In response to the economic impact of ongoing tariffs on Canadian goods, the federal government introduced an Employment Insurance (EI) pilot project in March 2025, which has now been partially extended to April 11, 2026 (the “Pilot Project”). Notably, the extension includes the continued suspension of the rule requiring the offset of separation payments against EI benefits. As a result, eligible employees terminated during the period of the Pilot Project may receive both separation payments and EI benefits concurrently – an important consideration for employers when structuring separation packages and negotiating settlements.
Pilot Project No. 24
Beginning on March 30, 2025, the federal government introduced new temporary EI measures to support Canadian workers whose jobs are impacted by the current economic uncertainty caused by tariffs.
The Pilot Project, which was originally scheduled to end on October 11, 2025, is a direct response to tariffs imposed on Canadian goods by the United States and other trading partners.
To implement the Pilot Project, the federal government enacted that Regulations Amending the Employment Insurance Regulations (Pilot Project No. 24): SOR/2025-115 (the “Regulations”) which introduced three key temporary measures for EI benefits:
- Waiver of the One-Week Waiting Period: Eligible claimants can now begin receiving EI benefits immediately upon job loss, without the standard one-week waiting period.
- Suspension of the Separation Payment Offset Rule: Payments made by employers upon lay-off or termination – such as severance or termination pay – will not be treated as “earnings” for EI purposes. This means such payments will not delay or reduce EI benefits.
- Adjustment of Regional Unemployment Rates: The federal government is temporarily increasing regional unemployment rates for EI calculations. This may reduce the number of insurable hours required to qualify for benefits, extend the duration of benefit entitlement, and increase the weekly benefit amount.
On September 10, 2025, the federal government announced the extension of two key temporary EI measures until April 11, 2026: (1) the waiver of the one-week waiting period for EI benefits, and (2) the suspension of the rule requiring the offset of separation payments against EI entitlements.
In addition, a new measure introduced under the Pilot Project provides up to 20 extra weeks of EI benefits, to a maximum of 65 weeks, for eligible “long-tenured workers” who may require additional time to secure new employment. This new temporary measure will apply to claims established between June 15, 2025, and April 11, 2026, for claimants who meet the Pilot Project’s definition of a long-tenured worker. To be considered a long-tenured worker, a claimant must have (1) been paid less than 36 weeks of regular EI benefits in the 3 years before the start of their claim, and (2) paid at least 30% of their maximum annual EI premium in 7 of the 10 years before the start of their claim.
Key Takeaways for Employees
The temporary measures introduced under the Pilot Project are expected to provide faster and more generous financial support to eligible claimants, helping to ease the financial burden associated with job loss. In particular, the waiver of the 1-week waiting period and the suspension of the rule offsetting separation payments against EI benefits mean that employees may now receive both forms of compensation concurrently, without delay.
These changes may influence how employees approach separation negotiations. Under the usual EI rules, employees who received retroactive improvements to their separation packages after beginning to collect EI were required to repay a portion of their benefits and could not resume EI until the additional payment was deemed exhausted. For the duration of the Pilot Project, however, employees may retain both their full EI benefits and any separation payments received, without repayment obligations. This shift may lead to new priorities and expectations at the negotiation table, and employers should be prepared to navigate these evolving dynamics.
[View source.]
