What to take away
- Issue an ROE whenever there is an interruption of earnings, even if the employee does not plan to claim EI.
- For electronic ROEs the clock runs from the pay period in which the interruption occurs, so check your own pay cycle.
- Report every separation payment on the ROE, then reconcile the ROE to the payroll register before submitting.
Two separate jobs on the last day
Paying the employee and reporting to Service Canada are different tasks with different rules. The final pay is a payroll matter: you calculate the amounts owed, withhold the usual deductions, remit them and report the earnings on the T4. The ROE is an information form for the EI program. Completing one does not complete the other.
Ontario employment standards rules, which are separate from the CRA rules and are not covered here, govern when final wages and vacation pay must be paid and whether notice or termination pay is owed. Settle that question first, because it decides which amounts appear in the final pay and on the ROE. If the departure involves a dispute or a dismissal, get advice before you pay.
When a Record of Employment is required
You must issue an ROE each time an employee has an interruption of earnings, or when Service Canada asks for one. This applies whether the employee resigns, is laid off, is dismissed, retires or goes on leave, and it applies even if the person has no intention of applying for EI. In general, an interruption occurs when an employee has had, or is expected to have, seven consecutive calendar days with no work and no insurable earnings from you.
There are exceptions and special cases. Part-time, on-call and casual workers do not need an ROE after every gap of seven days, although you must issue one if the employee asks, the person is no longer on your active employment list, Service Canada requests it, or there has been no work or insurable earnings for 30 days. An ROE may also be needed when your pay period type changes or the business changes ownership. Earnings that are not insurable, such as those of an employee who controls more than 40% of a corporation’s voting shares, do not call for an ROE. If you are unsure, confirm before skipping it.
How the ROE deadline works
For electronic ROEs, the deadline depends on how often you pay. If you pay weekly, biweekly or semi-monthly, you have up to five calendar days after the end of the pay period in which the interruption occurs. If you pay monthly or every four weeks, the deadline is whichever is earlier: five calendar days after the end of that pay period, or 15 calendar days after the first day of the interruption. Paper ROEs must be issued within five calendar days of the first day of the interruption or the day you become aware of it.
Illustrative example: a biweekly pay period containing the interruption ends on March 13, so the electronic ROE is due by March 18. With monthly pay and a March 1 interruption, 15 days after March 1 is March 16, which is earlier than April 5, so March 16 is the deadline. If the interruption began on March 30 instead, April 5 would be earlier than April 14. If you use a payroll provider, confirm in writing who files the ROE and who is accountable for the date.
What to withhold from the final pay
Final pay is not a special category for deductions; each component has its own treatment. Vacation pay, whether you pay it out because the person is leaving or it comes with the final cheque, is subject to income tax, EI premiums and CPP contributions. Wages in lieu of termination notice are also employment income subject to CPP, EI and income tax. The CRA’s methods for calculating the deductions can differ depending on whether vacation was actually taken, so the way your payroll software classifies the payment matters.
Retiring allowances, which can include some severance and damages for loss of employment, follow different withholding rules, including no CPP or EI. The retiring allowance entry explains them, and the severance article covers the employee’s side. Before you run the final pay, write down each component and how you have classified it. That one page is useful for the ROE, the T4 and any later question.
How separation payments appear on the ROE
The ROE asks you to report all payments or benefits, other than regular pay, that you have paid or will pay because of the separation. Vacation pay owing because the person is no longer working goes in the vacation pay block. Statutory holiday pay for days after the last day paid goes in its own block, and everything else, including bonuses, goes under other monies. You report these whether or not they are insurable. Vacation pay that you already include with each pay is not reported there.
Insurability is a separate question, set by the CRA. In the ROE guide’s summary chart, vacation pay paid on separation and pay in lieu of notice are insurable earnings but carry no insurable hours, and they are allocated to the last pay period of regular wages. Retiring allowances, including severance pay, are not insurable. Getting this wrong changes the earnings Service Canada sees, which can change the person’s benefit, so check each item against the chart.
Hours, reasons and common mistakes
Insurable hours depend on how the person is paid. For hourly employees it is the hours worked and paid. For salaried employees, use actual hours if you know them; otherwise use an agreed number in the contract, or divide insurable earnings by the minimum wage, capped at seven hours a day or 35 hours a week. Electronic ROEs also require earnings by pay period, going back as far as 53 weekly pay periods, so the payroll history has to be complete.
Choose the reason code that reflects what actually happened, such as shortage of work, quit or another listed reason. The guide warns that knowingly entering a false or misleading reason is a serious offence that can lead to fines or prosecution. Avoid comments unless needed, because a comment sends the ROE to manual review and can slow the person’s claim. The usual problems are late submission, the wrong last day paid, and hours or earnings that do not match payroll.
Fixing and keeping the record
You cannot cancel an ROE you have already issued. If something changes or was wrong, you issue an amended ROE and complete every block, not only the one that changed. A common trigger is a departure that becomes final after a first ROE, when additional vacation pay is then owed. Issue an amended ROE if Service Canada asks as well.
Keep the payroll records related to the ROE for six years after the year to which they relate, whether the ROE was electronic or on paper. Electronic ROEs do not require a paper copy for the employee, who can access the record through My Service Canada Account. Keep your own notes on how each payment was classified and who approved the final pay.
After the last cheque: the T4 and your accountant
If you know the person will not return in the calendar year, the CRA suggests working out the year-to-date earnings and giving them a T4 slip, then including it in your T4 return due at the end of February. Vacation pay paid out is reported in the year received. The year-end article explains how to reconcile the slips to your remittances.
When you talk to your accountant, bring the final payroll calculation, the termination or resignation letter, the ROE as submitted, the payroll register and the remittance confirmation. Ask how each separation payment was classified, whether the ROE agrees with the register, and whether the departure raises any other filing, such as a pension adjustment. Sora’s payroll service can help organize that file; the details depend on your circumstances.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- Employers: How to complete the record of employment (ROE) formService Canada / Employment and Social Development Canada
- What should you do if an employee has an interruption of earnings?Canada Revenue Agency
- Vacation pay and public holiday paymentsCanada Revenue Agency
- Special payments chartCanada Revenue Agency
- What should you do if an employee leaves?Canada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.