The Government of Canada is continuing to take significant and decisive action to support Canadians and protect jobs during the ongoing global COVID-19 pandemic. The Canada Emergency Response Benefit (CERB) was an important and necessary temporary response to support Canadians who had to stop working due to the pandemic. As we safely restart Canada’s economy, the Government will be transitioning to a simplified Employment Insurance (EI) program, effective September 27, 2020, to provide income support to those who remain unable to work and are eligible, and introducing a new suite of temporary and taxable recovery benefits to further support workers. While the Government prepares for this transition, and to ensure support continues for Canadians whose employment has been impacted by the pandemic, the CERB will be extended by an additional four weeks, providing a new maximum of up to 28 weeks of benefits.
Summary of temporary measures to help Canadians access EI benefits more easily
- 120 hours of work required to qualify
- Minimum benefit rate of $400 per week
- At least 26 weeks of regular benefits
Hours credits to enhance access to EI regular benefit and EI 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. This is known as their qualifying period. However, the Government of Canada recognizes that the pandemic has prevented many Canadians from accumulating the number of insurable hours that is normally required, and is taking action to address this. To help individuals qualify with a minimum of 120 hours of work, EI claimants will receive 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)
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.
The hours credit will be available for new EI claims for one year, in recognition that labour market conditions remain uncertain and will take time to stabilize.
Minimum EI unemployment rate across Canada
As a first step to help eligible Canadians transition from CERB back into the EI system and into the labour force, a minimum unemployment rate of 13.1% is being used for all EI economic regions in order to lower the hours required to qualify for EI regular benefits. This measure is effective for one year starting on August 9, 2020. Individuals 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 those in regions with a higher rate will have their benefits calculated using the actual higher rate.
Normally, the unemployment rate in the region in which a claimant resides at the time they file their claim determines:
- the number of hours of insurable employment a claimant needs to have accumulated in their qualifying period to be eligible for EI regular benefits – ranging from 420 to 700;
- the number of weeks of EI regular benefits a claimant may be entitled to – ranging from 14 to 45; and
- the number of best weeks of earnings that will be used to establish their weekly benefit rate – ranging from 14 to 22.
The EI system uses regional unemployment rates to determine access to EI regular benefits, given that it is generally more difficult for individuals to find new work when unemployment is higher.
In recognition that the pandemic has negatively impacted labour markets in ways that extend beyond traditional measures of unemployment, this measure will set a uniform eligibility requirement for EI regular benefits at 420 hours of insurable employment (before the hours credit is applied), provide a minimum entitlement of 26 weeks of regular benefits, and set 14 as the number of best weeks of earnings used in the calculation of the weekly benefit rate. Combined with the hours credits noted above, individuals can qualify for EI with 120 hours of work.
Minimum benefit rate
To further support clients and in addition to the above measures that will increase access to the program, new EI claimants as of September 27, 2020 will receive a minimum benefit rate of $400 per week (or $240 for extended parental benefits), if this is higher than what their benefits would otherwise be.
The EI benefit rate is typically based on a worker’s average weekly earnings before their EI claim.
However, the COVID-19 pandemic may have had a negative impact on a worker’s weekly earnings either because they lost their job or saw their hours of work reduced. The minimum benefit rate of $400 will reduce the negative impact on EI benefit rates for these workers and align with the weekly benefit rate for the new Canada Recovery Benefit.
Scenario 1, EI regular benefits measures: Worker whose seasonal employment was disrupted due to COVID-19 pandemic
- Mariam lives outside of Montréal and usually works in seasonal employment from mid-June to mid-September, and is usually able to establish an EI claim based on about 900 hours of work
- As a result of the pandemic, her hours have been cut and she has only accumulated 200 hours of work at the time of her lay off
- Mariam does not have the hours normally required to qualify for EI regular benefits
- As a result of the EI temporary measures Mariam has more than the minimum 120 hours of work and can qualify for at least 26 weeks of EI regular benefits at a minimum amount of $400 a week
Scenario 2, EI maternity and parental benefits measures: Expectant mother looking to take maternity/parental leave who does not have enough hours for EI due to the COVID-19 pandemic
- Inez normally works 30 hours per week in Fredericton, NB
- She is expecting a second child in October 2020 and planned to take maternity and parental leave and apply for EI benefits
- Due to the COVID-19 pandemic, Inez has been off work and receiving the CERB. She had only accumulated 450 hours of work, which is below the 600 hours requirement to qualify for maternity and parental benefits once her baby is born
What could Inez qualify for?
- As a result of the temporary measures, Inez has the minimum 120 hours of work and can qualify for EI maternity and parental benefits.
EI fishing benefits
The Government is also implementing temporary measures to support self-employed fish harvesters who rely on EI fishing benefits in the off-season. These measures will allow EI fishing benefits for these workers to be calculated using either their actual fishing earnings for their current claim, or their fishing earnings from their claim for the same season from the previous year, whichever is higher.
EI premium rate freeze
To support Canadian businesses and workers through the unprecedented challenges posed by the COVID-19 pandemic, 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.
Under ordinary circumstances, the Canada Employment Insurance Commission sets and announces (on or before September 14 each year) the annual premium rate for the coming year based on the 7 year break-even rate. This is a rate forecast to balance the EI Operating Account over a 7 year horizon, including the elimination of any cumulative surplus or deficit, as forecast by the EI Senior Actuary.
Freezing the premium rate will ensure that employees and employers do not have to pay increased EI premiums in a time of economic uncertainty, and help support job creation as the economy recovers.
New recovery benefits
As the CERB begins to wind down, the Government plans to introduce a suite of 3 new recovery benefits to provide needed support to Canadians who continue to face financial hardship even as the economy starts to re-open. The 3 new benefits are:
Canada Recovery Benefit
The new Canada Recovery Benefit would be effective from September 27, 2020 for one year and would provide a benefit amount of $400 per week for up to 26 weeks to workers who are not eligible for EI, mainly the self-employed and including those working in the gig economy. These individuals may still require income support if they continue to be unable to return to work due to COVID-19 or had their income reduced relative to pre-COVID-19 pandemic (attestation-based).
The benefit would be available to residents in Canada who:
- are at least 15 years old and 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 had a reduction in their employment/self-employment income for reasons related to COVID-19
- are not eligible for EI
- 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 apply after every 2 week period for which they are seeking income support and attest that they continue to meet the requirements. In order to continue to be eligible for the benefit the claimant wound need to look for and accept work when it is reasonable to do so. The benefit is taxable.
To encourage claimants to return to work, they would be able to earn income from employment and/or self-employment while receiving the benefit, as long as they continue to meet the other requirements. However, to ensure that the benefit targets those who need it most, claimants would need to repay some or all of the benefit through their income tax return if their annual net income, excluding the Canada Recovery Benefit payment, is over $38,000. In other words, claimants would need to repay $0.50 of the benefit 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.
This means that for a worker who received 10 weeks of the Canada Recovery Benefit in 2020 for a total of $4000, they would have to repay all of the benefit if their net income exceeded the threshold by $8000 (twice the benefit payment amount). In this example, the worker would have to repay the full benefit amount if their net income was greater than $46,000 (not including the Canada Recovery Benefit) in 2020.
The Government of Canada intends to introduce legislation to support the delivery of the new recovery benefits.
Scenario for the Canada Recovery Benefit: Self-employed worker whose business is affected by the COVID-19 pandemic
- Ibrahim is a self-employed bookkeeper in Toronto, ON
- He earned $34,000 in 2019 but his business has slowed due to COVID-19
- Ibrahim applied for and received the Canada Emergency Response Benefit (CERB) but his benefits will run out in September
- While his business has begun to rebound, it is still not business as usual and he is only back to working at 40% capacity
What could Ibrahim qualify for:
- With the Canada Recovery Benefit, he could receive $400 per week for up to 26 weeks. If his annual net income for 2020 is above $38,000 (excluding the Canada Recovery Benefit payments), he would need to repay some or all of the benefit when he files his annual income tax return for 2020
Canada Recovery Sickness Benefit
The new Canada Recovery Sickness Benefit would provide $500 per week, for up to 2 weeks, effective September 27, 2020 for 1 year, for workers who are unable to work because they are sick or must self-isolate due to COVID-19. This new benefit would fulfil the Government of Canada’s commitment as part of the Safe Restart Agreement with provinces and territories to provide up to 2 weeks of sick leave to all Canadians in the context of COVID-19.
The benefit would be available to:
- residents in Canada who are at least 15 years of age and have a valid Social Insurance Number (SIN)
- workers employed or self-employed at the time of the application and
- workers who earned at least $5,000 in 2019 or in 2020
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.
Workers would apply after the one-week period in which they are seeking income support and attest that they meet the requirements. The benefit would taxable.
Scenario for the Canada Recovery Sickness Benefit: Two weeks of paid leave if a minimum wage worker needs to self-isolate due to COVID-19
- Anita is working in a small grocery store in Saskatoon, SK and earns about $35,000 a year
- She has been working throughout the COVID-19 pandemic
- She just found out she must self-isolate for 14 days as a family member has tested positive for COVID-19
What could Anita qualify for:
- With the new Canada Recovery Sickness Benefit, Anita may be eligible to receive $500 per week, for up to two weeks provided that she is not in receipt of paid leave from her employer
Canada Recovery Caregiving Benefit
The new Canada Recovery Caregiver Benefit, would be effective from September 27, 2020 for 1 year, and provide $500 per week, for up to 26 weeks per household to eligible Canadians.
The closure of schools and other daycare and day program facilities to prevent the spread of COVID 19 has meant that many Canadians have been unable to work because they needed to provide care to children or support to other dependents who had to stay home. While it is anticipated that facilities will gradually re-open as the economy restarts, the Government of Canada recognizes that access may vary over time and across communities. The Government is committed to ensuring that parents and others with dependents do not need to choose between caring for them and paying the bills.
In order to be eligible for the Canada Recovery Caregiving Benefit, individuals would need to:
- reside in Canada
- be at least 15 years of age on the first day of the period for which they apply for the benefit
- have a valid Social Insurance Number
- be employed or self-employed on the day immediately preceding the period for which the application is made
- have earned at least $5,000 in 2019 or in 2020
- have been unable to work for at least 60% of their normally scheduled work within a given week because of one of the following conditions:
- they must take care of a child who is under 12 years of age on the first day of the period for which the benefit is claimed:
- because their school or daycare is closed or operates under an alternative schedule for reasons related to the COVID-19 pandemic
- who cannot attend school or daycare under the advice of a medical professional due to being at high risk if they contract COVID-19, or
- because the caregiver who usually provides care is not available for reasons related to the COVID-19 pandemic, or
- they must provide care to a family member with a disability or a dependent:
- because their day program or care facility is closed or operates under an alternative schedule for reasons related to COVID-19
- who cannot attend their day program or care facility under the advice of a medical professional due to being at high risk if they contract COVID-19, or
- because the caregiver who usually provides care is not available 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 (ERB), 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 in respect of the same week
Workers would apply after the period in which they are seeking income support and attest that they meet the requirements. Two members residing in the same household could not be in receipt of the benefit for the same period. The benefit is taxable.
Scenario for the Canada Recovery Caregiving Benefit: Single father with 1 child (employed and earns $48000/year) whose school has closed
- Steve is a single father in Cranbrook, BC with a daughter aged 8
- He earns $48,000 per year
- His daughter’s school had to close for four weeks beginning October 25th due to a COVID-19 outbreak. Steve arranged with his employer to take unpaid leave from work as he doesn’t have anyone else who can take care of his child
What could Steve qualify for:
- Steve could apply for the Canada Recovery Caregiving Benefit after each week of leave he takes to provide care for his daughter
- He could receive $500 per week, in total $2000 for the period that the school is closed
How to apply for EI and the recovery benefits
Canadians already receiving benefits through Service Canada will be transitioned to the EI program once they have received the maximum CERB benefits for which they are entitled, if they are EI eligible and continue to need income support.
Canadians who are currently receiving the CERB from the Canada Revenue Agency (CRA) who believe they are entitled to EI will need to apply through Service Canada after September 26.
The Canada Revenue Agency (CRA) would administer the Canada Recovery Benefits, and Canadians would be able to apply through the CRA. In the coming weeks, the CRA will provide more details on how and when Canadians can get ready to apply at www.canada.ca/coronavirus.