The Federal Government indicates that Supplemental Unemployment Benefit plans are unavailable for employees who are collecting the Canada Emergency Response Benefit.
Section 37 of the Employment Insurance Regulations (Canada) permits employers to create Supplemental Unemployment Benefit plans (a "SUB Plan") to top-up employment insurance ("EI") benefits issued to employees. A SUB Plan must be submitted to Service Canada prior to its effective date and the total of the employee's EI benefits plus the employer's top-up must not exceed 95% of the employee's normal weekly earnings. Amounts paid pursuant to a SUB Plan are not considered to be "insurable earnings" so EI premiums are not deducted from them.
As a general rule, EI SUB Plans can be established for "any period of unemployment by reason of a temporary stoppage of work, training, illness, injury, quarantine or any combination of such reasons." However, a SUB Plan must require employees to "apply for and be in receipt of [EI] benefits in order to receive payments under the plan." With the introduction of the Canada Emergency Response Benefit ("CERB"), significant uncertainty surrounded the interaction of the CERB and SUB Plans.
The CERB provides an income support payment of $2,000 every four weeks, for up to 16 weeks in total, to employees who are unable to work for reasons related to COVID-19. The initial CERB eligibility rules provided that only those workers who received no income from employment, for a period of 14 or more consecutive days, were eligible for the CERB. However, the Federal Government subsequently announced that employees can earn up to $1,000 during a particular four-week period and still receive the full amount of the CERB.
A key question for many employers is whether SUB Plan top-ups can be paid to employees who are currently receiving CERB payments. Service Canada has indicated that all individuals who became eligible for EI after March 15, 2020 cannot apply for EI regular or sickness benefits at this time, as all such applications are being processed under the CERB program.
On May 8, 2020, the Federal Government's webpage "Questions and Answers on the Canada Emergency Response Benefit" was updated to confirm that the SUB Plan rules "do not apply to employees who are receiving the CERB." If individuals earn more than $1,000 in total from all sources of employment and/or self-employment during a four-week CERB period, this "would create an obligation for the individuals to repay CERB amounts they received for the same benefit period."
Employers may still submit SUB Plans to Service Canada to allow them to top-up the benefits of employees who are currently receiving EI benefits (individuals who became eligible for EI regular or sickness benefits prior to March 15, 2020). A SUB Plan could also be registered for use in the future if employees begin receiving EI regular or sickness benefits at a future date (for example, if an employee has received CERB payments for the program maximum of 16 weeks).
Originally published May 12, 2020
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