COVID-19 and the Canadian Emergency Response Benefit

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Article2020 | 04 | 09

COVID-19 and the Canadian Emergency Response Benefit

by Jeff Palamar and Mark Alward

On March 25, 2020 the Federal Government announced the coming Canadian Emergency Response Benefit (“CERB”) to provide aid to many individuals whose income has been impacted by COVID-19. More details have been released as the days have passed, the program has evolved in many ways since originally announced and it went live on April 6, 2020.

Since being introduced, to date more than 7.5 million people apparently have applied for a CERB, yet there are still complaints the benefits available are leaving some who should be covered, excluded. Media speculation based on a seeming Government willingness to continue expanding the program, including a reported statement that those presently ineligible should stand by and wait for more “fixes” to the program, fuel that speculation and emphasize the need to bass decisions on the most current information available.

As of writing (April 20) the CERB provides up to $2,000 in a four week period ($500 per week) to a maximum of $8,000 for certain Canadians impacted by COVID-19. The CERB can help Canadians who would not otherwise qualify for Employment Insurance (“EI”) benefits, including self-employed persons.

Please note the obvious; everything related to the COVID-19 pandemic is in a constant state of rapid change, including government benefits like the CERB. The information in this article is current as of April 20, 2020, however things can change quickly and so you should seek specific and current information advice at the relevant time.

What exactly is the CERB?

This is a direct response from the federal government to assist individuals whose ability to earn income has been impacted by COVID-19. The CERB will be paid out once per four week period, up to a maximum of 16 weeks in the time period between March 15, 2020 and October 3, 2020. While the program is currently slated to run for this entire time period, individuals are only eligible for compensation for up to 16 weeks.

Who is eligible for the CERB?

This changed on April 15 to allow those with some income to apply.

At present, the CERB will be available to Canadians who have had to stop work as a result of COVID-19. An individual must be at least 15 years of age and had income of at least $5,000 in 2019 or in the 12 months prior to the date of their application in order to be eligible. The individual also cannot have earned more than $1,000 in employment and/or self-employment income for 14 or more consecutive days within the four-week benefit period of the claim. Workers who are receiving reduced pay may be eligible for the CERB.

Another change on April 15 includes the following:

seasonal workers who have exhausted their EI regular benefits and are unable to undertake their regular seasonal work because of COVID-19; and
workers who have recently exhausted their EI regular benefits and are unable to find a job because of COVID-19.

The CERB applies to individuals who have had to stop work even if they would otherwise be ineligible for EI benefits, including:

workers who are sick, in quarantine or caring for someone who has or may have COVID-19;
working parents who cannot work due to childcare requirements related to COVID-19 ;
workers who are not being paid by their employers because of a lack of available work due to COVID-19; and
self-employed workers, including contract workers, who would not otherwise be eligible for EI, who are not working due to COVID-19.

Applicants must have a valid Social Insurance Number.

Temporary foreign workers and international students may also be eligible for the CERB if other criteria are met.

What must be provided to apply?

The application requires some basic personal contact information, including your Social Insurance Number and a confirmation that you meet eligibility requirements.

The federal government has stated that additional documentation may be required at a later date.

What do I receive, and when?

Benefits under the CERB are $500 per week if you meet eligibility requirements.

If eligible, benefits will start within 10 days of submitting the application. There is no waiting period.

Payments will be made retroactive to your eligibility date and will be made by direct deposit or cheque.

What if my EI benefits would be greater than CERB?

The CERB is $500 regardless of what you would be entitled to from EI. Receipt of the CERB does not impact any EI entitlements and you remain eligible for EI following termination of benefits under CERB.

You cannot receive the CERB and EI benefits at the same time.

What if I’ve already applied to EI?

Individuals who became eligible for EI prior to March 15, 2020 would be processed through regular EI rules and receive EI benefits.

Individuals who became eligible for EI on or following March 15, 2020 would have their applications automatically rolled over to the CERB.

Tax considerations

The CERB is a taxable benefit, however taxes are not being deducted from CERB payments at source. This means that recipients will be required to report the CERB as income when filing tax returns for the 2020 taxation year, and pay tax at that time.

Is an employer able to top up the CERB?

Yes, but only up to $1,000 in 4 weeks.

Does dividend income count as income for the purposes of the CERB?

If the dividends are non-eligible dividends, an individual still qualifies for the CERB.

If the dividends are eligible dividends, an individual does not qualify for the CERB.

Additional note

As things are changing so rapidly, employers should be cautious about making decisions or representations to employees about their eligibility for the CERB, and employees too should be wary about making any important decisions based on assumptions. We recommend all concerned get specific and current information advice at the relevant time.

Additional information on and the application for the CERB can be found at: https://www.canada.ca/en/services/benefits/ei/cerb-application.html

Please contact a member of Taylor McCaffrey LLP’s labour and employment law team for answers to specific questions and/or advice.

DISCLAIMER: This article is presented for informational purposes only. The views expressed are solely the author(s)’ and should not be attributed to any other party, including Taylor McCaffrey LLP. While care is taken to ensure accuracy, before relying upon the information in this article you should seek and be guided by legal advice based on your specific circumstances. The information in this article does not constitute legal advice or solicitation and does not create a solicitor-client relationship. Any unsolicited information sent to the author(s) cannot be considered to be solicitor-client privileged.

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