COVID-19: Employment Insurance Benefits and Severance Package

In response to the COVID-19 pandemic, the Employment Insurance (“EI”) rules have been temporarily changed in Canada to allow employees to access EI benefits even when they received a severance package. Read on to learn more about what this means for employees.

Generally, an employee cannot receive EI benefits while also receiving severance or termination pay after they have been let go from their employment. If the employee receives a severance package later, such as through a settlement, they may generally have to pay their EI benefits back to Service Canada. This is because Service Canada will view the severance package as if the individual had received it immediately following termination and receiving EI and the severance package for the same period may result in “double dipping”. 

However, an Interim Order from the Federal Government introduces a temporary change to the Employment Insurance Regulations. This Interim Order states that if a person is terminated on or after September 27, 2020, any lump sums paid by reason of a lay-off or separation of employment would not impact the individual’s ability to access EI benefits. However, it is important to keep in mind that if the severance package is paid as salary continuance as opposed to a lump sum, the employee would not be able to access both EI benefits and salary payments.

According to the Explanatory Note appended to this Interim Order, the Minister of Employment and Social Development introduced these measures with the “purpose of mitigating the economic effects of the coronavirus disease” and to “facilitate access to employment insurance benefits for claimants seeking to establish claims on or after September 27, 2020. 

Updated October 15, 2021: As part of Budget Implementation Act, 2021, No. 1, between September 26, 2021, and September 24, 2022, any lump sums paid by reason of a lay-off or separation of employment would not impact the individual’s ability to access EI benefits.

If you require information about the process of applying for Employment Insurance, the best way for you to proceed is to contact Service Canada. To inquire about EI benefits, employees should contact Service Canada immediately upon termination, and no later than 30 days after termination.

If you have been terminated with or without cause, it is important that you consult an employment lawyer to learn your options concerning severance pay from your employer. Depending on your circumstances, you may be entitled to a substantial severance package and Monkhouse Law lawyers can help you get what you deserve.

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