How to Calculate Record of Employment (ROE) Correctly in 2025

Accuracy in payroll and HR documentation has never been more important. Among the most critical documents employers must provide in Canada is the Record of Employment (ROE). Whether an employee resigns, is laid off, or faces reduced hours, a properly issued ROE ensures that the employee can apply for Employment Insurance (EI) benefits without delay.

Knowing how to calculate the Record of Employment correctly is vital—not only for employee wellbeing but also for maintaining legal compliance and protecting your business from penalties.

In this guide, we’ll explain everything you need to know about calculating ROEs correctly in 2025, including how to handle complex situations, avoid mistakes, and adopt best practices that simplify the process.

What Is a Record of Employment (ROE)?

A Record of Employment (ROE) is a critical document issued by Canadian employers that records details of an employee's work history, including hours worked, earnings, and the reason for their interruption of earnings. Service Canada uses this information to determine eligibility for Employment Insurance (EI) benefits.

Employers must submit an ROE even if the employee is not planning to apply for EI. The ROE protects both employees and employers by creating an official record of employment activities.

Key Information Contained in an ROE:

• Employee identification details
• Start and end dates of employment
• Final pay period and gross insurable earnings
• Total hours worked in the relevant period
• Reason for separation (e.g., shortage of work, illness, quit, dismissal)

Regardless of the cause of the employment interruption, the law requires that the ROE be issued promptly and accurately.

Why Is Calculating ROE Correctly So Important?

When errors occur on an ROE, they can create a domino effect of problems:

• Delayed EI payments: Incorrect or missing information can prevent former employees from receiving timely benefits.
• Increased administrative burden: Employers may need to respond to audits or correct mistakes through amended ROEs.
• Financial penalties: In cases of serious error or negligence, employers may face fines or sanctions.
• Damage to company reputation: Mishandling employee separations or ROEs can lead to poor reviews and reduced trust among current and former employees.

By knowing how to calculate the Record of Employment properly, businesses can protect themselves and support employees in times of transition.

When Must You Issue an ROE?

Employers must issue an ROE under several circumstances, including:

• Seven-day rule: If an employee has seven consecutive days with no work or insurable earnings.
• Earnings interruption of 60% or more: If an employee's earnings drop below 60% of their normal weekly earnings due to illness, injury, maternity, or similar leave.
• Termination, resignation, or layoff: Any voluntary or involuntary departure.
• Change in pay period type: If your business changes payroll frequencies.

There are no exceptions based on employment type—full-time, part-time, casual, and seasonal workers are all covered by ROE rules.

How to Calculate Record of Employment: Step-by-Step

Proper calculation involves gathering complete, accurate data for each employee experiencing an interruption. Let’s walk through it in detail:

1. Identify the Relevant Pay Periods

An ROE requires detailed insurable earnings for a specific number of pay periods leading up to the last day worked:

Tip: Even if the employee worked for fewer periods, you report only the periods actually worked.

2. Gather Insurable Earnings

Insurable earnings include more than just base wages:

Include:

• Regular wages/salary
• Overtime pay
• Statutory holiday pay
• Vacation pay (if not already paid out)
• Bonuses and commissions (regular and expected)
• Tips (if controlled or accounted for by the employer)

Exclude:

• Severance pay
• Reimbursed expenses
• Non-cash gifts, unless treated as taxable employment income

Important: You must report gross earnings before deductions for taxes, benefits, or other withholdings.

3. Calculate Insurable Hours

For hourly workers: Report actual hours worked per pay period.

For salaried workers: Use standard weekly hours (e.g., 40 hours/week) unless employment agreements specify differently.

Example:

• Salaried employee: 40 hours/week → 80 hours/biweekly period.
• Hourly employee: 75 hours recorded over two weeks → report 75 hours.

4. Identify Last Day Worked

The last day worked is the last day the employee was physically present and earning wages.
It does not include vacation, severance, or paid leaves extending beyond the final working day.

If an employee works their final shift on July 15 but is paid vacation up to July 30, you still record July 15 as the last day worked.

5. Choose the Correct Reason Code

This is a critical field on the ROE (Box 16):

Choosing the wrong reason code can delay an employee’s EI application! Always match the reason precisely to Service Canada’s definitions.

Detailed Example: Biweekly Payroll ROE Calculation

Scenario:

• Biweekly pay: $2,400 gross
• Overtime: $300 (included during last 2 periods)
• Vacation payout: $1,500
• Termination date: June 15, 2025

Steps:

1. Report last 14 pay periods of earnings:
   • $2,400 base x 14 = $33,600
   • Add overtime where applicable
2. Report $1,500 separately in Block 17C (Other Monies).
3. Record June 15, 2025, as the last day worked.
4. Use code “A – Shortage of Work” if terminated due to layoffs.

Special Situations You Must Handle Carefully

Maternity and Parental Leave

If an employee leaves for maternity or parental leave, use Code "F" for Maternity or appropriate parental leave reasons.
Ensure the ROE reflects accurate insurable hours leading up to the leave.

Remote and Hybrid Workers

Remote work status does not change ROE obligations. As long as the employee has an interruption in earnings, the employer must issue an ROE.

Casual, Seasonal, and Temporary Employees

Even casual employees with irregular schedules must have an ROE issued once their earnings interruption occurs (e.g., end of a seasonal contract).

Common Errors When Calculating ROE

Employers often run into trouble with:

• Reporting gross earnings incorrectly
• Misclassifying severance as regular wages
• Skipping overtime or shift premium earnings
• Incorrectly stating the reason for separation
• Submitting an ROE late, causing delays for employees

Each of these mistakes can cause audits, fines, and unnecessary administration headaches.

Best Practices for Accurate ROE Management

1. Automate with Payroll Software

Modern payroll systems offer built-in ROE Web integration, dramatically reducing manual errors, which is why many organizations seek vendor shortlisting support before selecting a payroll platform. Look for platforms certified to file ROEs electronically.

2. Maintain Updated Employee Records

Consistently record employee status changes, pay adjustments, leave periods, and hours worked to simplify calculations when an ROE is needed.

3. Educate Managers and Payroll Teams

Host annual training sessions on ROE compliance and updates from Service Canada to ensure consistency across the organization.

4. Use a Quality Control Checklist

Always double-check:

• Earnings amounts
• Insurable hours
• Reason codes
• Final work dates
• Special payments (bonuses, severance)

5. Submit Electronically and On Time

Electronic submissions through ROE Web minimize delays and provide confirmation tracking, ensuring you meet your legal obligations.

How Long Should Employers Keep ROE Records?

Employers must keep payroll records, including ROEs, for at least six years after they are created.
This is important for audit defense and employee record requests.

ROE and Payroll Frequency: Know the Differences

Because ROE reporting periods vary by pay cycle:

• Weekly: 27 periods
• Biweekly: 14 periods
• Semi-monthly: 13 periods
• Monthly: 6 periods

Ensure your payroll and HRIS systems are configured correctly to capture the right reporting periods when generating an ROE, especially when evaluating The Four Types Of HR And Payroll Systems available to modern employers.

Final Thoughts: Getting ROEs Right Protects Everyone

Mastering how to calculate Record of Employment correctly in 2025 is not just a regulatory obligation—it’s a best practice that strengthens the relationship between employers and employees.

By understanding every detail, automating processes, and submitting ROEs promptly, you protect your company from compliance risks and support your employees' financial security during transitions. Companies needing additional guidance can also book a meeting with OutSail to discuss payroll and HR technology options.

Small mistakes can create big problems—but with the right approach, you can manage ROEs with confidence and precision.

Smaller employers evaluating affordable payroll tools may also benefit from reviewing the Best Free Payroll Software For Small Businesses In 2025.

Schedule your free Outsail consultation today and discover the tools and partners that can help you streamline compliance, protect your business, and better support your employees.

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