Overview

The Supplemental Unemployment Benefit (“SUB”) program is an option for employers dealing with the COVID-19 pandemic.  The SUB program, delivered by Service Canada, allows for an increase in employees’ weekly benefits when they are unemployed due to a temporary stoppage of work, illness, injury or quarantine. Registered SUB plans can benefit both employees and employers during time of economic uncertainty: it enables employers to continue supporting their employees, while the burden of the majority of the employees’ income is carried by Employment Insurance (“EI”).

Advantages

A registered SUB plan provides advantages to employers and employees. Payments received from registered SUB plans are not deducted from the employees’ EI benefits, and since payments under registered SUB plans are not considered insurable earnings, EI premiums are not deducted. SUB plans also provide for longer layoff periods, allowing for up to 35 weeks within a 52-week period, rather than the 13 weeks in a 20-week period allowed under the Employment Standards Act. A SUB plan gives employers flexibility when it comes to designing their own plan. The program allows employers to choose the duration of the SUB benefits and determine how the benefit will be calculated, whether based on a percentage of the regular weekly income or a fixed weekly amount.

Basic Requirements

The SUB plan must identify the group of employees covered and may identify an employee position, for example, accountant or administrator. The plan must indicate that it covers unemployment caused by one, or a combination, of the following:

• Temporary work stoppage

  • The employer should be able to estimate the date of the employee’s return to work
  • Termination caused by a re-organization or a shutdown of an operation is not considered temporary unemployment
  • Claimants must continue to meet all EI requirements, even though they are on temporary stoppage of work

• Illness, injury or quarantine

  • Employees must be in receipt of EI sickness benefits

Section 37(2) of the Employment Insurance Regulations requires employees to apply for and be in receipt of EI benefits in order to receive payments under a SUB plan. However, SUB payments may still be provided to an employee who is not in receipt of EI benefits for the reason that the employee:

1. is serving the waiting period;
2. has insufficient hours of insurable employment to qualify for benefits; or
3. has received all of the benefits to which the employee is entitled.

However the SUB plan is structured, it cannot provide employees with more than 95% of their normal weekly earnings when combined with their EI benefits. SUB plans must be registered with Service Canada, otherwise payments made will impact the employees’ entitlement to EI.

If you have any questions about the SUB program, or any other employment or labour related questions, please contact any of the Employment and Labour lawyers of Clark Wilson LLP.