benefits for self-employed persons.

Overview

[3] The Appellant applied for sickness benefits on May 24, 2022, and again on August 30, 2022. On his applications for benefits, he said he was self-employed.

[4] The Canada Employment Insurance Commission (Commission) decided the Appellant didn’t qualify for EI benefits for self-employed persons because he hadn’t accumulated the minimum amount in earnings from his self-employment activities during his qualifying period.

[5] The Appellant says the Commission made a mistake. He says he did in fact accumulate the minimum amount in earnings from his self-employment activities during his qualifying period.

Matter I have to consider first

I accept the Appellant’s post-hearing documents

[6] At the hearing, the Appellant said he has evidence that he earned more than the minimum amount in self-employment earnings during his qualifying period, contrary to what the Commission says. I told him I would accept this evidence if he sent it to the Tribunal after the hearing.

[7] The Appellant then sent documents to the Tribunal after the hearing.^{Footnote 1} I accept these documents as they relate to the Appellant’s arguments about why he qualifies for self-employment benefits.

Issue

[8] Does the Appellant qualify for EI benefits for self-employed persons?

Analysis

[9] Not everyone who stops working can receive EI benefits. You have to prove that you qualify for benefits.^{Footnote 2} The Appellant has to prove this on a balance of probabilities. This means he has to show that it is more likely than not that he qualifies for benefits.

Qualifying for EI benefits for self-employed persons

[10] To qualify for EI benefits for self-employed persons, the Appellant must show that he meets all four criteria set out below.^{Footnote 3}

1. a) At least 12 months have expired since the day on which he entered into an agreement with the Commission;^{Footnote 4}
2. b) The agreement has not been terminated or deemed to have been terminated;
3. c) He has had an interruption of earnings from self-employment;
4. d) He has had during his qualifying period an amount of self-employed earnings that is equal to or greater than the amounts set out in paragraph 152.07(1)(d) of the Employment Insurance Act (Act).

[11] The Appellant says he meets the first three criteria and argues that the Commission doesn’t dispute this.^{Footnote 5}

[12] I agree with the Appellant. The Commission doesn’t make any submissions with respect to the first three criteria.^{Footnote 6} In my view, it’s reasonable to believe that if the Commission does dispute that the Appellant meets the first three criteria, it would have brought forward this argument in some way.

[13] I also see no evidence to counter the Appellant’s argument here. It’s reasonable to believe that if there is evidence that he doesn’t meet the first three criteria, it would be on file and the Commission would have already referred to it.

[14] For these reasons, I find the Appellant does meet the first three criteria to qualify for EI benefits for self-employed persons.

[15] This means the only area of disagreement between the Appellant and the Commission is about whether the Appellant meets the fourth (and last) criteria, specifically whether he had during his qualifying period an amount of self-employment earnings that is equal or greater the amounts set out in paragraph 152.07(1)(d) of the Act. In this case, the minimum amount of self-employment earnings the Appellant needs is $5,289.^{Footnote 7}

[16] The Commission says the Appellant doesn’t meet the fourth criteria because his self-employment earnings during his qualifying period (January 1, 2021 to December 31, 2021) were below $5,289. More specifically, it says information received from the Canada Revenue Agency (CRA) via a two-way data exchange shows the Appellant’s net income from self-employment in 2021 was $0.^{Footnote 8}

[17] The Appellant says the following^{Footnote 9}:

• He applied for benefits in May 2022 and there was a technical glitch that prevented him from adding two professions (real estate and paralegal) at the same time.
• On that application, he put his total self-employment income even though he could only list one of his two professions (real estate).
• His real estate work is commission-based, but his paralegal work is a professional job.
• He wasn’t involved in real estate much over the last few years, including 2021.
• His plan was to let the Commission know that he had a technical glitch and he wanted to update his claim to add his second profession and clarify what the income was for that profession.
• His claim was initially approved, but then the payments stopped after one week. The Commission told him it stopped the payments because he hadn’t qualified for benefits as his self-employment income was too low.
• That’s when he noticed the Commission just considered his real estate income, not his paralegal income.
• He spoke to a Commission agent who told him to go ahead and make a new claim (which he did in August 2022) based on his legal profession only instead of filing a reconsideration request.
• But in late August he found out his second claim was denied too.
• He submitted a reconsideration request to the Commission in September 2022, but he was later told it was never received. He went back and forth with the Commission over the next few months with little progress, and the matter wasn’t resolved until March 2023.
• In March 2023, a Commission agent misled him about how to appeal its reconsideration decision. They falsely told him he didn’t need to file an appeal with the Tribunal. Instead, he could just contact the CRA to update his income and once that was done his EI claim would be automatically updated.
• He’s very upset with how the Commission treated him while trying to sort out his reconsideration request.
• The Commission repeatedly refers to his real estate brokerage, but he had no income from real estate in 2021. His income was from his paralegal work, with a part of that being employment income and another part being self-employment income.
• The Commission says he has $0 in self-employment income, but that’s not correct. His Notice of Assessment for 2021 shows his total income was $29,830. And his gross income as a paralegal for 2021 was $18,800, which shows up on line 13699 of his T-1 general.
• He’s earned income that’s way beyond the minimum threshold and is upset that the Commission doesn’t seem to understand that.
• A Tribunal decision (P.N. v Canada Employment Insurance Commission) says that the Tribunal isn’t bound by the information provided by the CRA with respect to a person’s self-employment earnings.
• Another Tribunal decision (C.T. v Canada Employment Insurance Commission) says that a person’s total income might be of different types, including self-employment, and the net income is taken into account from this.
• Other Tribunal decisions (L.M. v Canada Employment Insurance Commission and O.S. v Canada Employment Insurance Commission) say that the self-employment earnings of a self-employed person for a year is the aggregate of an amount equal to their income for the year from their business minus all losses sustained by the self-employed person in the year carrying on the business.
• Section 35(2) of the Employment Insurance Regulations (Regulations) defines earnings as the entire income of a person arising out of any employment. The Federal Court upheld this definition in McLaughlin v Canada (Attorney General).

[18] I understand the Appellant feels he qualifies for self-employment benefits. Unfortunately, I disagree. These are my reasons.

[19] I find that the Appellant was engaged in a business during 2021. The Act says a self-employment business includes a profession.^{Footnote 10} And the Appellant referred to his paralegal work (from which he says he earned self-employment income in 2021) as a profession multiple times in his submissions^{Footnote 11} and at the hearing.

[20] I also find that for a self-employed person engaged in a business, the calculation of their amount of self-employed earnings for a year (the length of their qualifying period) is based on their net income from their business. This is because the Act says that for these individuals, the amount of their self-employed earnings for a year is “the amount that is the aggregate of an amount equal to their income for the year…minus all losses” they sustained in the year from their business.^{Footnote 12}

[21] In my view, the fact that the Act specifically includes the phrase “minus all losses” leads me to conclude that the calculation of the amount of self-employment earnings for a person engaged in a business is meant to represent their net income (meaning their income after any losses have been subtracted) rather than simply total income. If Parliament had intended this calculation to include only total income, it’s reasonable to believe it would have not included the phrase “minus all losses” from the Act.

[22] So, I conclude that I must look at the Appellant’s self-employment earnings in terms of his net income, not his total income. This is what the Act says I must do.

[23] When I look at the Appellant’s self-employment earnings in terms of his net income, I find his evidence shows that the amount of his earnings falls short of what he needs to qualify for self-employment benefits.

[24] On the one hand, I note that the Appellant’s 2021 Notice of Assessment says his total income was $29,830.^{Footnote 13} And I note the Appellant’s 2021 T1 General says his gross professional income was $18,800.^{Footnote 14}

[25] But I also note the Appellant’s 2021 T1 General says his net self-employment income was -$12,010.95 (or negative $12,010.95).^{Footnote 15}

[26] Since the Appellant’s net self-employment income for 2021 was -$12,010.95, I find this means he doesn’t meet the fourth criteria to qualify for self-employment benefits. This is because his earnings during his qualifying period are below the minimum amount needed (in this case, $5,289) as set out in the Act. As discussed above, I must calculate his earnings based on his net self-employment income, not his total income.

[27] I acknowledge the Appellant feels that some other Tribunal decisions support his argument that he still qualifies for self-employment benefits.

[28] But I note that I’m not bound by other Tribunal decisions. This means I can decide for myself if I agree with them and how much weight to give them in my own decision.

[29] In this case, I don’t give much weight to the other Tribunal decisions the Appellant refers to. Here are my reasons.

[30] For P.N. v Canada Employment Insurance Commission: That decision says the Tribunal isn’t bound by information from the CRA about self-employment earnings.^{Footnote 16} While I agree with the Appellant that these findings are persuasive^{Footnote 17}, I find they don’t apply here though. This is because the Appellant himself has provided the evidence (specifically his 2021 T1 General) that I have relied on to make my findings.^{Footnote 18} In other words, my decision is ultimately based on information from the Appellant, not the CRA. 

[31] For C.T. v Canada Employment Insurance Commission and L.M. v Canada Employment Insurance Commission: I note those decisions specifically cite the part of the Act that says self-employment earnings are based on net income.^{Footnote 19} I find this means they help to reinforce my findings that the calculation of self-employment earnings is based on net income. So, I don’t see how those decisions help to support the Appellant’s argument that his self-employment earnings should be calculated based on total income instead.

[32] I also find the Appellant’s arguments about C.T. v Canada Employment Insurance Commission and L.M. v Canada Employment Insurance Commission support my argument, not his. This is because he says those decisions cite the part of the Act that I have already discussed, and which I have found says self-employment earnings are based on net income, not total income.^{Footnote 20} So, without more information, I find that the Appellant’s arguments about those decisions don’t help to support his appeal.

[33] For O.S. v Canada Employment Insurance Commission: That decision discusses in part how self-employment earnings are calculated. But I find it does so in relation to another part of the legislation (specifically section 35(10)(c) of the Regulations)^{Footnote 21}, which doesn’t pertain to the issue before me, which is whether the Appellant qualifies for self-employment benefits. Because of this, I find that decision isn’t relevant here.

[34] Also, I find that the Appellant’s arguments about O.S. v Canada Employment Insurance Commission focus largely on how that decision talks about the allocation of earnings.^{Footnote 22} But this isn’t the issue before me here. Instead, I’m only looking at whether the Appellant qualifies for self-employment benefits, not how the Commission has allocated his earnings and whether it has done that correctly. So, I find the Appellant’s arguments about that decision aren’t relevant here either.

[35] I also acknowledge the Appellant says that a Federal Court decision (McLaughlin v Canada (Attorney General)) supports his argument that he qualifies for self-employment benefits because it upholds the definition of earnings set out in the Regulations.^{Footnote 23}

[36] I note that I am bound by Federal Court decisions. This means that I must follow what these decisions say if they are relevant to the issue before me.

[37] But in this case, I find McLaughlin v Canada (Attorney General) isn’t relevant to the issue before me. This is because that decision focuses on a different issue: whether a person had received earnings from their employer based on the meaning of subsection 35(2) of the Regulations.^{Footnote 24} And I find McLaughlin v Canada (Attorney General) also doesn’t bring up eligibility for self-employment benefits as an issue under dispute or refer in any way to the parts of the Act that focus on self-employment benefits.^{Footnote 25}

[38] In other words, I find that I don’t have to follow McLaughlin v Canada (Attorney General) here because it doesn’t make any findings about the issue before me, which is whether the Appellant qualifies for self-employment benefits. It also doesn’t make any findings that would lead me to agree with the Appellant’s argument that his self-employment earnings should be calculated based on total income.

[39] So, for these reasons, I don’t give McLaughlin v Canada (Attorney General) much weight here either.

[40] Additionally, I understand the Appellant is very upset with how the Commission handled his claims for benefits and reconsideration request. And I understand from his testimony that this process has taken a significant toll on him emotionally.

[41] But, while I sympathize greatly with the Appellant, I can’t look at the Commission’s actions and behaviour here. I can only look at the Commission’s reconsideration decision and the issue (or issues) raised in that decision^{Footnote 26}, which in this case is whether the Appellant qualifies for self-employment benefits. If the Appellant wants to pursue a complaint against the Commission for how he was treated, he needs to pursue that at the appropriate decision-making body or tribunal.

[42] That said, it appears to me that the Appellant has raised some valid concerns about the Commission’s conduct in terms of administrative delays, lost documents, and misinformation he received leading up to this appeal. Because of that, I would strongly encourage the Commission to review its internal policies to improve how it communicates with people and processes the documents they send in so that others in the future don’t have the same negative experience as the Appellant.

So, does the Appellant qualify for self-employment benefits?

[43] Unfortunately, no.

[44] I understand the Appellant feels he qualifies for self-employment benefits because his total income during his qualifying period (January 1, 2021 to December 31, 2021) is more than the minimum amount of earnings he must have.

[45] But, as discussed above, I find the Act says self-employment earnings are based on net income, not total income. The Act also says that someone in the Appellant’s situation needs to have earned at least $5,289 in self-employment earnings during their qualifying period to qualify for self-employment benefits. In this case, the Appellant’s evidence shows that his net self-employment income for 2021 (his qualifying period) was -$12,010.95, which is below the minimum amount needed.

[46] Since the Appellant’s self-employment earnings during his qualifying period is below the minimum amount, this means he doesn’t meet one of the criteria to qualify for self-employment benefits.

[47] I understand the Appellant will be frustrated with my decision. But I have to follow the law the way it’s written and can’t interpret it in a way that’s contrary to its plain meaning.^{Footnote 27} I also can’t make an exception for him here, no matter how difficult or compelling his circumstances may be.^{Footnote 28} 

[48] The Appellant needs to meet all four criteria to qualify for EI self-employment benefits. He has only met three of the four criteria.

[49] This means he hasn’t satisfied the requirements to qualify for EI self-employment benefits.

Conclusion

[50] The appeal is dismissed.

[51] The Appellant hasn’t proven he meets the criteria to qualify for EI benefits for self-employed persons. This means he can’t establish a claim or be paid the benefits he asked for.