Last updated on June 18th, 2020
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For many of us the beginning of a new decade was meant to be a time for future prosperity and progress. However, during the first few months of 2020, our world was faced with an unprecedented threat of a dangerous virus we call COVID-19.
While each one of us is doing their best to protect ourselves and our loved ones, world governments are working hard to help relieve financial hardships that most people are unwillingly experiencing.
In Canada, we are fortunate enough as our government has recently introduced its response plan to combat economic crisis that came along with COVID-19 pandemic.
It is crucial to support the people of Canada during a difficult time like this and, hence, the federal government came up with a detailed list of financial aid tools to assist our nation, while health professionals are tirelessly working towards a sustainable solution to end coronavirus outbreak once and for all.
As many Canadians are losing their jobs are a result of coronavirus-related business closures, it is worth exploring available options that can help mitigate financial damage to the residents.
More specifically, we are referring to the new Canada Emergency Response Benefit and Employment Insurance that provide income support to Canadian workers during the time of economic crisis.
Canada Emergency Response Benefit (CERB):
Canadian Government has announced that it is allocating a sizeable amount of funds as an emergency benefit for eligible Canadian nationals and other residents, who are struggling to maintain their life standard as a consequence of COVID-19 related business closures and lay-offs that are taking place across the country.
The main premise of such benefit is that Canada will provide income support for the amount that is equal to $2,000 a month in weekly installments of $500. The duration of this program is 4 month or 16 weeks.
Who is eligible to apply for CERB?
In order to be able to apply for Canada Emergency Response Benefit, each applicant must meet the following requirements:
– You must be at least 15 years old
– You must be residing in Canada
– You have ceased working as a result of COVID-19 pandemic
– You had at least $5,000 of income in 2019 or during the 12 months immediately prior to the date you apply. AND you are or expect to be unemployed and/or without self-employment income for at least 2 consecutive weeks (14 days) during the initial 4-week period. For any subsequent benefit period you expect to have no employment income.
CERB: Important Details
You do not need to be laid-off: CERB allows people to apply, even though they could still be attached to their company i.e. NOT LAID-OFF to apply for benefit as long as they have completely stopped working and remain without income for 14 days in a row.
CERB is taxable: Another important feature is that CERB remains taxable, but the tax will not be deducted right away. You will need to report the fact that you have been receiving the benefit when you file your income tax for 2020.
Your income could be earned outside of Canada: As long as you reside in Canada, your minimum income of $5,000 for 2019 or 12 months before you apply could be earned in any other country in the world.
No waiting period: As soon as your application is approved, you will start receiving CERB installments within 10 days without any waiting period and your payments will reflect the date you became eligible for CERB starting from March 15, 2020.
Please note that CERB is only available to those who have stopped working and lost income due to COVID-19 related reasons. If your employment and income has not been affected by COVID-19 as described above, you are not eligible for CERB.
When can I apply for CERB?
Provided that you met all official eligibility requirements, the starting date for application processing is April 6, 2020. However, you can retroactively apply from March 15, 2020 as the Government of Canada allows.
More information on Canada Emergency Response Benefit (CERB), please visit the official website of the Government of Canada or use the following link to that page here – Canada Emergency Response Benefit
Employment Insurance, or simply EI, is a government program designed to provide eligible workers with benefits equal to 55% of the average weekly earnings up to the maximum insurable amount that is currently $573 a week.
As of January 1, 2020, the maximum amount of insurable annual earnings is $54,200.
There are 2 types of EI benefits and namely – Regular and Sickness.
Regular Employment Insurance Benefits and Eligibility:
Regular EI Benefits are provided to eligible workers who lost their employment through “no fault of their own” including shortage of work or lay-offs.
Normally, benefits are available to people for the duration ranging from 14 weeks to 45 weeks based on the circumstances listed below.
In order to qualify for Regular EI Benefits you must meet the following eligibility criteria:
– You were employed in an insurable employment;
– You lost your employment through no fault of your own i.e. laid-off;
– You have not been working and without pay for at least 7 days in a row at anytime during the last 52 weeks;
– You have completed the required number of insurable employment hours ranging from 420 and 700 during the last 52 weeks or following the start of your last EI claim if it is a shorter period;
– You are ready, willing and capable of working each day;
– You are actively looking for employment. You must present a written record of employers you contact and when you contacted them.
The duration of your eligibility for Regular Employment Insurance benefits would depend on the rate of unemployment specific to your region when you file a claim as well as the number of total hours you have worked over the last 52 weeks or since you previous claim in case it is a shorter period.
Please visit Canada.ca for a more detailed information concerning the subject – EI Regular Benefits
Employment Insurance Sickness Benefits and Eligibility:
Unlike Regular EI Benefits, Sickness Benefits are payable when you lose your employment due to eligible medical reasons including accidental injury, sickness, quarantine or any other medical condition that prevents you from working.
With Sickness Benefits provided by Employment Insurance you can be eligible for 55% of your regular weekly earning up to the maximum of $573 a week for a period of up to 15 weeks.
The amount of financial benefit you might be entitled to will be based on your insurable income before taxes during the past 52 weeks or following the start of your last claim, whichever is shorter.
If your employer provides financial aid such as paid sick leave or a short-term disability insurance, you should use it prior to applying for EI sickness benefits.
In order to receive EI Sickness Benefits you must meet the following eligibility requirements:
– You are not able to work for medical reasons
– Your regular weekly earnings from the place of employment have decreased by more than 40% for at least 7 days
– You have accumulated 600 insured work hours* during the 52 weeks prior to the start of your claim or following start of your last claim if it happens to be a shorter period
– You must demonstrate that you have a medical reason not to work by providing an appropriate Medical Certificate
Please note that as a recipient of Sickness EI Benefits, you must remain available for work if it were not for your medical reasons.
For more information about EI Sickness Benefits, please visit Canada.ca – EI Sickness Benefits
Employment Insurance: Important Details
Employment Insurance benefits in Canada have certain features that could be important depending on your specific case, please review the most important ones below.
Best weeks Pay Calculation: The amount of payable EI benefits will depend on your highest earning weeks if your employment income varies due to changing bonuses, commissions, tips and wages. The number of best weeks will be based on the unemployment rate in your region that varies between 14 weeks with the highest unemployment and 22 weeks with the lowest unemployment rate.
Available Family Supplement: If your combined family income does not exceed $25, 921, provided you have at least one child under 18 y.o., and you or your spouse is a recipient of Canada Child Benefit, then you are eligible for a family supplement. Such supplement can increase EI rate from 55% to 80% of average weekly earnings for one spouse (preferably with a lower income for higher benefit rate). You or your spouse will be eligible for the supplementary benefit. The maximum amount is $573 a week.
EI Benefits are taxable: EI benefits are taxable. More specifically, it means that applicable provincial and federal taxes will be deducted from your payments.
Waiting Period: There is usually a 1 week waiting period before you could start receiving your EI benefits. It is considered a “deductible” that you would normally have with other types of insurance payments.
Mandatory Bi-Weekly Reports: In order to prove your eligibility and to receive any payments under EI, you are required to complete bi-weekly reports via internet or phone . If you do not do so, it may lead to a loss of otherwise payable benefits.
When can I apply for Employment Insurance Benefits?
Applying for EI is important as soon as you lost your job even before you receive a Record of Employment (ROE) in order to begin processing your case immediately. You are encouraged to apply within the first 4 weeks following the last working day in order to receive all benefits you are entitled to.
CERB or EI: Which one should I apply for?
All in all, both Canada Emergency Response Benefit (CERB) and Employment Insurance (EI) are designed to help you maintain a normal lifestyle during the time of economic setbacks when you happen to lose your source of insurable income.
However, considering the differences in eligibility requirements and payable benefits, you might be wondering which of the two works best in your personal situation.
The main advantage of EI benefits is that it offers a higher maximum payment amount of $573 a week in comparison to $500 from CERB.
Another notable distinction of EI from CERB is the maximum duration you could be entitled to receive benefits for. While it is 16 weeks with CERB, EI offers up to 45 paid weeks based on aforementioned factors.
Yet, in case your maximum annual earnings for the previous year were significantly less than $54,200, then you might be much better off applying for CERB to receive the guaranteed $500 in weekly payments that are not taxable until you file your Income Tax for 2020.
In addition, when applying for CERB over EI, there is no waiting period before you could start receiving money. Not to mention, you are also not required to submit bi-weekly reports to remain eligible for CERB payments as opposed to Employment Insurance.
Let’s summarize the main advantages and shortcomings of both programs to have an easier time deciding which one to apply for:
– Guaranteed $500 a week
– No waiting period
– Benefit is not taxable right away
– Maximum limit of $573 a week
– Up to 45 weeks are payable
– You are unemployed for various reason that are not your fault
– Payable benefit for 16 weeks only
– Could pay less than EI benefits
– You are out of work solely due to COVID-19
– Payable benefit varies based on hours worked, regional unemployment rate and income earned.
– One week of waiting period
– Payments are taxable at the source
Overall, if you are eligible for either regular or sickness Employment Insurance Benefits, and based on your income and your regional unemployment rate it comes down to more than $500 a week, your best bet is to apply for EI. In any other case, you should go with CERB as a temporary income support.
Whichever option works best for you, it is important to know what programs are available to Canadians during the time of crisis!