On August 20, 2020, the Canadian government announced new measures as the government slowly reopens the economy. On September 27, 2020, new measures will be effective as the government will be transitioning from the Canada Emergency Response Benefit (CERB) to a simplified Employment Insurance (EI) program.
Extension of the Canada Emergency Response Benefit
The CERB will be extended by an additional 4 weeks, providing a new maximum of up to 28 weeks of benefits.
A More Flexible and Simplified Employment Insurance Program
In the past, individuals needed 420 insurable employment hours to qualify for the regular benefits and 600 insurable employment hours to qualify for special benefits. Access to EI benefits is normally based on the number of insurable hours an individual has worked in the year prior to their application, or since their last claim.
With the new flexible EI program the Canadian government is offering a one-time insurable hours credit of:
- 300 insurable hours for claims for regular benefits (job loss);
- 480 insurable hours for claims for special benefits (sickness, maternity/parental, compassionate care or family caregiver).
Therefore, workers will now need a minimum of 120 hours of insurable employment to qualify for EI benefits. The hours credit will also be made retroactive to March 15, 2020, for claimants who were looking to transition early from the CERB to EI maternity, parental, compassionate care, family caregiver or work-sharing benefits but could not establish their EI claim due to insufficient hours. For these claimants, the qualifying period will also be extended. This will provide a minimum entitlement of 26 weeks of regular benefits.
The government has also implemented a minimum benefit rate of $400 per week. This will correct the negative impact on a worker’s earnings if they lost their job or saw their hours of work reduced.
EI Premium Rate Freeze
The Government is freezing the EI premium rate for employees at the 2020 level of $1.58 per $100 of insurable earnings for 2 years. The rate for employers, who pay 1.4 times the employee rate, will also remain unchanged at $2.21 per $100 of insurable earnings.
New Recovery Benefits
The Canadian government plans to introduce 3 new recovery benefits to help individuals as the CERB will come to an end. Those would be effective from September 27, 2020, for a period of one year.
For all 3 of the new recovery benefits enumerated below, the individual must be resident in Canada and meet the following the eligibility requirements:
- be at least 15 years old and have a Social Insurance Number (SIN);
- had employment or self-employment income of at least $5,000 in 2019 or 2020.
Canada Recovery Benefit
The Canada Recovery Benefit would provide a benefit amount of $400 per week for up to 26 weeks to workers who are not eligible for EI. This benefit will specifically target the self-employed and individuals working in the gig economy.
In addition to the general requirements described above, the Canada Recovery Benefit will be available to individuals who:
- have stopped working due to COVID-19 and are looking for work or have had a reduction in the income due to COVID-19;
- are not eligible for EI; and
- have not quit their job voluntarily.
Workers would apply every 2 weeks and continue to meet the requirements. In addition to being a taxable benefit, claimants would need to repay benefits received under Canada Recovery Benefit if their income is over $38,000 (excluding the Canada Recovery Benefit payments). More specifically, individuals would be required to repay $0.50 of the benefits for each dollar of their annual net income above $38,000 in the calendar year to a maximum of the amount of benefit they received. For example, for an individual who received $4,000 of benefit under Canada Recovery Benefit in 2020, the individual would have to repay all of the benefit if his/her net income exceeded the threshold by $8,000 (twice the benefit payment amount). In this scenario the worker would have to repay the full benefit amount of his/her net income was greater than $46,000 in 2020 (not including the Canada Recovery Benefit).
Canada Recovery Sickness Benefit
The Canada Recovery Sickness Benefit will provide $500 per week for up to 2 weeks, for workers who are unable to work because they are sick or must self-isolate due to COVID-19. In addition to the general requirements described above, this relief measure is available to workers employed or self-employed at the time of the application.
Workers would not be required to have a medical certificate to qualify for the benefit. Workers could not claim the Canada Recovery Sickness Benefit and receive other paid sick leave for the same benefit period. Workers would need to have missed a minimum of 60% of their scheduled work in the week for which they claim the benefit. The benefit would be taxable.
Canada Recovery Caregiving Benefit
The Canada Recovery Caregiving Benefit would provide $500 per week for up to 26 weeks. The benefit is aimed at individuals who are unable to work because they need to provide care to children or support to other dependents that must stay home. In addition to the general requirements described above, this relief measure will be available to individuals who:
- are employed or self-employed on the day immediately preceding the period for which the application is made;
- have been unable to work for at least 60% of their normally scheduled work within a given week because they must take care of a child who is under 12 years of age, or they must provide care to a family member with a disability or a dependent because of one of the following reasons:
- the school, daycare, day program or care facility is closed or operates on a different schedule for reasons related to the COVID-19 pandemic;
- they cannot attend school, daycare, day program or care facility under the advice of a medical professional due to being at high risk if they contract COVID-19;
- the caregiver who usually provides care is not available due for reasons related to the COVID-19 pandemic.
- not be in receipt of paid leave from an employer in respect of the same week; and
- not be in receipt of the CERB, the EI Emergency Response Benefit, the Canada Recovery Benefit, the CRSB, short-term disability benefits, workers’ compensation benefits, or any EI benefits or Quebec Parental Insurance Plan (QPIP) benefits in respect of the same week.