At the beginning of the pandemic, a multitude of job losses following the emergency lockdown prompted the federal government to implement the Canada Emergency Response Benefit (CERB). CERB was set up to provide employed and self-employed Canadians who were affected by COVID-19 with financial support in the form of temporary income replacement. Eligible workers received $2,000 for a 4-week period between March 15 and September 26, 2020. CERB retroactive applications were closed effective December 2, 2020. Canadians can no longer apply for this benefit.
The Government of Canada (“Government”) did not deduct taxes before sending you these benefits. Early in 2021, the Government issued T4A tax slips to all CERB recipients. You will have declared this taxable income when you filed your tax returns. Consulting with an accountant will allow you to plan for any taxes you might owe on this income.
The transition from CERB to EI
On September 27, 2020, the Government transitioned CERB recipients to a redesigned Employment Insurance (EI) benefits program. The program was modified to make it easier for affected workers to receive benefits. Eligible recipients receive at least $500 per week before taxes for a maximum of 50 weeks of benefits. Workers now only need 120 insured hours to qualify for benefits. Workers registered for the unemployed program need to have made at least $5,000 in net earnings in 2020 to be eligible for benefits in 2021. If you received CERB, the 52-week period to accumulate insured hours will be extended. However, unlike CERB, Service Canada has and will tax these benefits at the source. To plan your cash flow and determine how much money you stand to receive, consult the Government’s Website.
Also, CERB recipients should make note of important changes with this transition. You will only qualify for the new EI benefits if Service Canada has your Record of Employment (ROE) on file. In addition, you must meet other qualification criteria. To assist with a swift transition, ensure that your employer(s) have submitted ROEs for each job you held in the 52-week period before you went on CERB.
Just like CERB, Service Canada requires workers to complete bi-weekly reports to determine your continued eligibility. However, unlike CERB, the government now expects you to continue making reasonable and ongoing job search efforts while receiving EI. If you are proactively reaching out to employers, applying for job postings, or conducting job bank searches, keep a record of these efforts in the event of an audit.
Who Should Reapply?
The transition between CERB and EI was automatic for most recipients. However, some individuals must submit a new application for EI. This includes anyone with a 900-series social insurance number, such as foreign-trained workers or international students. Self-employed workers who received benefits through Service Canada need to reapply, along with individuals who received CERB through the Canadian Revenue Agency and those who filed a CERB report declaring they have returned to full-time employment.
Severance and Employment Insurance (EI)
In addition, you must report any earnings you receive while on EI. These include wages, salary or commissions, vacation pay, retirement pension and severance in lieu of notice.
Normally, severance pay will impact your EI benefits start date. If you are caught up in a wrongful dismissal case, you may not know the amount of your severance when you apply for EI benefits. However, you should declare these funds in your biweekly report as soon as you receive them. This may trigger an EI overpayment and cause your payments to stop, depending on the timing of your termination. Amendments to the EI Act earlier in 2021 made some important changes for employees terminated between September 27, 2020 to September 25, 2021 for the purposes of how wrongful dismissal severance is treated. If the timing of your termination does trigger an EI overpayment, the Receiver General will issue a Notice of Debt and ask for repayment from your severance payout.
Canada Recovery Benefit, Canada Recovery Caregiver Benefit and Canada Recovery Sickness Benefit
Some individuals may not qualify for the EI program. The government launched the following new programs under Bill C-4, that may accommodate you. These benefits apply retroactively from September 27, 2020, to avoid a gap in coverage after the end of CERB.
The Canada Recovery Benefit (CRB) provides eligible workers up to 54 weeks of income support for those who are not eligible for Employment Insurance and are either not employed or self-employed due to COVID-19 or had their income reduced by at least 50% due to COVID-19. Self-employed workers can apply for the CRB. Eligible workers can either receive $1,000 or $600 for a 2-week period. Applicants can apply for a maximum of 27 periods (54 weeks). The program ends on October 23, 2021. The CRA, which administers the CRB, will tax these benefits at the source. To plan your cash flow and determine how much money you stand to receive, consult the Government of Canada Website.
The Canada Recovery Caregiver Benefit (CRCB) provides eligible workers up to 42 weeks of income support for those who are unable to work because they must care for their child under 12 years old or a family member who needs supervised care. This applies if the child’s school is closed due to COVID-19, or because they are sick, self-isolating, or at risk of serious health complications due to COVID-19. Eligible recipients will receive $500 for each 1-week period. The government does not require your ROE for these benefit programs.
Anyone sick or in isolation due to COVID-19 should apply to the Canada Recovery Sickness Benefit (CRSB). You will receive $500 per week for a maximum of four weeks.
Seeking a Legal Opinion
Most individuals do not require legal representation to file claims for EI or any of the other emergency benefits programs outlined above. The requirements are straightforward along with the application processes.
However, Service Canada puts a very high emphasis on an accurate ROE to assess your EI claim. You will likely require legal help if your employer refuses to issue your ROE, causes delays with it or issues it with errors out of spite. Such actions can delay your claim, have it denied or result in a significantly lower pay-out. Contact us as soon as possible if this has occurred to you.
In addition, you should also seek legal help if your employment status remains ambiguous. The terms “terminations” and “layoffs” are often used interchangeably. But your rights and entitlements differ greatly depending on which one it is. In an uncertain economic climate, some employers will try to walk in the grey zone between the two. A 1-hr consultation with an employment lawyer can help clarify the matter for you.