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Some emergency coronavirus benefits to end in Canada: what will happen next?

Written by
Mathews Dinsdale, Canada’s only national labour and employment law firm.
The Canada Emergency Response benefit (‘CERB’) is slated to end on 27 September and the Federal Government has announced an expanded Employment Insurance programme and other financial benefits will replace it. This article provides initial details.

The Federal Government has announced an extension of the Canada Emergency Response Benefit (‘CERB’) by an additional four weeks to a maximum of 28 weeks.

On 27 September 2020, those still entitled to CERB will transition to a more flexible and expanded Employment Insurance (EI) programme. Additionally, the Federal Government has announced three new temporary benefits are also being established, including a form of paid sick leave

Details of the expanded EI programme includes, but is not limited to the following:

Individuals with 120 insurable hours, which equates to 3.5 weeks of work in the last 52 weeks, can apply and receive a minimum payment of CAD 400 per week, and a maximum of CAD 573 per week, depending on past earnings under the revised EI programme. This revised EI can be claimed for between 26 and 45 weeks, depending on time worked prior. Additional flexibilities are also being offered for new parents, including a new one-time hours credit that is being offered retroactively to 15 March.

EI claimants can earn income, but will have their benefits adjusted, reducing their benefit by CAD 0.50 for each dollar of earnings. The government is also freezing the EI premium rate for two years at CAD 1.58 per CAD 100 for employees and CAD 2.21 per CAD 100 for businesses. The EI premium would normally be expected to increase in 2021 as large numbers of Canadians access the programme due to COVID-19.

In addition, a minimum unemployment rate of 13.1% will be applied temporarily for all EI economic regions across Canada. When individuals begin transitioning off of the CERB to EI benefits, those living in EI regions with an unemployment rate lower than 13.1% will have their EI benefits calculated on the basis of the 13.1% rate, while individuals living in regions with a higher unemployment rate will have their benefits calculated using the actual rate for that region.

According to the Federal Government, the transition to the new EI system will be automatic. However, there may be instances where individuals may need to re-apply.

The Federal Government is also launching three new taxable benefits meant to target specific factors leaving Canadians out of work or in need of financial aid. The three new taxable benefits are going to be enacted through legislation, which will not be tabled until after Parliament resumes on 23 September 2020. The Federal Government has, however, indicated that it anticipates the implementation of these new benefits to be on 27 September 2020.

The ‘Canada Recovery Benefit’ will be available to workers who are self-employed, gig or contract workers, or otherwise not EI eligible but still cannot return to work. According to Government press releases, this benefit will provide CAD 400 a week, the same as the minimum weekly benefit under the modified EI, for up to 26 weeks. In order to qualify, individuals must be looking for work and stopped working or had their income reduced due to COVID-19. Workers will need to repay CAD 0.50 of every dollar earned above an annual net income of CAD 38,000 through their income tax return.

The Federal Government has also announced the ‘Canada Recovery Sickness Benefit’, for those who don’t already have paid sick leave through their employer. The benefit will enable people to stay home from work when they are sick or have to self-isolate due to COVID-19. This benefit will provide will provide CAD 500 per week for up to two weeks.

Finally, the Federal Government has announced the ‘Canada Recovery Caregiving Benefit’ providing help in the instances where someone needs to stay home to care for a child under the age of 12, a family member with a disability, or a dependent because schools, daycares, or other care facilities are closed due to the pandemic, or because a medical professional has deemed them to be at high-risk of severe illness if they were to contract COVID-19. This benefit will provide CAD 500 per week per household for up to 26 weeks. It is important to note that this benefit can only be used when facilities are closed and not because people ‘prefer’ to keep their dependents at home.

Please note that this article is based on Federal Government media releases. It is anticipated further detail on these measures will be available in the near future.

The author gratefully acknowledge the assistance of Erica Herman, a Summer Student in Mathews Dinsdale’s Toronto office.