The Government of Canada’s Supplemental Unemployment Benefit (“SUB”) Program allows employers to provide supplemental payments to an employee to “top-up” their Employment Insurance (“EI”) benefits during a period of unemployment due to a temporary stoppage of work, training or illness, injury or quarantine. Employers can use the SUB Program to provide financial support to employees during periods of unemployment and, when an employer’s SUB plan is registered with Service Canada, such payments will not be deducted from the employee’s EI benefits.
Participating in the SUB program has an additional benefit for employers, in that it can allow an employer to extend a temporary layoff under the Employment Standards Act, 2000 from 13 weeks in a 20 week period to up to 35 weeks in a 52 week period. As a result, the SUB Program is an excellent way for employers to provide financial support to their employees during a period of layoff while also giving themselves more flexibility if a longer period of layoff becomes necessary.
Employers have a significant amount of flexibility when it comes to designing a SUB plan. Employers can provide employees with a top up of their EI benefits based on a percentage of regular weekly income (for example, the benefit could be set at 40% of the employees’ normal weekly earnings), or set at a fixed weekly amount (for example, the weekly SUB payment will be $300). Employers can also choose the duration that benefits under the SUB plan will be available for, although employers should be mindful that unless payments are made throughout the period of layoff, they will likely not be eligible to extend the layoff beyond the standard 13 week period.
However an employer’s SUB plan is structured, it cannot provide employees with more than 95% of their normal weekly earnings when combined with their EI benefits. At the present time, the basic EI benefit rate is equal to 55% of the employee’s weekly insurable earnings up to a maximum payment of $573 per week.
As noted above, an employer will need to register their SUB plan with Service Canada (otherwise any payments made to the employee will impact their entitlement to EI). However, there is no waiting period once the SUB plan is approved – the plan will be effective as of the date of the application.
The Government of Canada has a helpful guide outlining the SUB Program, which can be accessed here. The guide also includes a sample plan so that employers can see what terms need to be clarified to finalize the plan and also includes information on how employers can register their plan with Service Canada.
The SUB Program can be a great option for employers who need to lay off employees due to the impact of COVID-19 on their business.
