The Canada Emergency Response Benefit (CERB) provides welcome financial support to workers across Canada who have stopped working due to the COVID-19 pandemic. Eligible workers are entitled to C$500 per week for up to 16 weeks, paid in four-week blocks. The CERB is available for the period of March 15, 2020 to October 3, 2020. Now, almost two months after its launch, here are the top 5 questions we have been asked by employers:
1. Who is eligible for the CERB?
The CERB is available to workers who meet the eligibility criteria. This includes full-time and part-time employees, as well as workers who would not typically qualify for Employment Insurance (EI) benefits, such as contract workers or self-employed individuals.
In order to be eligible for the CERB, a worker must meet the following conditions:
- Lives in Canada and is at least 15 years old
- Earned income of at least C$5,000 in 2019 or in the 12 months prior to the CERB application
- Did not quit his or her job voluntarily
- Experienced reduced work hours due to COVID-19 or stopped working due to COVID-19—including, without limitation, due to job loss, temporary layoff or an unpaid leave of absence—or is eligible for EI regular or sickness benefits or has exhausted his or her EI regular benefits but is still unable to work due to COVID-19
- Has earned income of less than C$1,000 for 14 or more consecutive days in the worker’s initial four-week claim period. Government commentary provides that for subsequent claim periods an eligible worker cannot have earned income of more than C$1,000 for the entire four-week claim period. An employer may continue to provide non-cash benefits to an employee, such as medical benefits.
Importantly, there is no requirement that workers experience a permanent break in the employment or contractor relationship in order to access the CERB. For example, workers may be eligible for CERB if their work hours and pay are reduced or if they are placed on temporary layoff or an unpaid leave of absence. Employers should be mindful that unilaterally imposing such changes to the terms and conditions of employment or engagement could give rise to constructive dismissal or breach of contract claims. However, given the current situation where finding new work in the short term may be difficult, many workers have been willing to consent to such arrangements in order to maintain the working relationship.
2. How does the CERB interact with the Canada Emergency Wage Subsidy (CEWS)?
An eligible employer can claim the CEWS in respect of eligible remuneration paid to an employee during a CEWS claim period, even if the employee is receiving or has received CERB payments in respect of the same claim period. However, an employer is not permitted to claim the CEWS in respect of an employee who has been without remuneration from the employer for a period of 14 or more consecutive days in the claim period. It is possible for an employer to hire back eligible employees and pay them retroactively in respect of a claim period and receive the CEWS. In this situation, an employee who has received the CERB in respect of this period may be required to repay the CERB.
Example: An employee is placed on temporary layoff on March 15, 2020. During the temporary layoff period, the employee does not earn any income and receives the CERB. However, the employer subsequently recalls the employee to work on April 11, 2020, and retroactively pays the employee for the entire period of layoff. In this situation, assuming the employer is eligible for the CEWS, the employer will be permitted to include the employee’s eligible remuneration in its CEWS application for the March 15, 2020, to April 11, 2020, claim period and the employee will be required to return or repay the CERB funds received in respect of that four-week period.
3. Can an employer “top-up” the CERB through a supplemental unemployment benefit plan (SUB Plan)?
A SUB Plan registered with Service Canada allows an employer to increase, or “top-up,” the regular or sickness EI benefits an employee may receive, without resulting in a claw back of EI benefits. Since the CERB was announced, employers have wondered whether the federal government would allow the CERB to be topped up in a similar manner.
Unfortunately, the federal government recently confirmed that payments from a SUB Plan will be considered employment income when assessing whether an individual meets the CERB eligibility requirements. If an employee receives employment income in excess of the C$1,000 threshold, the individual will not be eligible for the CERB. Employees will be required to repay the CERB for periods where the employee is subsequently found ineligible.
Furthermore, all employees who ceased working after March 15, 2020, and would have otherwise been eligible for regular or sickness EI benefits, will receive the CERB first before having their EI claim processed. Individuals do not get to choose whether to receive the CERB or regular EI benefits. This means that employees will not begin receiving regular or sickness EI benefits until after the 16-week CERB has been exhausted. As a result, an employer cannot top-up an employee’s earnings while the employee is collecting the CERB, even if the employer has a pre-existing SUB Plan in place.
4. Does an employer need to issue a record of employment (ROE)?
An employee does not need an ROE to apply for and receive the CERB. However, employers should be providing ROEs when there is an interruption in earnings in case an employee subsequently applies for EI after the CERB is exhausted. When completing the reason for separation (block 16) on the ROE, Service Canada notes that (i) if an employee is sick or quarantined, use code D (illness or injury), (ii) if an employee is no longer working due to a shortage of work (business closed or decreased operations) use code A (shortage of work), and (iii) if an employee refuses to go to work but is not sick or quarantined, use code E (quit) or code N (leave of absence), as appropriate.
5. What should an employer consider when reinstating employees?
As provincial governments begin to loosen emergency measures and implement strategies to re-open the economy, more workplaces will be permitted to open. Yet with social distancing requirements and other safety directives in place, many companies will likely experience a transition period where business remains slow and employees are not needed on a full-time basis.
During this transition period, some employees may be recalled on a part-time basis, earning more than C$1,000 per month—and making them ineligible for the CERB—but less than the C$2,000 they would have received through the CERB. The CERB does not account for this transition period or offer any top-up payment to such employees. As a result, such employees will be in a worse financial position upon returning to work than they were before. This will likely affect their willingness to return. Employers should be mindful of this issue and be prepared to offer employees sufficient financial incentive to return.
For general information on considerations for returning to work, please see our May 2020 Blakes Bulletin: COVID-19: Considerations for Returning to Work.
For further information, please contact:
Lindsay McLeod 416-863-3881
Laura Blumenfeld 416-863-5250
or any other member of our Employment & Labour or Pensions, Benefits & Executive Compensation groups.
Please visit our COVID-19 Resource Centre to learn more about how COVID-19 may impact your business.
Blakes and Blakes Business Class communications are intended for informational purposes only and do not constitute legal advice or an opinion on any issue. We would be pleased to provide additional details or advice about specific situations if desired.
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