Question Period Note: Difference in treatment for workers receiving Employment Insurance and the Canada Recovery Benefit

An article in the Toronto Star has suggested that the working while on claim provisions under EI are less generous than those of the Canada Recovery Benefit.

• To support Canadian workers impacted by the pandemic, we have transitioned to a more accessible Employment Insurance program.
• EI eligible workers now have access to a minimum of 26 weeks of support at a benefit rate of at least $500 per week, with a minimum of 120 hours of insurable work.

• To encourage people to accept work, claimants keep their earnings while on claim. Their EI benefits are reduced by 50 cents for each dollar they earn.

• This approach is long-standing and is applied when workers report their earnings every two weeks.

• We introduced the Canada Recovery Benefit as a temporary income support measure for those who are not eligible for EI.

• Under the Canada Recovery Benefit, a worker can earn up to 50% of their regular employment or self-employment income and be eligible for the Benefit..

• When a worker files their taxes they will need to repay50 cents on every dollar earned above $38,000 (not including the Canada Recovery Benefit) to a maximum of the full benefit received.

• Similar to EI, this approach maintains a balance between providing income support and incentives to return to work.

• The approach also recognizes that most recipients of the Canada Recovery Benefit are expected to be self-employed, and have more variable income patterns. Asking these claimants to report their income every two weeks would have been overly burdensome and complex to administer.

An article in the Toronto Star (October 20, 2020) suggests that the EI working while on claim provisions disadvantage EI claimants who work while receiving benefits when compared to workers who receive the Canada Recovery Benefit (CRB). This is because the CRB clawback provision only requires benefits to be repaid above an annual net income threshold of $38,000, rather than for every dollar earned from work as is the case for EI.

Employment Insurance

Under the Employment Insurance (EI) Working While on Claim provisions, claimants can keep 50 cents of their benefits for every dollar they earn, up to 90 percent of the weekly earnings used to calculate their benefit rate. Above this cap, EI benefits are deducted dollar-for-dollar. This is a long-standing approach that aims to maintain incentives for claimants to accept work while on claim. There have been no changes to this approach in response to the COVID-19 pandemic.

Under the EI program, a claimant’s benefit rate is normally determined as 55% of the claimant’s average weekly insurable earnings. This can be up to $573 per week in 2020. In response the COVID-19 pandemic and the new Canada Recovery Benefit, a minimum EI benefit rate of $500 per week has been put in place for claims established on or after September 27, 2020 for a period of one year.

Canada Recovery Benefit

For those who are not eligible to receive EI regular benefits, such as the self-employed, or those experiencing a reduction in employment/self-employment income of at least 50% due to COVID-19, the Government has introduced the Canada Recovery Benefit (CRB). This temporary benefit provides $500 per week (taxable) for up to 26 weeks between September 27, 2020 and September 25, 2021. This amount aligns to the minimum benefit rate for the EI program. The new CRB is delivered by the Canada Revenue Agency (CRA),

Applicants who receive the Canada Recovery Benefit and have an annual net income greater than $38,000 (not including amounts received for the Canada Recovery Benefit) will be required to repay $0.50 of each benefit dollar until they have repaid the full value of the Benefit. This is a similar approach to the EI Working While on Claim provision. This will be applied through the tax filing process.

The CRB clawback is applied just once, at year-end, reflecting that the majority of claimants are expected to be self-employed. These individuals tend to have more variable and less predictable income streams compared to employees, and are not in receipt of a regular paystub that would facilitate reporting their income every two weeks. Asking them to report income on a bi-weekly basis would have been very burdensome to them, and complex to administer for the Canada Revenue Agency.

EI claimants could receive a higher benefit rate and more weeks of benefits than CRB applicants. However, as the CRB clawback only applies at annual income levels over $38,000, CRB recipients who earn less than $38,000 per year will be better off when working than individuals with similar incomes who receive EI, who are subject to the clawback from the first dollar they earn.

None