In these unprecedented times, employers will be challenged to be creative in finding ways to not just keep their business afloat but also to take care of their employees and through doing so will obtain assurance that when the pandemic has passed their workforce will still be there.
The Supplemental Unemployment Benefit (“SUB”) Plan allows an employer to top up EI benefits to lessen the loss of income experienced by the laid off employee. This applies to both regular EI and EI sickness benefits. SUB plans can be utilized when unemployment is due to a variety of factors, including a temporary stoppage of work or illness, injury or quarantine. The Employment Insurance Regulations (Article 37(2)) require the following to be met to implement a SUB plan
1. Identification of the group of employees covered by the SUB plan;
2. Employee must be in receipt of EI benefits related to a permitted type of unemployment, which with respect to Covid19 in particular, would be temporary shortage of work due to illness or quarantine;
3. Plan may provide for payments to employees who are not in receipt of EI benefits when:
- The employee is serving the waiting period before benefits begin to be paid;
- The employee has insufficient hours of insurable earnings to qualify for benefits; or
- The employee has received all of the benefits they are entitled to.
4. The combination of the weekly payment of EI benefits plus the provided SUB benefit must not exceed 95% of the employee’s normal weekly earnings;
5. The SUB plan must be registered with Service Canada. If the plan is not registered with Service Canada the payments made by the employer under the SUB plan will be considered insurable earnings. The consequence of the payments made by the employer being considered insurable earnings is that they will be deducted from the EI benefits payable to the employee.
With respect to creating the plan to be registered with Service Canada, there is no specific template or form that must be used. A sample plan can be found on the Government of Canada website which can be used to create the employer’s plan. The plan must contain a description of the benefits as well as the following information:
- The group of employees that will be covered by the plan;
- The type of unemployment covered by the plan;
- A statement that the employee must be in receipt of EI benefits to be a part of the plan;
- The amount of the SUB payments;
- The length of time during which the SUB payments will be made;
- Plan details; and
- A statement that payments made under the SUB plan will not be used to reduce or increase any other remuneration.
A registration form, which can be found on the Government of Canada’s website, must be submitted along with a copy of the plan. The registration form is called the “Supplemental Unemployment Benefit (SUB) Plan Registration”. The form is number NAS5036. The stated purpose of the form is:
This form will be used by employers to register their SUB plan with Service Canada. Before any supplemental payments are paid to an employee who is in receipt of EI benefits during a period of unemployment due to a temporary stoppage of work, training, illness, injury or quarantine, the employer must receive the approval from Service Canada that all the required conditions are met.
Approval of Service Canada of the SUB plan must be received prior to any payments being made to employees under the plan.
It is anticipated that further statutory changes will be announced to provide greater support to both employers and employees.
Learn more about these new development and other helpful information in Managing Workplace Reductions Due to COVID-19, authored by Rose Keith, QC.
Read the paper here.