Employers can’t use SUB plans to top up employees laid off due to pandemic

Employers with registered supplemental unemployment benefit plans aren’t able to use them to top up laid-off employees who are receiving the Canada Emergency Response Benefit.

In an online question and answer session on the CERB, the federal government confirmed that due to the “simplified design” of the benefit, the provisions existing under the employment insurance system that allow employers to top up workers’ EI benefits don’t apply to the CERB, which provides a flat $2,000 each month.

Canadians who were laid off on or after March 15 and would have normally become eligible for EI were automatically moved over the CERB. “It has supplanted the EI system for the next several months,” says Stephanie Kalinowski, a partner at Hicks Morley Hamilton Stewart Storie LLP. “So because of that, the top-up becomes a problem. Had employees who were laid off been receiving EI as they would have in normal circumstances, the employers could have created SUB plans and had them registered with Service Canada and been able to offer some additional assistance to their employees.”

Read: Feds adding $2,000 benefit for Canadians out of work due to coronavirus

She says her firm had several employer clients who registered SUB plans with Service Canada in mid-March as they started to plan for the economic impacts of the coronavirus on their business and are now feeling frustrated they can’t support their staff.

While the Canada Emergency Wage Subsidy allowed many employers to support laid-off employees, employers like municipalities and universities aren’t included or don’t meet the revenue decline requirements. “That doesn’t mean they are continuing to operate as normal and are not having to lay people off,” says Kalinowski. “There are a lot of employers who have to do layoffs but still have the ability and would like to help employees increase their income by more than $500 a week.”

As well, she notes, the CERB and CEWS programs create a two-tiered system of compensation for laid-off workers. “Some employees who are laid off can get up to 75 per cent [of their salary] or $847 per week through the wage subsidy. And there’s this other chunk [of Canadians] whose employers don’t qualify for the wage subsidy, who are going to be getting substantially less in many cases.”

Read: Feds introduce 75% wage subsidy to help employers keep staff during coronavirus

Jerry Dias, president of Unifor, says the CERB loophole is affecting about 50,000 of his union’s members, particularly those in the automotive sector whose employers — General Motors of Canada Co., Ford Motor Co. of Canada Ltd. and FCA Canada Inc. — have established SUB plans as part of their collective agreements.

“I’ve got the [Big Three] auto parts companies saying, ‘Look, Jerry, we want to pay SUB but the government won’t let us,'” he says. “Ultimately, I have no idea why the government would take hundreds of dollars out of the pockets of workers when it doesn’t even cost them a nickel. It doesn’t make any sense. . . . We have SUB plans that are fully funded, they’re negotiated for this exact reason and [workers] can’t have it.”

The union has launched a campaign to ask the federal government to allow employers to top up the CERB. In mid-April, it also wrote a letter to Carla Qualtrough, minister of employment, workforce development and disability inclusion, signed by Dias and the heads of three bargaining units representing autoworkers.

Read: Contract, self-employed Canadians worry about end of coronavirus support

“The emergency income assistance programs launched by your government this week, while having helped address an unprecedented backlog in employment insurance claims, have disrupted long-standing income security practices developed by employers and unions over many decades,” said the letter.

According to Unifor, GM Canada and Ford have also written to Qualtrough.

In a statement to Benefits Canada, Marielle Hossack, Qualtrough’s press secretary, said employers that want to top up their employees on CERB could use the provision, established in mid-April, that allow workers to earn up to $1,000 per month and still receive the benefit.

Read: Feds expand CERB to workers earning up to $1,000 per month

“Protecting the health and safety of Canadians, jobs and our economy, is our top priority,” she wrote. “That’s why our government has taken action to support workers and their families with the Canada Emergency Response Benefit, which provides $2,000 a month for 16 weeks to eligible workers. We recently improved access to the CERB to allow workers to earn up to $1,000 during a four-week pay period, which represents 50 per cent of the amount of the benefit.

“Employers who wish to increase their employees’ weekly earnings while they are unemployed have the flexibility to top up CERB benefits up to this amount in lieu of a SUB plan. All Canadians workers will maintain their EI entitlements, once they exhaust their CERB eligibility. Our priority is to make sure all Canadians have the support they need and we will continue working with our partners across the country to do so.”

The extra monthly income wouldn’t come close to what many employees would receive under their employers’ SUB plans, says Dias. “A CERB [payment] is less money than many manufacturing workers would have made on EI, so they’re getting a double hit. Instead of being on EI, you’re getting $500 a week, instead of the EI maximum rate and then topped up. I have skilled trades members that are out $400 a week.”

In its online Q&A, the federal government noted that Canadians who receive more than $1,000 per month — including top-ups from their employers — would have their CERB clawed back commensurately.

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The clawback has put some Unifor members in a difficult position, says Dias. Multiple employers had begun using their SUB plans to top up laid-off employees before the government made it clear they wouldn’t be able to do so. “The issue of the SUB plans during CERB was a little up in the air at the beginning, so we have a lot of members who were laid off and collecting CERB and SUB. Then the employers had to stop. In essence, there are thousands of members who, at the end of the day, are going to have an overpayment.”

Dias says he’s supportive of the CERB program, but wants to see this loophole closed. “I understand what the government is trying to do — nobody’s been more supportive than me. We did a lot of work with the government telling them they have to move forward with the CERB, they have to move forward for workers who are casual, part-time, precarious workers so they can feed their families. I support it . . . but this is a policy that’s ridiculous.”