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Employment Insurance, what you can claim

If you are terminated from your employment and are not guilty of willful misconduct, and you have enough insurable hours, you are entitled to Employment Insurance. You have to serve a two-week waiting period before you can start collecting.
 
It has to be a two-week period for which you are not paid any earnings by your employer.
 
If you are terminated and at the same time were paid that two weeks of unpaid vacation you had accrued but not used, it’s going to be four weeks before you are eligible. If the employer is looking out for you and knows the termination is coming, they should pay out your vacation pay a couple of weeks before the termination. If they do that, you only have to wait two weeks to collect EI, not four. Does it make sense? No. I don’t make these rules, I just report on them.
 
Whether you call it termination pay, severance pay or pay in lieu of notice, any payment received from your employer as a result of your termination will also delay your entitlement to Employment Insurance. If you receive 12 weeks’ termination pay and two weeks’ vacation, it’s going to be 16 weeks before you are eligible to collect Employment Insurance.
 
But what if you have to fight for your severance package? If you receive no severance immediately after the termination, you can start collecting Employment Insurance.  The maximum insurable earnings is $47,400.00. You can get 55% of that amount so the most anyone can get on Employment Insurance is $501.00 a week.
 
Let’s imagine that you were terminated from a job in which you earned $52,000.00 a year. After two weeks with no income you start to collect $501.00 a week. Let’s assume your maximum is 40 weeks although that changes for different areas an unemployment rates. You hire a lawyer to start litigating with your employer about your severance package. After you have collected 16 weeks of Employment Insurance, you settle with your old employer. After the lawyer’s fees are deducted, you end up with a gross amount of $30,000.00. For you, that is 30 weeks’ pay.
 
You have to report that amount to Service Canada and they will tell you that you have to pay back the first 16 weeks; at $501.00 a week, that is a $8,016.00. That’s the bad news. The good news is that now you have paid back the first 16 weeks, instead of having 24 weeks left in your maximum EI claim, you have 40 left again. As long as you collect them within 104 of your termination, your entitlement period is extended by the pay back.
 
If you end up getting a new job 10 weeks later, that extension of your entitlement did you no good. The irony in this situation is that while the government gets the benefit of you having hired and paid a lawyer by getting some of the money back, they don’t contribute a dime to your legal costs. Granted, they are nice enough to not count what you paid a lawyer in calculating your pay back obligations.
 
In this scenario, you’ll not only have to send the cheque for $8,016.00, your Employment Insurance will be cut off until 32 weeks after the date of your termination, the two-week waiting period plus the 30-week settlement.
 
Even if you have received a healthy severance package as soon as you were terminated, you should go online and file your claim for Employment Insurance benefits. If you are receiving a salary continuance instead of a lump sum payment, and both are common, you won’t have an employment record yet but don’t let that bother you. If you wait beyond four weeks you may run into trouble getting Employment Insurance if you need it.
 
Remember, if you quit, you don’t get Employment Insurance unless you had just cause for leaving. For example, there was serious harassment, discrimination or dangerous working conditions.
 
If your employment record says you were “dismissed”, don’t worry. Everyone in the world seems to think that means that you cannot collect Employment Insurance. It’s simply not true. Unless you were dismissed for willful misconduct, which is very hard to establish, you are going to get Employment Insurance.
 
As published in the Hamilton Spectator, February 19, 2013