In our other recent posts on COVID-19, we discussed specific leaves for COVID-19, general statutory leaves of absence, work sharing programs and effecting a temporary layoff in the workplace.
All of these considerations prompt the question, what happens to employee compensation?
Most forms of statutory leave under existing employment standards legislation are unpaid. Of course, employers have the option to continue all wages/salary during a leave, but that may not be feasible.
In this article, we canvass options for assisting employees and their families financially during the COVID-19 pandemic.
New Funding Announced from the Federal Government
Prime Minister Justin Trudeau recently announced further measures to provide temporary income support for workers and parents.
The Federal Government is introducing an Emergency Care Benefit to provide up to $900.00 on a bi-weekly basis, for up to 15 weeks. The benefit will be administered through the Canada Revenue Agency (CRA) and provide income support to Canadians in the following situations:
- workers (including self-employed workers), who are quarantined or sick with COVID-19, but do not qualify for employment insurance (EI) sickness benefits, as discussed below;
- workers (including self-employed workers), who are taking care of a family member who is sick with COVID-19, such as an elderly parent, but do not quality for EI sickness benefits; or
- parents with children who require care or supervision due to school closures, and are unable to earn employment income, irrespective of whether they qualify for EI or not.
The application to apply for the benefit will be available in April 2020, and require Canadians to attest that they meet the eligibility requirements. Claimants will need to re-attest every two weeks to reconfirm their eligibility.
The Federal Government is also implementing longer-term income support for workers through an Emergency Support Benefit delivered through the CRA to provide up to $5 billion in support to workers who are not eligible for EI and are facing unemployment, and is also proposing to provide a one-time special payment by May 2020 to low and modest-income families through the Goods and Services Tax Credit. The average boost to income for those benefitting from this measure will be close to $400.00 for single individuals and close to $600.00 for couples.
The Federal Government is also planning to increase the maximum annual Canada Child Benefit payment amounts for the 2019-20 benefit year by $300.00 per child.
Further, there is funding being allocated to targeted groups who may be more vulnerable to the effects of COVID-19 such as First Nations, Inuit and Metis Nation communities, and individuals currently repaying their student loans.
Options for increasing flexibility for Canadian taxpayers are also being considered. Support measures for businesses and employers have also been announced.
Employment Insurance Sickness Benefits
EI sickness benefits provide up to 15 weeks of income replacement and are available to eligible claimants who are unable to work because of illness, injury or quarantine. This allows employees time to restore their health and return to work. Canadians quarantined due to COVID-19 are eligible to apply for EI sickness benefits.
The normal one-week waiting period for EI sickness benefits will be waived for new claimants who are quarantined due to COVID-19 so they can be paid for the first week of their claim. Priority EI application processing will apply for EI sickness claims due to quarantine and those individuals will not have to provide a medical certificate in order to qualify.
It is currently unclear whether during the period of the claim the employee will have to meet the normal requirement of submitting reports every two weeks that show they are still entitled to receive EI benefits.
Employees who cannot complete their claim for EI sickness benefits due to quarantine may apply later and have their EI claim backdated to cover the period of delay.
More information can be found at Employment and Social Development Canada's (ESDC) webpage discussing COVID-19.
What are the Eligibility Criteria for EI Sickness Benefits?
The applicant must be:
- employed in insurable employment;
- normal weekly earnings have been reduced by more than 40%;
- accumulated at least 600 hours of insurable employment during the qualifying period; and
- self-employed, registered for EI and submitting premiums for at least one year.
The Government of Canada is exploring additional measures to support other affected Canadians, including income support for those that are not eligible for EI sickness benefits.
Regular EI Benefits
If an employee does not qualify for EI sickness benefits, they may still qualify for regular EI benefits. More information is available at ESDC's webpage on EI Regular Benefits.
Can Employees Work while in Receipt of EI Benefits? Are there deductions?
If an employee works while receiving EI (sickness or regular) benefits, the employee is able to keep $0.50 of the EI benefits for every dollar they earn, up to 90% of the weekly insurable earnings used to calculate their EI benefit amount (earnings threshold). If they earn any money above this threshold, ESDC will deduct those amounts dollar for dollar from benefits.
What types of income are subject to deductions depend on whether they are defined as "earnings" for EI purposes. A detailed chart explaining what constitutes earnings is outlined on the ESDC's website: Employment Insurance Earnings Chart.
Certain types of income have no impact on EI benefits because they are not considered earnings, such as:
- disability benefits;
- survivor or dependent benefits;
- worker's compensation benefits paid under specific regulations;
- additional insurance benefits paid under an approved private plan (for example, payments for pain and suffering or medical expenses that received from an insurance company after an employee has been injured in a car accident);
- additional sickness benefits paid by an employer from a registered supplemental unemployment benefit plan (as long as the income, benefits, and additional amounts combined do not exceed 95% of the weekly earnings) – see below for more information on these types of plans;
- sickness or disability payments received under a private wage loss replacement plan; and
- retroactive salary increases.
Special considerations apply for work-sharing programs.
Can employers provide an EI "top up", like with pregnancy and parental leave?
Based on the information currently available, it is likely that any payments made by an employer outside the context of a formal "top up" plan, more properly known as a "Supplemental Unemployment Benefit" plan, will be considered earnings and consequently clawed back by ESDC as noted above.
There is a possibility that such payments to employees could receive special consideration in retrospect given the current circumstances. If employers choose to offer top-up payments without registering a supplemental unemployment benefit plan, they should advise employees that there is a risk of clawback. A member of Gowling WLG's Employment, Labour & Equalities Group is also available to discuss additional options with you.
What is a Supplemental Unemployment Benefit (SUB) Plan? How can it help employees during the COVID-19 event?
Employers can use a Supplemental Unemployment Benefit (SUB) plan to increase their employees' weekly earnings when they are unemployed due to a temporary stoppage of work, training, illness, injury or quarantine. Payments from SUB plans that are registered with Service Canada are not considered as earnings and are not deducted from EI benefits (pursuant to subsection 37(1) of the EI Regulations).
SUB plans are registered by Service Canada through the SUB program. The registration date is the date the application for a SUB plan is submitted by the employer, and must be registered before the effective date. The plan is subject to review by officers in the SUB program.
Currently, it does not appear that SUB plan requirements have been relaxed in the face of COVID-19. Therefore, until a plan is registered, the EI program will likely consider those amounts paid by the employer to be earnings, which are subject to claw back as noted above. However, it is possible that the policy on this will be considered retroactively.
More information about registering a SUB plan is available at ESDC's webpage.
What components are necessary for registering a SUB Plan?
SUB plans are assessed against the requirements set out in subsection 37(2) of the EI Regulations. Acceptable plans are subject to prescribed criteria. For complete details on SUB plan requirements, please visit ESDC's webpage. A sample SUB plan is available here.
The required documentation to submit a SUB plan includes the following:
- the SUB Plan;
- the SUB Plan Registration Form;
- a copy of the current collective agreements, if the plan covers employees who are members of a certified bargaining unit;
- a copy of the relevant section of the insurance policy used to administer the SUB plan, if applicable (if the policy does not contain a complete plan description, a document signed by the employer containing the missing information);
- a copy of the trust agreement (if applicable); and
- any company policies and/or personnel guidelines containing information about the plan, as well as any declarations or documents that employees have to sign to receive the SUB payment.
If you would like to discuss setting up a SUB plan, a member of Gowling WLG's Employment, Labour & Equalities Group is available to assist.
A Comment on Statutory Leaves in Response to COVID-19
Based on current information, statutory leaves announced in response to COVID-19 are intending to rely upon the EI program to compensate employees while they are away from work. However, this is subject to change depending on what funding is allocated to the program in response to the COVID-19 pandemic.
Quebec's Temporary Worker Assistance Program
On March 16, 2020, the Government of Quebec announced the creation of the Temporary Assistance Program for Workers affected by COVID-19 in order to allow workers who do not have access to other financial assistance (employer compensation, private insurance, or government programs such as EI) to receive up to $573.00 per week for a period of 14 days of isolation. Financial assistance may be extended to a maximum of four (4) weeks for infected individuals whose quarantine period must be extended.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.