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Self-Employed While on EI: Freelance and Gig Work on a Claim

Updated

Taking on freelance, contract or gig work while you collect Employment Insurance (EI) is allowed, but it’s one of the most misunderstood parts of EI. You must report it, it lowers your benefits, and if it becomes your main activity you may no longer qualify.

How the income is counted

For EI, self-employment earnings are your gross income minus operating expenses, such as supplies, platform fees, business phone costs or rent for a workspace. Capital purchases, such as equipment or a vehicle, are not deducted. Source: Employment Insurance Regulations, s. 35(10); Digest of Benefit Entitlement Principles, chapter 5, section 16.

Earnings from services are allocated to the weeks you did the work, not the weeks you were paid. Earnings from selling goods usually go to the week of the sale.

They then reduce your EI under the Working While on Claim rules: You keep 50 cents of EI for every dollar you earn, up to 90% of the weekly insurable earnings your benefit is based on; above that, earnings are deducted dollar for dollar, and a full week of work pays no EI.

Example. Your EI is $550 a week, based on $1,000 of weekly earnings. In one week you invoice $500 for design work and spend $100 on software for that job. Your earnings for EI are $400, and $200 is deducted, so you receive $350 of EI.

Gig platforms (ride-sharing, delivery, freelancing marketplaces) are self-employment too. Selling a few of your own belongings isn’t.

The availability test

To get regular EI you must be available for work and looking for a job every working day. Service Canada looks at how much time the self-employment takes, whether you’re still applying for jobs, whether you’d drop it for a job, and whether it looks like a business you’re building. If you work at it so much that it amounts to a full week of self-employment, you’re not considered unemployed that week.

A few hours of occasional work while you job-hunt is usually fine. Full-time contract work, or building a business instead of looking for a job, usually isn’t. If you’re unsure, describe the work on your reports and ask Service Canada.

If you had a side business before the layoff

You can still claim EI for the job you lost. Report your ongoing self-employment earnings, and be ready to show you’re available for work. If the side business doesn’t take up more time than it did while you were employed, that helps show it isn’t your main occupation.

Taxes

Report self-employment income on form T2125 with your tax return, and pay CPP contributions on net self-employment income. EI benefits are taxable too, and if your net income for the year is above $86,125 (2026), you may repay part of your regular EI; see EI repayment at tax time.

EI special benefits for the self-employed

If you’re self-employed (not an employee), you can’t get regular EI when your business slows down. You can register for EI special benefits, which cover maternity, parental, sickness and caregiving benefits. You pay EI premiums on your self-employment earnings (the employee rate, with no employer share). To be paid, you must meet all of these:

  • You registered for EI special benefits at least 12 months before claiming.
  • You're a Canadian citizen or permanent resident.
  • You own the business or control more than 40% of the corporation's voting shares.
  • You've cut the time you spend on the business by more than 40% for at least a week.
  • You earned at least $9,254 of net self-employment earnings in 2025 (for claims in 2026).
  • You meet the conditions of the benefit you claim.

Source: Service Canada, self-employed benefits: who can qualify. Quebec residents get maternity and parental benefits through QPIP instead.

Sources

The figures and rules on this page come from these sources, last checked against them between September 28, 2026 and September 29, 2026. How we check facts.