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The Canada Emergency Response Benefit (CERB) is set to expire at the end of August, but the Canadian government has announced that the $500-per-week benefit is being extended by four weeks. Once the CERB ends at that time, things will transition over to a simplified Employment Insurance scheme, which will have three different payment programs. 

This new EI system, which starts on Sept. 27th should be a seamless transition for people who are currently on CERB. How much you’ll get and how long it’ll last depends on which program you qualify for. Keep in mind that all the programs are taxable.

Right now the progarms are just a proposal and they need to pass in legislation for them to become available. It’s possible that there will be tweaks, but here’s what know right about the new employment insurance programs

Employment insurance Canada

New simplified Employment Insurance benefits

  • $400 per week minimum
  • 26 weeks of regular benefits minimum
  • Taxable

To address what has happened in the labour markets during the pandemic, EI payments will now be at a minimum of $400 per week with a minimum of 26 weeks of benefits. The calculation used to determine your benefit will be based on your 14 best weeks of earning in the previous year. 

Currently Employment insurance is calculated at 55% of your best weeks up to a maximum of $573 a week. We don’t know if that is changing yet.

Employment Insurance eligibility

  • Resident of Canada
  • 120 insurable hours worked in 2020
  • Applies to claims due to job loss
  • Applies to claims for special benefits (sickness, maternity/parental, compassionate care or family caregiver)

The insurable hours worked to qualify for the simplified employment insurance has dropped significantly. Instead of having to work 420 hours, you now only need to have worked 120 hours. The government is basically giving you a credit of 300 hours since they recognize that the pandemic has affected the work of many Canadians.

This new rule of 120 insurable work hours also applies to people who are applying for special benefits who would normally have required 600 insurable hours worked. So if you’re about to go off on maternity or parental leave, you only need to have worked 120 hours to qualify for employment insurance benefits.

Canada Recovery Benefit

  • $500 per week 
  • Up to 26 weeks of benefits
  • Taxable

Canada Recovery Benefit eligibility

  • Resident of Canada
  • Must be at least 15 years old and have a valid Social Insurance Number (SIN)
  • Have stopped working due to the Pandemic, but are looking for work
  • You’re working, but your employment/self-employment income has dropped due to COVID-19
  • You’re not eligible for Employment Insurance
  • Had income of at least $5,000 in 2019 or in 2020
  • Did not quit your job
  • Applies to self-employed and gig economy workers

The Canada Recovery Benefit is designed for self-employed and gig economy workers who do not qualify for employment insurance. Think of this as the CERB replacement. You would need to apply for this benefit every two weeks and you’re supposed to be looking for work during this time.

If you do find work, whether it is stable or not, you would need to repay $0.50 of the benefit for each dollar of their annual net income above $38,000 (excluding the Canada Recovery Benefit payments). Some people may think this is a bad deal, but it’s actually encouraging you to work. You’ll never need to pay more than what you earned from the benefit. If you ended up making enough money to repay the entire benefit you earned, that just means you didn’t need the benefit.

The key thing to understand is that the repayment only applies to income above $38,000 (excluding the Canada Recovery Benefit payments). Let’s say you were on the Canada Recovery Benefit and received $2,000. You would only need to repay that amount if you earned $4,000 over the threshold, which is double of your benefit. To be clear, you won’t earn less by working.

Canada Recovery Sickness Benefit

  • $500 per week
  • 2 weeks of benefits maximum
  • Taxable

Canada Recovery Sickness Benefit eligibility

  • Resident of Canada
  • Must be at least 15 years old and have a valid Social Insurance Number (SIN)
  • Employed or self-employed at the time of the application
  • Earned at least $5,000 in 2019 or in 2020
  • Applies to people who must self-isolate or quarantine due to COVID

The Canada Recovery Sickness Benefit is available to workers who are sick or must self-isolate due to COVID-19. This is a great benefit as there’s less pressure for people to head to work if they’re showing symptoms of COVID-19 or need to self-isolate due to exposure. That said, you need to miss at least 50% of your scheduled work in the week to qualify.

You would apply for this benefit after the one-week period in which you’re looking for income support. Note that if you’re getting paid leave from your employer, you would not qualify for the Canada Recovery Sickness Benefit.

Canada Recovery Caregiving Benefit

  • $500 per week 
  • Up to 26 weeks of benefits per household 
  • Taxable

Canada Recovery Caregiving Benefit eligibility

  • Resident of Canada
  • Must be at least 15 years old and have a valid Social Insurance Number (SIN)
  • Employed or self-employed immediately preceding the time of the application
  • Earned at least $5,000 in 2019 or in 2020
  • Unable to work for at least 50% of your normally scheduled work within a given week due to one of the following conditions:
    • Must take care of a child who is under 12 years of age
      • Their school or daycare is closed or operates under an alternative schedule due to COVID-19
      • Can’t attend school or daycare under the advice of a medical professional
      • Their caregiver is not available for reasons related to the COVID-19
    • Must take care of a family member with a disability or a dependent:
      • Their day program or care facility is closed or operates under an alternative schedule due to COVID-19
      • Can’t attend their day program or care facility under the advice of a medical professional
      • Their caregiver is not available for reasons related to the COVID-19
  • Must not be on paid leave during the same week
  • Must not be on any other EI benefits including EI Emergency Response Benefit (ERB), the Canada Recovery Benefit, and the Canada Recovery Sickness Benefit

While the Canada Recovery Caregiving Benefit eligibility may seem excessive, if you fall into this category it makes perfect sense. It’s aimed at people who need to take care of their children or a relative due to COVID-19. During the pandemic, there were many stories about parents who had to quit their jobs to take care of family. The Canada Recovery Caregiving Benefit will now at least provide some income for those who had to leave their jobs.

Two family members living in the same household would not be able to receive the Canada Recovery Caregiving Benefit at the same time. You would apply for this benefit after the period in which you’re looking for income support.

How to apply for Employment Insurance

If you’re currently receiving benefits via Service Canada, then you’ll automatically be transitioned to the simplified employment insurance benefits once your CERB runs out. This assumes you’re EI eligible and you still need the income support.

Those who believe they are entitled to EI and currently are getting their CERB payments through Canada Revenue Agency (CRA) would need to apply through Service Canada after September 26.

The CRA will administer the Canada Recovery Benefits, so you would apply through them if you believe you qualify for benefits.

For more information about your EI Benefits and what happens when CERB runs out, check out the Government of Canada website at www.canada.ca/coronavirus.

Employment Insurance Replacing CERB | What you need to know
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About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi

1 Comment

  1. Avatar Greg Adlam on September 28, 2020 at 1:06 PM

    Do I need to apply for this if already received cerb benefits and if so, how do I apply and qualify?

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