Federal Government Temporarily Changing EI Rules due to Tariffs
April 15, 2025
| By
Emily Elder
Labour
|
Employment
Bottom Line
The Canadian government has implemented Employment Insurance (EI) Pilot Project 24 to address the current economic uncertainty stemming from U.S. tariffs. This Pilot Program makes three temporary changes that aim to support workers – and businesses – to weather these challenging economic times.
Key Measures Aiming to Make EI More Accessible
These measures were announced on March 22, 2025, and the Regulations implementing them were published last week, on April 9, 2025, in the Canada Gazette. Employers may recall that some similar temporary changes were in place at times during the COVID-19 pandemic.
1. Adjustments to EI Regional Unemployment Rates (Effective for Three Months)
For claims starting between April 6, 2025 to July 12, 2025, the government will artificially inflate certain regional unemployment rates to broaden the pool of workers who can access EI benefits. Those changes will be:
- If a region has an unemployment rate of or below 6.1%, that will be adjusted to 7.1%
- If a region has an unemployment rate of 6.2% to 12%, that rate will be adjusted by adding 1%
- If a region has an unemployment rate of 12.1% to 13%, that rate will be adjusted upwards to 13.1%
- If a region has an unemployment rate of 13.1% or above, that rate will not be adjusted
This change means that employees will have to work fewer hours to qualify for EI benefits, may be able to receive benefits for up to four weeks longer than would have been the case under the unadjusted unemployment rate, and may receive greater benefits.
2. Option of Waiving the One-Week Waiting Period (Effective for Six Months)
Typically, employees need to wait for one week after they apply for EI benefits before they start to receive those benefits.
Pilot Program 24 eliminates that mandatory weeklong wait for all of regular, special, and fishing benefits – though the Commission can choose to keep the waiting period if it is advantageous for the employee (for example, under the terms of a Supplementary Unemployment Benefits plan – see our previous Insight on this topic here).
This optional waiver of the waiting period will apply to any claim where the benefits are owed beginning on or after March 30, 2025 and ending October 11, 2025.
3. Changing Treatment of Certain Payments upon End of Employment Relationship
In many situations when the employer ends an employment relationship, the employee receives some form of payment, often in the form of payment in lieu of notice and (if applicable) severance pay. Typically, these payments are considered “employment income” for EI purposes, such that employees are not eligible for benefits during the period when they are “earning” this income. If employees have received benefits before they get their payments – for example, if it takes some time to negotiate the amount of the payment – then employees would normally be subject to a repayment obligation as they cannot be in receipt of income and EI benefits during the same period.
Pilot Program 24 changes this for the period of March 30, 2025 to October 11, 2025. Employees will no longer need to repay EI benefits if they are eligible for EI benefits beginning in this time frame, and they receive a termination or severance payment from their former employer. Employees will also not need to repay EI benefits if they receive a payment from their employer that is allocated to a period of weeks which starts in this timeframe. However, if the employment relationship was terminated before March 30, 2025, or there are salary continuance payments (instead of lump sum payments), the obligation to repay EI benefits remains a consideration.
Takeaways
The Canadian federal government has made these temporary changes to assist employers and employees through the economic tumult following the American imposition of tariffs. Employers may wish to consult experienced labour and employment counsel about the impact of these recent changes – as well as other programs available, such as the EI Work-Sharing Program and the Supplemental Unemployment Benefits Program – on their workforce planning in these challenging times.
Need More Information?
For more information or assistance with workforce management planning (including conducting lay-offs or terminations of employment relationships), contact your regular lawyer at the firm.
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