In early 2020, the federal government was forced to create an economic action plan to assist the influx of individuals whose employment was negatively affected by the COVID-19 pandemic. A major component of this plan was the Canada Emergency Response Benefit (CERB) – a flat $2,000 monthly payment for those who qualified. Effective September 27, 2020, the federal government began transitioning all people accessing the CERB onto Canada’s already established Employment Insurance (EI) framework, which employees pay into automatically.
Employment Insurance Programs
Canada’s EI scheme consists of both “regular benefits” and “special benefits.” Regular benefits provide payments to employees who have lost their job, without fault, are willing and able to find alternative employment, but cannot. These payments are generally based on 55% of an employee’s compensation, up to a maximum of $547 per week. The benefits are paid for a specified number of weeks as determined by said employee’s insurable hours worked in the past 52 weeks. Notably, the minimum number of insurable hours worked in the previous 52 weeks that are required to qualify an employee for regular EI benefits depends on the unemployment rate in their region. However, the absolute lowest number of insurable hours required is 420 in the past 52 weeks. Generally, the higher the unemployment rate in your region, the less insurable hours you need to have worked in the past 52 weeks to qualify for regular EI benefits.
Special benefits, on the other hand, are payments made to individuals who are unable to work due to illness, maternity/parental duties, or family caregiver roles – only maternity/parental benefits are discussed here. To qualify for either maternity (mother) or parental (father) benefits, an employee must have worked at least 600 insurable hours in the previous 52 weeks. Additionally, they have to show that their weekly earnings were reduced by at least 40% due to their pregnancy or parental responsibilities. Notably, a mother or father can split their benefits into 12 or 18 months, and can share their total benefit period between them.
Employment Insurance Updates
The federal government acknowledged that rapidly switching from the CERB to the standard EI regime would likely prejudice many Canadians. It is unlikely that those who did not work in many months due to COVID-19 would be able to show proof of the large number of insurable hours required for regular or special benefits. Therefore, EI has been updated significantly, on a temporary basis, to make it far more inclusive during the ongoing COVID-19 pandemic.
Three of the most important updates are discussed here.
- First, there has been a one-time reduction in the minimum amount of insurable hours required to qualify for both regular and special benefits. To qualify for any of these benefits, an employee now only needs to show proof of 120 insurable hours worked in the past 52 weeks. This hours credit may only be used one time.
- Second, the unemployment rate for all regions has been artificially set at 13.1% (the highest rate) until August 9, 2021. This is to ensure that the lowest amount of hours (420) required to access regular benefits continues to apply for an extended period of time.
- Third, the minimum EI benefit rate for both regular and special benefits has been set at $400 per week; or $240 per week for the extended 18 month option of maternity/parental benefits.
These new updated benefits are crucial for both employees and employers to understand as they affect many aspects of employment law, such as layoffs, termination, and general employment relations.
Thank you to Articling Student Filip Szadurski for writing this blog. For more information, please contact Colleen Hoey, a Partner in the Employment team. Colleen can be reached at 613-369-0366 or at Colleen.Hoey@mannlawyers.com.