When should I apply my EI if I received a severance package from my company?
If you have received a severance package, make sure you know if it’s a lump sum payment or you are on salary continuance.
In a situation where you received a lump sum payment, you will most likely receive your ROE at the time of your job separation. All separation monies (e.g. vacation pay, severance pay, bonus, etc.) will be recorded on your ROE. You must apply your EI benefits right away. EI processing will take the total monies you received upon separation, then divided by your average weekly income. It comes up with a number of weeks to push back the starting week of your EI benefits.
If you received salary continuance, which means you are still on company’s payroll until future date, you will not receive any ROE until the end of salary continuance. Therefore, you are technically still employed. You don’t need to apply your EI benefits right away. You can fill your EI application online after your salary continuance ends.
How does severance pay affect my EI payment?
If you received severance pay upon separation, your EI payment will start after the total severance amount is all credited out against your avg weekly income. You will receive a letter after the claim has been processed, it explains how the amount will be deducted and when you EI payments will begin. In other word, your EI payment is being push back. For example, let’s say your avg weekly income (gross) is $500/week. You received $2,000 in severance. That means it will take 4 weeks time to fully deduct your severance money against your avg weekly income. Therefore your first payment will begin 4 weeks later plus 1 week waiting period, that equals to a total of 5 weeks non pay. Your EI payment will officially begin on the 6th week.
EI benefits period can stretch to a maximum of 104 weeks. Therefore, if your severance pay is going to elapse for over 52 weeks, you will still be able to get paid for your EI benefits as long as you claim in before the 104 weeks of maximum EI period.
What if I have delayed my application?
If you have received severance payment and did not apply upon original separation date, the EI system may consider your application as late. It will then result in an disqualification to the benefits. You will usually receive a letter stating your claim denial. If this happens to you, you will have submit the Request for Reconsideration form to appeal the decision. You may find more info in our post: How to appeal an EI decision?
If you have not applied your EI application online yet, you will have to submit an extra form called Antedate form to explain the reason for your late application.
What if you received severance pay from your employer during your EI claim?
When you receive any separation money that’s not indicated from your initial ROE (e.g. severance pay, vacation pay, bonus, etc), these amount must be declared in your report so that EI processing can re-calculate your claim. Most often, you will receive an overpayment bill indicating that you must pay back a specific amount that’s you have been overpaid for the first few weeks of EI benefits. What happen here is that you claim got recalculated and your entitlement weeks got shifted later, therefore it creates an overpayment of EI benefits payment for the weeks you should not have been paid due to the deduction of separation money.
Source: Canada.ca https://www.canada.ca/en/services/benefits/ei/various-types-earnings.html
What is severance pay?
You may find more info about severance pay/package on Service Canada’s website