Greatra Mayana

Career & Employment Opportunities

Employment Insurance Benefits and Severance Overlap – Fundamental Issues


Welcome everyone this is Amer Mushtaq, from
You Counsel. A lot of times when employees are terminated
without cause in Ontario, they are unclear about their terminations rights and the interplay
of those terminations rights. So, specifically, people have questions about
whether they will get Employment Insurance Benefits if they get the severance pay or
whether if they’re getting Employment Insurance Benefits would they still be entitled a severance
pay? So, that’s a fundamental issue and we’ll
explain that legislative framework in this lecture and hopefully, that will help clarify
this issue. We begin, as always, with our usual disclaimer
that this course is not legal advice so, if you have any specific questions you must contact
a lawyer or paralegal or the Law Society of Upper Canada for a referral. Now, Rights and Terminations Without Cause,
and this is a situation in which the employee is not terminated for cause, and if you’re
unclear of the difference between with cause and without cause termination we have separate
lectures on that. But, briefly speaking, this is a scenario
in which the employee is not being terminated because of some serious misconduct. The first kind of benefit that the employee
may be entitled to is Employment Insurance Benefit under Employment Insurance Act. There are specific requirements for the employee
to be eligible, and these generally include that the employee has worked certain number
of hours, has completed a certain number of work hours, and the employee is dismissed
without cause and then he or she may be entitled to Employment Insurance Benefits. The employee may also be entitled to termination
pay under Employment Standards Act, which is based upon, again, the number of years
and months the employee may have worked for that employer. The employee, in addition to termination pay,
may be entitled to severance pay, which is a separate category. It’s not the same as termination pay under
the Unemployment Standards Act, and it has it’s own qualifications for the employee to
get severance pay. And then finally the employee may be entitled
to Reasonable Notice under common law which is the judge made law based upon the previous
cases that the courts have decided. And so, the employee may be entitled to that,
and all of these entitlements depend upon the employee’s length of service and the fact
that employee was dismissed without cause and what kind of employment contract the employee
has or had with the employer. Before we get into our basic question, I just
wanted to explain the Reasonable Notice Concept one more time. We have covered this in our other lectures,
but fundamentally, a Reasonable Notice is the concept that comes from the courts, it
is not based on a legislation, and if an employee is entitled to Reasonable Notice then that
Reasonable Notice already includes the terminations pay and severance pay. So, you don’t get Reasonable Notice plus termination
pay plus severance pay, that is not how the Reasonable Notice is calculated. If you are entitled to any termination pay
or severance pay then both of those kinds of payments are already included in a Reasonable
Notice, so, you got termination pay, you got severance pay and then potentially, you have
some additional notice. So, one example could be that let’s say employee
was entitled to six weeks of termination pay and six weeks of severance pay, and then the
judge may very well, under the specific circumstances, give six months of additional notice and so
this could the total could be seven months or so. So, this Reasonable Notice includes all of
that and why it’s important for you to keep in mind is that the discussion we’re having
in the next slide, if we’re talking about Reasonable Notice then that’s probably the
best case scenario for the employee, so, if we use Reasonable Notice then it’s easy to
understand the examples better. Okay, so the question then arises that if
an employee is terminated can the employee be entitled to all of those benefits that
we have described above? And the answer is potentially yes. So, there could be a situation where the employee
gets Reasonable Notice, plus the E.I. Benefits. There could be a situation where the employee
gets termination and or severance pay plus E.I. Benefits, and these scenarios are possible,
but you must keep in mind that these payments are not for the same time period. So, the E.I. and Reasonable Notice or E.I.
and termination and severance pay cannot overlap for the same time period. Let’s explain that by way, of an example
and hopefully that will help us clarify this question. In a normal Termination Without Cause, these
are the sequence of events that take place. The employee is terminated, and the employee
gets termination or severance pay or Reasonable Notice from the employer, and when that terminations
or severance pay is exhausted, E.I. kicks in, and then E.I. runs for the time period
until the employee is unemployed or about 10 months or so that is the maximum that E.I.
is provided. So, let’s say in the situation, the employee
is terminated January 17, and the employer provides five months of Reasonable Notice. Then the Reasonable Notice kicks in, and it
runs up to May 2017, that’s the Reasonable Notice period and then from May until I believe
March 2018, the employee gets the E.I. Benefits. So, from January from the time that the employee
is terminated, to March of 2018, the employee gets Reasonable Notice and E.I. Benefits as long as the employee is unemployed. So, that’s a scenario in a normal or in an
ideal world, that’s how things should happen. But, in the majority of the cases this middle
part is the one that creates most anomalies, and what happens is in majority of the terminations,
employees either don’t get any of the of these rights termination, severance, or Reasonable
Notice, or get inappropriate rights. So, they’re not the correct payments that
they should receive and there are different reasons for that. But majority of Employment Law litigation
is based on this, so, for instance, 80% of my practice is really trying to get employees
there appropriate Reasonable Notice or termination and severance Pay in their circumstances. And so, most of the Employment Law litigation
is either lawyers advancing employee’s claims, for Reasonable Notice or lawyers defending
the corporate clients actions. So, because of this anomaly in the real world,
the majority of the people are in this scenario. Where they get terminated and then they start
receiving E.I. Benefits and at some point in the future,
either when they are already receiving E.I. Benefits or E.I. Benefits have expired and that at some point
they get through settlement or a judgment termination, severance pay, or Reasonable
Notice. So, in this scenario then, the employee is
terminated January 17th and that employee starts receiving E.I. right after that and
then comes the Reasonable Notice. So, the problem with this situation is that
just because this is how the sequence of events happened, this is not how the law allows these
things to be tagged along. Meaning that the law does not permit that
you exhaust your E.I. Benefits and then you tag along your Reasonable
Notice after your E.I. Benefits, that’s not how the law works. So, even though the person received these
terminations and severance or Reasonable Notice after the person already started receiving
E.I., what the law requires is that take this payment and then insert this payment over
here, right? So, the law wants you to make the scenario
the same as its previous slide where the termination, severance, or Reasonable Notice kicks in before
the E.I. Benefits. So, we move this Reasonable Notice before
E.I. but then what do we do with the E.I. Benefits that you have already received for
the same time period? And, so, in this scenario then the E.I. will
send what’s called a Notice of Debt to the employee and say that you now have received
five months – let’s take the same example – five months of Reasonable Notice from January
to May, but we also paid you from January to May, E.I.. benefits so, can you kindly
return the money from January to May that we have paid you? Why, because you have received E.I. Benefits for the same time period. Okay, so, you return that money and then The
E.I. clock is, in a way, reset for May 2017 right. So, come May 2017, if the employee is still
unemployed then the E.I. kicks in again, and then it will run for another 10 months or
so as long as the employee is unemployed. And why that’s important, is it because it
all comes down to when the employee obtains employment. Because the two concepts that you want to
understand in this scenario is that ‘A’ there is no overlapping double payment right,
there is potential for double payment but it can’t overlap. And then you can’t get E.I. if you are employed. So, in this scenario, the advantage of moving
E.I. again, ahead of the Reasonable Notice period, is that the clock for the employee
is reset and if the employee does have a job in May 2017, then the employee does not get
any more E.I. benefits … so then the Reasonable Notice that the employee had received makes
the employee whole up to May 2017 and there on … the employee has a job, so, that’s
the end of it. But if the employee still does not have a
job then he or she is entitled to E.I. Benefits and that can run for the Reasonable
Notice period. So, the key things that you want to remember
is that there is a potential for getting all of these payments, you can get all of these
payments, but you must keep in mind, that they do not overlap for the time period. And what you also want to understand is that
this concept comes from two legislations, one is the Employment Insurance Act And second
is the Employment Standards Act and then of course, the common law, the judges law. So, hopefully that helps you understand under
what circumstances you can get E.I. Benefits and severance payment and under what
circumstances you don’t. But, if you are unclear about any of these
concepts or if you have any questions or any feedback we’ll appreciate to hear from you,
and thank you for watching.

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