On May 8, 2020, the federal government of Canada clarified through Q&A guidance that the Employment Insurance (EI) rules allowing employers to make additional ("top up") payments to workers through Supplementary Unemployment Benefit Plans (SUB plans) do not apply to employees receiving the Canada Emergency Response Benefit (CERB). The CERB provides temporary income support to workers who have stopped working for COVID-19-related reasons.
An employer can establish an SUB plan to top up EI benefits during a period of unemployment. Unless an SUB plan is registered with Service Canada and meets specific requirements, the payments from that plan to an employee will be treated as income and EI benefits received by the employee may be reduced.
In response to feedback following the initial release of details about the program, the government modified the CERB so that while eligible individuals are collecting the CERB ($2,000 for a 4-week period), they will be permitted to earn up to $1,000 in employment and/or self-employment income in each benefit period from March 15, 2020 to October 3, 2020. The new Q&A clarifies that eligible individuals will be obligated to repay CERB amounts received in a benefit period if in that period they receive an amount from any employer that is greater than the $1,000 threshold.
The Q&A explains that employers that wish to submit SUB plans to Service Canada may continue to do so. Registration of SUB plans will enable employers to make payments to employees who are currently receiving EI regular or sickness benefits because they became eligible for such benefits prior to March 15, 2020.
Employees who became eligible for EI regular or sickness benefits on or after March 15, 2020, are only entitled initially to the CERB (they do not have the freedom to choose EI benefits over CERB); however, once their 16-week entitlement period expires, they may then apply for regular EI benefits. Registration of an SUB plan enables an employer to be prepared should it wish to top up EI benefits for those employees in the future.
Bottom Line for Employers
This new Q&A leaves no doubt that employers will not be in a position to assist their employees by topping up the CERB with an SUB plan. However, employers are encouraged to register SUB plans so that if an employee transitions to regular EI benefits after they can no longer receive CERB (because their 16-week entitlement period has expired), the employer will be able to use the SUB plan to top up the employee's EI benefits.
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