Canada Emergency Response Benefit Act, 2020

Introduction

The Canada Emergency Response Benefit Act, 2020, S.C. 2020 (CERB) has come into effect on March 25, 2020, to tackle the problems faced by “worker” community. This Act is aimed at putting money in the hands of workers as soon as possible (temporary income support) to serve twin purpose. One, to support them in their time of need so that in the difficult time of COVID-19, they are not compelled to make choice between protecting their own well-being and extend support to their families. Second, to support businesses to keep their employee base intact during COVID-19 time so that when situation normalises, they can resume business activity as quickly as possible.

The CERB is simpler and combined version of earlier announced “the Emergency Support Benefit” and “the Emergency Care Benefit”. Though some positive progress towards normalcy were seen when people started returning to their workplace, still a significant number of Canadians were finding it difficult to get back to work. Therefore, the CERB aims at providing these people $500/week for 4 weeks extendable to a maximum of 24 weeks (in some cases 28 weeks) to smoothen the whole transition from unemployment to work. There are two ways to apply for the CERB one through ‘Service Canada’ and another through ‘the Canada Revenue Agency’ (CRA) but one can’t apply through both.

Eligibility to get the CERB

For the purpose of this scheme, the worker is defined in S. 2 of the Act as someone who is resident of Canada (citizenship or permanent residence is not criteria, but one need to have a valid Social Insurance Number) and above the age of 15 years and who had a total income of at least $5000 in the 12-month period immediately preceding the day on which he makes an application. The worker’s income can be from employment/self-employment and benefits paid under the Employment Insurance Act (the EI Act) or allowances, money or benefits paid under a provincial plan for pregnancy or parental case. The daily wagers, contractual workers and self-employed professionals who are otherwise ineligible for Employment Insurance (EI) are also considered worker for the purpose of the benefit.

These workers (employed/self-employed) are eligible if (i) they ceased to work for the reasons purely related to COVID-19 (like lost job, in quarantine, taking care of others who are sick or in quarantine or taking care of their dependents (including children) because of stoppage of their care facility due to COVID-19 among the many reasons) for at least 2-week consecutively within the 4-week period with respect to which they are applying for payment and (ii) they didn’t get any income, benefits under the EI Act, allowances, money or any other income which is prescribed by regulation. There is a proviso that if an employed worker has ceased to work owning to his/her resigning from employment voluntarily then he/she would not be considered for the benefit. At the same time, the worker need not be laid off, provided he remains attached to his company.

Additionally, while submitting the first claim, those who have earned more than $1,000 as income either from employment/self-employment for more than 2-week consecutively within the four-week benefit period of claim and while submitting subsequent claims, those who have earned more than $1,000 as income for the entire four-week benefit period of the new claim are not eligible for the CERB. However, in case one is receiving assistance from the provincial or territorial support payments then it will not bar his eligibility under the CERB.

A query can arise about the status of workers who lost their job prior to March 15, 2020, for COVID-19 related reasons. Here, if an applicant is eligible for the EI regular/sickness benefits prior to March, 15, then his claim will be processed under the existing EI rules, otherwise he is automatically eligible for the CERB. One needs to see that though worker would have lost his job any time prior to March 15, he can be given benefit for the period between March 15, 2020 to October 03, 2020 only.

Regarding income from self-employment, one needs to be clear that artists’ royalties are considered as self-employment income if received in the form of compensation for allowing their intellectual property to be appropriated i.e. copyright, patent, trademark, formula or secret process. These royalties are counted towards both, the $5,000 income threshold for eligibility and the $1,000 that claimants are allowed to earn for 4-week while receiving the CERB. There is a proviso that if one receives royalty from the prior work which materialised before the period for which he is applying for the benefit then it wouldn’t be counted as income during that specific benefit period. This income need not be earned from Canada only, it can be from anywhere in the world. In addition to royalties, tips and honoraria (it can be nominal amounts paid volunteers) are also counted towards consideration in the $5,000- and $1,000-income limit.

The CERB Payment Amount and its Consequences

Provided one meets the eligibility criteria, he is eligible to receive $500/week for a maximum of 24-week period. One is required to report this benefit when he files his income tax return for the tax year of 2020, as the benefit is made taxable. This CERB is to respond to the emerging needs quickly, hence there is no waiting period and one will start receiving the amount within 10 days of applying which can be through either direct deposit or by cheque. It might happen that one is eligible to receive more than $500/week under his EI, but he will only receive $500/week under the CERB. After receiving the CERB, if one still can’t find a job and if he is eligible to receive EI then he will receive EI at the higher rate as getting the CERB doesn’t affect one’s right to EI. In case one is entitled to receive less than $500/week under his EI, then it doesn’t affect his entitlement for $500/week under the CERB.

In case one has received the payment in error, then there will not be any penalty (interest) but he is required to repay the CERB benefits received for which he was not entitled. The CRA will issue a letter giving information about the repayment process to him. This mostly happens if one has applied through both the medium available for application and he receives the benefit from both for the same period.

There is a caveat. If one receives his first entitlement under the CERB that automatically doesn’t result in the renewal of the next payment 4 weeks later. One is required to confirm his eligibility for each period he is applying to seek the benefit. In case one is receiving maternity/parental benefits for the period he is applying for the benefit, he will not receive the CERB, but in the case, he has stopped going to work due to COVID-19 just after completion of maternity/parental leave, then he will be put in the category of workers who have stopped going to work for COVID-19 related reasons.

Application procedure

To apply online, the prospective applicants are required to have a CRA account. They can also apply through automated phone service. In the beginning, the applicants are required to answer a series of questions for determination whether the application for the CERB is to be made through Service Canada or through the CRA. In case applicant has already applied for the CERB or the EI through Service Canada, then he would not be allowed to apply for the CERB through the CRA. As a part of the documentation, one is required to confirm that he meets all the eligibility criteria by providing personal contact information and Social Insurance Number (SIN). One may also be additionally asked to provide further documents to verify his eligibility for future dates. Variables under the Act like $5,000- and $1,000-income limit, class of income to be excluded or included, duration of the benefit and the benefit amount per week can be varied by the Minister of Employment and Social Development subject to the Minister of Finance’s consent.

Special cases provided under CERB

  1. Students/Apprentices: If one is a student who was working as a part-time employee and has lost the job for reasons related to COVID-19, then he will be eligible for the CERB subject to meeting other eligibility criteria. In case even after losing a job, the student is receiving bursaries/scholarships, he still would be considered for the CERB. Student loans and bursaries/scholarships are not counted towards the requirement of $5,000- and $1,000-income limit; hence, they nowhere affect one’s eligibility for the CERB. The case of an apprenticeship program is different in case he is receiving funding through the EI Program and has lost the job due to COVID-19, then he will not be eligible to receive the CERB.
  2. Retired Persons: Those who lost the job due to COVID-19, but started to receive a pension would still be eligible to receive the CERB subject to meeting other criteria as pension income doesn’t affect his eligibility to the CERB and it’s not counted towards the requirement of $5,000- and $1,000-income limit.
  3. Persons with Disabilities: if one has lost job/stopped working for the reasons associated with COVID-19, but receives disability benefits, then he still would be considered for the CERB provided he meets other eligibility criteria, the simple reason being the disability benefits aren’t counted toward the $5,000- and $1,000-income limit.
  4. Seasonal Worker: If one is a seasonal worker who usually receives the EI benefits for the off-season and has got his benefit entitlement exhausted, then he would be eligible for the CERB provided he is unable to get the work due to COVID-19. Potential season worker’s benefit period will not automatically start in case he has exhausted his last EI benefit prior to March 15, 2020. It will only start on March 15, 2020.
  5. Unemployed: If one is unemployed and was laid-off from the work prior to March 15, 2020, for reasons associated with COVID-19 and has also exhausted his EI benefits, he would be eligible for the CERB provided he is not able to find the work due to COVID-19 related reasons. The benefit will start from the week following the last EI payment or March 15, 2020, whichever is the most recent i.e. same as a seasonal worker.

Duration of Benefits

Earlier the CERB was available for maximum 16 weeks, but later it was extended by 8-week making it total of maximum 24-week to respond to the growing need for continued and uninterrupted support during the ongoing pandemic. Though one can apply till December 2, 2020, to secure the benefit, the benefit is available for the duration of March 15, 2020, to October 3, 2020, only. In case one applies after October 3, 2020, then he will receive the benefit retroactively. On August 20, the CERB was extended from 24-week to 28-week for those workers who have either stopped working due to COVID-19 or eligible for the ET regular/sickness benefits.

The 24 weeks benefit period begins not from the date of application but from the first week for which one receives the benefit. These 24 weeks period need not be consecutive. It may happen that one would receive his first 4 weeks benefit beginning from March 15, but after that, if he has income source/found employment, he may stop receiving the benefit. Later on, albeit before October 3, 2020, if his situation again worsens, he may reapply and receive the benefit.

Conclusion

From the scheme of the Act, it is apparent that the Federal Canadian Government has taken immediate, effective and strong action to protect Canadians in general and the economy in particular from the harmful impacts of COVID-19 pandemic which has not just affected Canadians but whole world. The CERB is essentially a part of a larger Economic Response Plan of the Federal Government to mitigate the harm done by COVID-19 to an individual as well as business. Its result will start surfacing once the global pandemic dies down.