What to expect after the Canada Emergency Response Benefit

On August 20, 2020, the federal government announced major changes to the Employment Insurance (EI) program and the creation of three new recovery benefits. With the end of the Canada Emergency Response Benefit (CERB) fast approaching, and to ensure continued support for workers whose employment has been affected by the COVID 19 pandemic, the government has extended the CERB for an additional four weeks,¹ bringing the maximum benefit period to 28 weeks.²

Canadians have now been able to benefit from all of these measures since September 27. 

This update presents an overview of the most important measures adopted by the government designed to support Canadians in the next phase of the country’s economic recovery.

Employment insurance, simplified

The government has implemented certain measures to make it easier to access EI benefits for workers who, until now, have been eligible to receive the CERB.³ Here is an overview of the main ones.

Minimum EI unemployment rate

To reduce the number of insurable hours required to be eligible for EI, the minimum unemployment rate is set at 13.1% for all EI economic regions for the period beginning September 27, 2020, and ending September 11, 2021.

This measure therefore sets a uniform eligibility requirement for EI regular benefits at 420 hours of insurable employment, provides a minimum entitlement of 26 weeks of regular benefits, and sets 14 as the number of best weeks of earnings used in the calculation of the weekly benefit rate.

The number of insurable hours required to be entitled to EI special benefits (sickness, maternity/parental, compassionate care or family caregiver) remains 600 hours. 

One-time insurable hours credit

EI claimants filing an initial claim between September 27, 2020, and September 25, 2021, will receive a temporary, one-time credit of:

• 300 insurable hours for EI regular or work-sharing benefits; or
• 480 insurable hours for EI special benefits.

In other words, to be eligible to receive EI, claimants only need to accumulate 120 hours of insurable work in the year preceding their claim or since their last claim.

This credit is only available to new claimants once, and only for a period of one year. It will be applied automatically when the claim is processed. 

Minimum benefits rate

The minimum EI benefits rate is set at $500 per week (or $300 for extended parental benefits), minus the applicable tax withholdings, if that amount is higher than the benefits to which the claimants would otherwise have been entitled. The maximum benefits rate for 2020 is $573 per week.

EI premium rate freeze

The EI premium rate for the next two years will be:

• $1.58 per $100 of insurable earnings for employees; and
• $2.21 per $100 of insurable earnings for employers, which represents 1.4 times the employee rate.

Recovery benefits

On October 2, 2020, the federal government adopted the Canada Recovery Benefits Act.⁴ This act is intended for workers not eligible for the EI benefits plan and, among other things, introduces three new recovery benefits replacing the CERB that are administered solely by the Canada Revenue Agency (CRA). Here are some of the most interesting aspects of this act, as well as some highlights from the federal government’s web pages.

Eligibility requirements common to all three benefits 

To be eligible to receive any of the three recovery benefits, claimants must (i) have a valid social insurance number, (ii) be at least 15 years old, (iii) be a resident and present in Canada during the period covered by the claim, and (iv) have had an income of at least $5,000 in 2019, in 2020 or in the last 12 months preceding the claim (or any other amount determined by regulation) from:

• a job;
• self-employment;
• employment insurance maternity or parental benefits; 
• allowances, money or other benefits paid under a provincial plan, because of pregnancy or parental care; or
• any other income determined by regulation.

Moreover, for the period covered by the claim, (v) claimants cannot be in receipt of:

• allowances, money or other benefits paid under a provincial plan, because of pregnancy or parental care; 
• recovery benefits other than those for which the claim is filed;
• short-term disability benefits, workers’ compensation benefits or EI benefits; or
• any other income determined by regulation.

The requirements specific to each of the benefits indicated below are in addition to the general eligibility requirements indicated above. 

Canada Recovery Benefits (CRBs)

The CRB is intended for workers not eligible for EI, mainly the self-employed and workers whose income has dropped drastically or failed to return to normal due to COVID-19.

The benefit payable is $500 per week for a maximum of 26 weeks and will be taxable at source ($450 per week after a  tax withholding of 10%). CRB claims cover specific two-week periods.

One week will be deducted from the maximum number of CRB weeks for each week that a worker received EI regular benefits during the period beginning September 27, 2020, and ending September 25, 2021.

Eligibility requirements

The CRB is available to claimants who:

• have stopped working or whose average weekly employment/self-employment income dropped at least 50% for reasons related to COVID-19 during the period targeted by the claim, without having unduly limited their availability for work;
• are looking for a job or for work during the targeted period and have not refused a reasonable offer of employment or self-employment; and
• are not eligible for EI for the period targeted by the claim.

Additionally, claimants must not have:

• quit their job voluntarily or stopped working, unless it was reasonable to do so; and
• refused to return to work either for an employer or for themselves when it was reasonable to do so, or have refused a reasonable offer of employment or self-employment that would have begun during the period targeted by the claim.

People who might be eligible for both the CRB and EI benefits are required to file an EI claim with Service Canada. 

Impact on income taxes

Although claimants are entitled to earn income from employment or self-employment while receiving the CRB, they will need to repay $0.50 of each dollar of their annual net income above $38,000 in the calendar year, up to a maximum of the amount of CRB benefits they received.

Canada Recovery Sickness Benefit (CRSB)

The CRSB is intended for individuals who are unable to work because they (i) contracted or might have contracted COVID-19, (ii) have an underlying health condition that puts them at greater risk of contracting COVID 19, or (iii) are in isolation due to COVID 19. 

The benefit payable is $500 per week for a maximum of two weeks and will be taxable at source ($450 per week after a tax withholding of 10%). CRSB claims cover a specific one-week period. 

Eligibility Criteria

The CRSB is available to claimants who:

• were unable to work at least 50% of their scheduled work week during the week in which they are claiming the CRSB or had to reduce by at least 50% the time they would have spent working, in the case of claimants who are self-employed, for one of the reasons mentioned above; and
• have not, for the week covered by the claim, been granted paid leave, been paid under a sickness benefit plan or received EI benefits. 

Claimants can be eligible for both the CRSB and EI sickness benefits. In this case, they can choose which benefit they prefer. However, claimants cannot receive both benefits for the same period covered by the claim.

Canada Recovery Caregiving Benefit (CRCB)

The CRCB is intended for individuals who were unable to work because they were caring for a child or a family member who had to stay home because schools, care facilities or other day programs were closed.

The benefit payable is $500 per week for up to 26 weeks per household and will be taxable at source ($450 per week after a tax withholding of 10%). In other words, two family members living in the same dwelling will not be able to receive the CRCB for the same period. CRCB claims cover specific one-week periods.

Eligibility Criteria

To be eligible for the CRCB, claimants must:

• be employed or self-employed on the day immediately preceding the period for which the claim is made;
• have been unable to work at least 50 % of their normally scheduled week or have reduced by at least 50% the time they would have spent working, in the case of claimants who are self-employed, for one of the following reasons:
  • 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 the child’s school or any other facility attended by the child is closed or operating under an alternative schedule for reasons related to COVID 19;
    • because the child cannot attend school or the facility because the child contracted or might have contracted COVID-19, the child is in isolation or is at a risk of developing serious complications if the child contracted COVID-19, in the opinion of a medical practitioner; 
    • because the person who usually cared for the child is not available for reasons related to COVID 19;
  • take care of a family member (including anyone whom the person considers to be like a close relative or who considers the person to be like a close relative) who requires supervised care because:
    • the facility or day program is closed, unavailable, open only for certain persons or operating under an alternative schedule for reasons related to COVID 19;
    • the family member cannot attend the facility or day program because the family member contracted or might have contracted COVID-19, the family member is in isolation or is at a risk of developing serious complications if the family member contracted COVID-19, in the opinion of a medical professional; or
    • the care services normally provided to the family member at their residence are not available for reasons related to COVID 19;
• they have not been granted paid leave, been paid under a plan that provides for payment for the care of support of another person or received EI benefits during the week covered.

Elements common to all recovery benefits

Benefit claims

Claims for benefits must be made within 60 days after the end of each period for which the claimant is requesting income support, more specifically at the earliest on the first Monday after the period has ended. Therefore, contrary to the CERB and as is the case with EI benefits, these benefits are paid in arrears. 

The periods covered must be between September 27, 2020, and September 25, 2021. Claims do not renew automatically so a new claim must be made for each benefit period. 

Claimants will need to attest that they meet the eligibility requirements specific to each recovery benefit plan. For audit or prevention purposes, additional information or documentation could be required. Claimants who fail to comply with these requirements will not be eligible to receive the benefit for the period they applied for. 

If no additional documentation is requested during the claim process, the payment processing time will be three to five business days by direct deposit or 10 to 12 business days by mailed cheque. If the claim requires further validation, the processing time may take up to four weeks from the time the requested information is received.

Claims can be submitted using the CRA “MyAccount” portal or by telephone⁵. 

Repayment

If claimants receive an amount to which they are not entitled or in excess of the amount to which they are entitled, the overpayment must be repaid.

If they fail to do so, the minister can:

• require that a financial institution debit all or part of the amount owed from the account of the debtor; 
• require that the debtor’s employer deduct all or part of the amount owed from the debtor’s pay.

Penalties for false representations

A penalty equal to no more than 50% of the benefit that was or would have been paid, up to $5,000, may be imposed on a claimant who knowingly makes a false or misleading representation in relation to a claim for a benefit or who receives a benefit knowing full well that he or she is not eligible.

Canada Emergency Response Benefit

The CERB is available from March 15 to October 3, 2020. Eligible workers have until December 2, 2020, to file a claim for this period. For more information on the CERB and its eligibility criteria, please refer to our latest publication: “Canada Emergency Response Benefit: Update.”