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August 31, 2020

Canada’s COVID-19 Economic Response Plan

On August 20, 2020, the government of Canada announced that it will extend the Canada Emergency Response Benefit (“CERB”) by an additional four weeks to a maximum of 28 weeks. This extension is intended to help the government prepare for the transition of individuals receiving the CERB to the Employment Insurance (“EI”) program starting September 27, 2020.

The government also announced important changes to the EI program which are intended to simplify the regime and allow more Canadians to access EI. A summary of the changes is outlined below.

Note:  Some of the programs discussed in this article are subject to the passing of legislation upon the return of Parliament in September, 2020.

Hours Credit and Unemployment Rate

Generally, whether an individual is entitled to EI benefits depends on the number of “insurable hours” the individual has worked. An insurable hour, broadly speaking, means any hour worked for which remuneration is received. Effective August 9, 2020, claimants for regular EI benefits will need to have accumulated 420 insurable hours in the 52 weeks preceding their claim in order to qualify for regular benefits (i.e., due to the loss of one’s employment). The minimum number of insurable hours required to qualify for special benefits (e.g., maternity, parental, sickness, compassionate care or family caregiver claims), is 600.

The government has announced that EI claimants will receive a one-time insurable hours credit, which will help individuals to accumulate the number of hours required to qualify for benefits. The credit will be for:

  • 300 insurable hours for claims for regular benefits; and
  • 480 insurable hours for claims for special benefits.

With the introduction of the 300 insurable hour credit for regular benefit claims, individuals must now have accumulated 120 insurable hours in the 52 weeks prior to their claim in order to reach the 420 insurable hours required to qualify for a regular benefit claim.

With the introduction of 480 insurable hours for special benefit claims, individuals must likewise have accumulated 120 insurable hours in the 52 week period prior to their claim in order to reach the 600 insurable hours required to qualify for a special benefit claim.

New Benefit Rate

The government announced that those receiving EI will be eligible for a taxable benefit rate of a minimum of $400 per week, or, for extended parental benefits, $240 per week.

Insurance Premium Rate Freeze

The government also announced that the EI insurance premium rates will be frozen for two years in order to avoid potential immediate increases to costs and payroll deductions due to additional expenses resulting from the pandemic. The current rates are:

  • $1.58 per $100 of insurable earnings for employees; and
  • $2.21 per $100 of insurable earnings for employers.

Transition From the CERB to EI

The government announced its intent to transition individuals receiving the CERB to the EI program once they have received their maximum CERB benefits, beginning on September 27, 2020. Individuals who are currently receiving the CERB must apply for EI. Individuals who wish to transition must apply for EI through Service Canada after September 26, 2020.

New Benefits

The government additionally announced its proposal to implement three new benefits, effective for a one-year period starting September 27, 2020. The introduction of the new benefits is contingent on the passing of supporting legislation by the Federal Parliament of Canada.

One. The Canada Recovery Benefit (the “CRB”) will provide $400 per week for a maximum of 26 weeks to workers who are self-employed or working in the gig economy, who require income support. To qualify for the CRB, individuals:

  • must be at least 15 years old;
  • must have stopped working due to the COVID-19 pandemic;
  • must be available and looking for work or have had a reduction in their income due to the COVID-19 pandemic;
  • must not be eligible for EI;
  • must have had employment or self-employment income of at least $5,000 in 2019 or in 2020; and
  • must not have quit their job voluntarily.

Two. The Canada Recovery Sickness Benefit (the “CRSB”) will provide $500 per week for a maximum of two weeks for workers are unable to work because they are sick or must self-isolate due to COVID-19. To qualify for the CRSB, individuals:

  • must be a resident of Canada who is at least 15 years old;
  • must be employed or self-employed at the time of the application; and
  • must have earned at least $5,000 in 2019 or in 2020.

The CRSB cannot be claimed concurrently with other paid sick leave. Further, workers must have missed a minimum of 60% of their scheduled work in the week for which they claim the benefit.

Three. The Canada Recovery Caregiving Benefit (the “CRCB”) will provide $500 per week for a maximum of 26 weeks per household to caregivers who are affected by the closure of schools and other daycare and day program facilities. To qualify for the CRCB, individuals:

  • must be at least 15 years old on the first day of the period for which they apply for the benefit;
  • must be employed or self-employed on the day immediately preceding the period for which the application is made;
  • must have earned at least $5,000 in 2019 or in 2020;
  • must have been unable to work for at least 60% of their normally scheduled work within a given week for one of the following reasons:
    • They must care for a child who is under 12 years of age: (i) because their school or daycare is closed or operating under an alternative schedule due to the COVID-19 pandemic; (ii) who cannot attend school or daycare under the advice of a medical professional due to being a high risk to contract COVID-19; or (iii) because the caregiver who would usually provide care is unavailable due to the COVID-19 pandemic.
    • Alternatively, they must care for a family member who is disabled or a dependent. because: (i) their day program or care facility is closed or operates under an alternative schedule due to the COVID-19 pandemic; or (ii) they cannot attend their day program or care facility under the advice of a medical professional due to being a high risk to contract COVID-19; or (iii) because the caregiver who would usually provide care is unavailable due to the COVID-19 pandemic.

To qualify for the CRCB, individuals must not be in receipt of paid leave from an employer, the CERB, the EI Emergency Response Benefit, the CRB, the CRSB, short-term disability benefits, workers’ compensation benefits, or any EI benefits or Quebec Parental Insurance Plan benefits for the week being claimed.

Applications

Applications for the CRB, CRSB, and the CRCB will be made through CRA as announced in the coming weeks.

The Government of Canada has taken action to support Canadians and businesses facing financial hardship as a result of the global COVID-19 outbreak. The federal government has announced a number of supports for individuals, supports for businesses and supports for specific sectors, all of which are summarized here

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Resource posted on August 31, 2020, with a reports from Brendan Forrest

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