On Thursday, August 20, the federal government announced a series of changes to existing benefits, as well as proposed new benefits, aimed at supporting Canadians during the COVID-19 pandemic. Among the changes to existing benefits are an extension of the Canada Emergency Response Benefit (“CERB”), and changes to “simplify” the Employment Insurance (“EI”) program to provide income support to those who continue to be unable to work. Additionally, the government has proposed a series of new temporary, taxable recovery benefits to support workers.
Details regarding the revised and new benefits are set out below.
CERB Extension to 28 Weeks
To bridge the transition period to the new proposed recovery benefits, the federal government extended the CERB (which was previously extended from an initial 16 weeks to 24 weeks) to 28 weeks. The CERB will now be available until September 27, 2020 for eligible workers who have been collecting the CERB since applications opened on April 6, 2020, retroactive to March 15, 2020.
Workers are entitled to receive $500 a week if they:
- reside in Canada;
- are at least 15 years old at the time of application;
- have stopped working because of COVID-19 (and have not voluntarily quit their job), or are eligible for EI regular or sickness benefits, or have exhausted their EI regular or fishing benefits between December 29, 2019 and October 3, 2020;
- had employment and/or self-employment income of at least $5,000 in 2019 or in the 12 months prior to the date of their application; and
- are or expect to be without employment or self-employment income for at least 14 consecutive days in the initial four-week period. (For subsequent benefit periods, eligible applicants must expect to have no employment income.)
The CERB is being jointly delivered by Service Canada and the Canada Revenue Agency, and employees can apply to one or the other (but not both). The federal government recommends applying to one over the other based on the employee’s answers to a short questionnaire on the CERB information site.
Transitioning to a Simplified EI Program
In addition to changes to the CERB, the government announced significant temporary measures to allow Canadians to access EI benefits more easily, including hours credits to allow workers to reach the insurable hours threshold to qualify for EI benefits, a higher minimum unemployment rate for a one-year period, a minimum benefit rate, and a premium rate freeze.
Typically, to be entitled to EI benefits, a worker has to have worked a minimum number of hours in the year before applying for EI, or since their last EI claim. To address the fact that many Canadians have not been able to accumulate the number of insurable hours that is normally required, the federal government has introduced a one-time insurable hours credit, which will be available for new EI claims for one year. EI claimants with a minimum 120 hours of work will receive a credit of:
- 300 insurable hours for claims for regular benefits (job loss); or
- 480 insurable hours for claims for special benefits (sickness, maternity/parental, compassionate care or family caregiver).
The hours credit will be retroactive to March 15, 2020 for claimants who wished to transition to EI maternity, parental, compassionate care, family caregiver or work-sharing benefits, but had insufficient insurable hours to do so.
Additionally, the federal government has announced that a minimum unemployment rate of 13.1% will be used in all EI economic regions for one year effective August 9, 2020. The unemployment rate in the region in which an EI claimant lives when they file their claim determines:
- The number of insurable hours a claimant needs to be eligible for EI regular benefits (between 420 and 700);
- The number of weeks of EI regular benefits a claimant may be entitled to (between 14 and 45); and
- The number of best weeks of earnings that will be used to establish the claimant’s weekly benefit rate (between 14 and 22).
As a result of the 13.1% unemployment rate, claimants across Canada will be eligible for EI benefits at 420 insurable hours (before the credit outlined above is applied). Additionally, the minimum EI entitlement with respect to regular benefits will be 26 weeks, and the weekly benefit rate will be calculated based on the claimant’s 14 best weeks of earnings.
A further temporary change to the EI program related to the minimum benefit rate. Typically, the benefit rate is equal to 55% of the claimant’s average weekly insurable earnings before the EI claim, to a maximum of $573 per week. As of September 27, 2020, new EI claimants will be entitled to a minimum $400 per week in EI benefits, or $240 per week for extended parental benefits).
Finally, the federal government has announced that it is freezing the EI premium rate for employees at the 2020 level of $1.58 per $100 of insurable earnings for two years. Similarly, the EI premium rate for employers will remain fixed at $2.21 per $100 of insurable earnings.
New Recovery Benefits
The federal government has announced that, as the CERB winds down, it intends to introduce three new recovery benefits to provide additional support to Canadians: the Canada Recovery Benefit, the Canada Recovery Sickness Benefit, and the Canada Recovery Caregiving Benefit.
The government has stated that it intends to introduce legislation to support the delivery of the new benefits. However, as Parliament is currently prorogued, any such legislation could not be introduced until late September, at the earliest, following the government’s new Speech from the Throne. As the Speech from the Throne could allow the opposition parties, if they do not agree with the government’s stated plan, to trigger an election, it is not guaranteed that the legislation intended to create these new recovery benefits will be passed, or even proposed.
Canada Recovery Benefit
The proposed Canada Recovery Benefit would be available for one year from September 27, 2020, and would provide a taxable benefit of $400 per week for up to 26 weeks to those not eligible for EI – mainly self-employed workers, including those who work in the gig economy. The Canada Recovery Benefit would be available to Canadian residents who:
- are at least 15 years old;
- have a valid Social Insurance Number (SIN);
- have stopped working due to the COVID-19 pandemic and are available and looking for work, or are working and have experienced an employment/self-employment income reduction for reasons related to COVID-19;
- are not eligible for Employment Insurance;
- had employment and/or self-employment income of at least $5,000 in 2019 or in 2020; and,
- have not quit their job voluntarily.
Workers would be required to apply for the Canada Recovery Benefit every two weeks, and attest that they continue to meet the eligibility requirements. Workers would have to look for work and accept work “when it is reasonable to do so”. To further the government’s goals of encouraging Canadians to return to work, the Canada Recovery Benefit would allow workers to earn income while receiving the benefit. However, claimants would be required to repay $0.50 of the benefit for each dollar of their annual net income exceeding $38,000 in the calendar year, to a maximum of the amount of Canada Recovery Benefit they had received.
Canada Recovery Sickness Benefit
Like the Canada Recovery Benefit, the Canada Recovery Sickness Benefit would be available effective September 27, 2020. Eligible workers who are unable to work because they are sick or required to self-isolate because of COVID-19 would be entitled to a taxable benefit of $500 per week for up to two weeks. This benefit provides the 10 paid sick days that the federal government announced it was discussing with provinces and territories in the spring. At the time, the federal government indicated that the measure would help workers with COVID-19 symptoms stay home to reduce the risk of a second wave of cases.
The Canada Recovery Sickness Benefit would be available to:
- Canadian resident 15 years of age and older with a valid SIN;
- Employed/Self-employed workers (based on the time of application); and
- Workers who earned at least $5,000 in 2019 or 2020.
A medical certificate would not be required to establish eligibility for the benefit payment, and workers would not be entitled to claim the benefit at the same time as other paid sick leave. Additionally, to be eligible to receive the benefit, a worker would have to have missed at least 60% of his or her scheduled work hours in the week for which he or she wishes to claim the benefit.
Canada Recovery Caregiving Benefit
The Canada Recovery Caregiving Benefits would provide $500 per week, up to 26 weeks per household to eligible Canadians for one year beginning on September 27, 2020.
To be eligible for this benefit, a person would need to:
- live in Canada;
- be at least 15 years old on the first day of the period for which they apply for the benefit;
- have a valid SIN;
- be employed/self-employed on the day immediately prior to the period for which they apply for the benefit;
- have earned at least $5,000 in 2019 or 2020;
been unable to work for at least 60% of their normally scheduled hours in a
particular week because:
must provide care for a child under 12 years of age on the first day of the
period for which they apply for the benefit:
- because the child’s school or daycare is closed or operates under an alternative schedule for reasons related to the COVID-19 pandemic;
- because the child cannot attend school or daycare under the advice of a medical professional due to being at high risk if he or she contracts COVID-19; or
- because the caregiver who usually provides care is not available for reasons related to the COVID-19 pandemic; or
must provide care to a family member with a disability or a dependent:
- because the family member’s day program or care facility is closed or operates under an alternative schedule for reasons related to COVID-19;
- because the family member cannot attend their day program or care facility under the advice of a medical professional due to being at high risk if he or she contracts COVID-19; or
- because the caregiver who usually provides care is not available for reasons related to the COVID-19 pandemic;
- they must provide care for a child under 12 years of age on the first day of the period for which they apply for the benefit:
- not be receiving paid leave from an employer for the same period; and
- not be receiving CERB, the EI Emergency Response Benefit, the Canada Recovery Benefit, the Canada Recovery Sickness Benefit, short-term disability benefits, workers’ compensation benefits, or any EI benefits or Quebec Parental Insurance Plan (QPIP) benefits for the same period.
While many of the benefit-related changes will directly impact employees, rather than employers, they could result in significant effects for employers as well. To begin with, the extension of the CERB, even thought it is meant as a transition to the new “simplified” EI program, may mean that employees are more reluctant to return to work as they continue to be compensated at home. The recovery benefits may have a similar effect, as employees may calculate that money they earn staying at home is better than whatever they would earn at work, particularly when weighed against the possibility of contracting COVID-19.
Specifically, with the uncertainty still remaining surrounding “back to school”, employers may find that employees who have access to the Canada Recovery Caregiving Benefit are less inclined to send their children to school (whereas before they may have felt that they had less choice due to financial concerns). As a result, employers may find themselves facing more family status claims and/or request for accommodation due to childcare obligations. For more information about family status accommodation, see our recent blog.
If you have any questions about the revised or proposed benefits, contact any of our lawyers.
As always, we will monitor the legal progression of the legislation intended to support the new recovery benefit, and post further updates as they become available to keep you In the Know.
This blog is provided as an information service and summary of workplace legal issues. This information is not intended as legal advice.