Employment Insurance & Termination Claims

Written on behalf of Peter McSherry

Most people are aware of their right to apply for E.I. benefits on termination of employment. The issue of E.I., however, has other complications for a claim based on unfair termination of employment.

The Basics

To be eligible, the individual must be terminated “not for cause” and have the necessary eligible number of hours of insurable employment. This varies by region, based on rates of unemployment, from 420 hours to 700 hours in the 52 week period preceding the date of the application.

The maximum benefit payable is set at $547 weekly, based on 55% of insured income. The number of eligible weeks of benefits runs from 14 to 45, again based on the regional rate of unemployment. In Kitchener-Waterloo, the number of required hours is 700 and the maximum number of weeks of benefits is 36.

There is always a waiting period of one week before benefits are commenced.

Repayment Obligations

If there is litigation commenced or threatened resulting in a settlement or judgment, the benefits paid must be reimbursed from the severance sum. There is a deduction allowed for legal fees, but the mathematics are somewhat complicated.

If, for example, a settlement is paid of 12 months’ pay, E.I. benefits received in this period will be required to be repaid, less legal fees from the total severance sum. The fees should be deducted from the repayment obligation, not the severance sum received. There is no net reduction for legal fees where the severance sum exceeds the E.I. benefits received.  This makes no sense, of course.

The good news, well less worse news, is that if the individual is still unemployed when the severance sum is obtained, the severance payment is treated as insurable income, which will allow for a new application for benefits. The commencement date of this application is then the end of the severance period.

Settlement Negotiations

All this being said, certain termination claims will not cause repayment obligations. Sums paid as human rights compensatory payments for personal damages, or aggravated damages for unfair conduct at the time of termination, will not only be non-taxable, but also will be exempt from E.I. repayment obligations. These claims clearly must be made in good faith and settled in the same manner.

Similarly a payment made for the “loss of reinstatement” will not lead to an E.I. repayment.

These considerations are important ones and must be not only made in good faith with a proper factual underpinning, but also planned in advance when the claim is first considered.

Get Advice, Then Act

E.I. benefits are not straightforward. These sums can lead to an unexpected repayment obligation, if not contemplated.  Legal advice may cause other claims to be made which may reduce or eliminate these repayment obligations. If you have been terminated, get advice on this issue and plan in advance for the need to repay these amounts. Contact the offices of Guelph employment lawyer Peter McSherry. We can guide you through the issues, help you understand your rights, and defend your position. Contact us online or by phone at 519-821-5465 to schedule a consultation