Exclusion of vacation entitlement and severance under “simplified” EI.

There has been some confusion regarding new Employment Insurance (EI) rules that affect our members who have been victims of mill closures. Previously all severance and vacation payments received at the closure of a mill were used to negatively impact EI entitlement.

Those rules have changed.  Due to some incredible diligent lobbying, including the significant efforts of Jeff Bromley USW Wood Council Chair, severance and vacation pay received due to a mill closure no longer have a negative impact on EI eligibility or benefits.

Interim order No.8, published on Sept 16th, provides clarity on how vacation entitlements and severance are treated under simplified EI. “Simplified EI” refers to the temporary rule changes to the EI program that will be in effect from September 27, 2020 until September 25, 2021.

The order specifically excludes vacation entitlements and severance from a claimant’s earnings. Previously, these payments were considered part of a worker’s earnings. Section 36 of the EI regulations contains specific rules about how these payments are allocated within a claimant’s qualifying period. The old (normal) rules allocate vacation and severance to a claimants’ earnings in a such a way that they are equal to normal weekly earnings. That is, if a worker were entitled to $1,000 in severance and their weekly earnings were $500, the EI program would not begin for an additional two weeks, because the $1,000 in severance would be allocated as two weeks of regular earnings. The consequence of the old (normal) rules is that EI claims can only begin once vacation and severance is exhausted.


 Under simplified EI, vacation and severance will be excluded from earnings as defined in the EI regulations.  The relevant section of the interim order is paragraph 153.193. Seethe relevant excerpts of the Regulation here.


I want to reiterate that the simplified EI rules are not permanent. They are set to expire on Sept. 25, 2021. 




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