Issuing Records of Employment (ROEs) – A Complete Guide by a Montreal CPA Firm Near You

Introduction

When an employee’s earnings stop or are interrupted, Canadian employers are legally required to issue a Record of Employment (ROE)—one of the most important payroll documents in the country. ROEs allow employees to apply for Employment Insurance (EI) benefits, and Service Canada uses them to determine eligibility, benefit periods, and amounts. Mistakes in ROEs lead to delayed EI payments, Service Canada investigations, employer penalties, and even payroll audits. Yet many employers misunderstand when an ROE is required, how to complete it properly, or what information must be included. Whether you have full-time staff, part-time workers, seasonal employees, or casual labour, understanding how to issue ROEs correctly is essential for CRA and Service Canada compliance.

Legal and Regulatory Framework

ROEs are governed by the Employment Insurance Act and Employment Insurance Regulations under Service Canada. Employers must issue an ROE whenever an employee has an interruption of earnings, defined as:

1. Seven-Day Interruption

A break in insurable employment for 7 consecutive calendar days with no work and no insurable earnings.

2. Reduced Earnings

An employee’s earnings fall below 60% of normal weekly earnings due to:
• illness or injury
• leave (maternity/parental/sick leave)
• shortage of work
• strike or lockout
• layoff
• dismissal or termination

3. Special Situations Requiring ROEs

Service Canada requires ROEs in cases of:
• seasonal layoffs
• unpaid leave
• retirement
• work-sharing arrangements
• employee absences beyond 7 days
• family caregiver leave
• compassionate care leave

ROEs must be issued:
• within 5 days of the interruption of earnings, or
• within 5 days of the end of the pay period in which interruption occurs (depending on payroll cycle).

ROEs may be filed electronically (ROE Web, payroll provider integrations) or by paper (less common). These legal requirements form the basis for ROE compliance in Canada.

Key Court Decisions

Courts have reaffirmed the importance of employer compliance with ROE obligations:

1. Tennant v. Canada

The court held that employers must provide truthful and complete ROEs; inaccurate information can lead to penalties and civil liability.

2. Canadian Food Inspection Agency v. Canada

Incorrect ROEs caused employees to receive improper EI payments; the court ruled the employer responsible for providing complete and accurate information.

3. Carignan v. Canada

The employer failed to issue timely ROEs, causing delays in EI benefits. The court confirmed that delays create grounds for Service Canada enforcement action.

4. Hickey v. Canada

Although focused on payroll deductions, the case emphasized that payroll documentation, including ROEs, must reflect accurate income and employment records.

These decisions clearly show that ROE accuracy is critical and legally enforceable.

Why Service Canada & CRA Target This Issue

ROEs are a major audit and verification area because errors are widespread. Agencies look for:

• late-issued ROEs
• incorrect reason codes for separation
• earnings not matching payroll records
• inaccurate insurable hours
• misreported vacation, gratuities, or overtime
• failure to issue ROEs for part-time or casual workers
• employers issuing ROEs only when employees request them
• ROE patterns suggesting misclassification of employees

Red flags include:
• “shortage of work” used repeatedly
• discrepancies between T4 earnings and ROE earnings
• high frequency of employment interruptions
• ROEs for employees treated as contractors

Service Canada shares data with CRA; an ROE review often leads to payroll audits.

Mackisen Strategy

At Mackisen CPA Montreal, we ensure employers issue accurate, compliant ROEs every time. Our payroll compliance strategy includes:

1. Determining When an ROE Is Required

We assess interruption of earnings based on:
• hours worked
• earnings dropped below 60%
• unpaid leave
• seasonal layoffs
• terminations or resignations
• maternity, parental, or medical leaves

2. Completing ROEs Correctly

We verify and prepare:
• correct reason codes (“K”—Other, “A”—Shortage of Work, “M”—Dismissal, etc.)
• accurate insurable earnings in Box 15
• correct insurable hours in Box 15A
• vacation pay treatment
• bonuses, commissions, and lump-sum payouts
• ROE comments (only when required)

3. Filing Through ROE Web

• submitting ROEs electronically through Service Canada
• ensuring payroll systems align with ROE data
• issuing ROEs within mandatory deadlines

4. Avoiding Red Flags

We ensure:
• reasons for separation match employment records
• totals match T4 and payroll summaries
• no discrepancies between hours worked and payroll periods
• proper categorization of benefits and allowances

5. Audit Protection

If Service Canada questions an ROE:
• we respond directly on behalf of employers
• provide payroll reports and supporting documents
• defend classification and severance calculations
• correct ROEs when necessary

Our system ensures clean, accurate ROEs that protect both employer and employee.

Real Client Experience

A Montreal restaurant repeatedly issued late ROEs, causing employees to file complaints. Service Canada contacted the employer to enforce compliance. We took over payroll, automated ROEs, and resolved all outstanding cases.

A clinic misreported insurable hours for part-time staff. This triggered both a payroll audit and EI benefit recalculations. We corrected all ROEs and retrained staff on proper recordkeeping.

A construction company incorrectly coded layoffs as “dismissal,” leading to EI denials and employee disputes. We corrected the ROEs and educated management on proper reason codes.

A beauty salon treated workers as contractors but issued ROEs during slow months. Service Canada flagged misclassification. We restructured the workforce model and resolved the audit.

Common Questions

Employers often ask whether they must issue an ROE when an employee quits. Yes—if there is an interruption of earnings.

Others ask whether ROEs are required for term employees. Yes—at the end of each contract.

Some ask whether ROEs must be issued for employees on sick leave. Yes—if insurable earnings drop below 60%.

Another question: Should ROE reason codes include comments? Only if absolutely necessary; comments often trigger audits.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal ensures employers issue ROEs correctly, on time, and fully compliant with federal and Quebec laws. Whether you have a single employee or a large workforce, our experts protect your business from penalties, delays, and payroll audits.