Extended federal EI pilot project may impact employee separation negotiations

In March 2025 the federal government adopted an Employment Insurance (EI) pilot project to assist workers affected by ongoing tariffs on Canadian goods. Originally set to expire on October 11, 2025, some components of the pilot project have been extended until April 11, 2026.

An important element of the pilot project, now extended, is the temporary suspension of the rule requiring offset of separation payments and EI benefits. Employees terminated during the pilot project may collect both simultaneously, which may impact separation negotiations.

The pilot project, which began on March 30, 2025, and was originally scheduled to end on October 11, 2025, is intended to respond to increased job losses arising due to ongoing tariffs. It supports EI-eligible Canadian workers whose employment is terminated during the term of pilot project.

The pilot project was implemented through the Regulations Amending the Employment Insurance Regulations (Pilot Project No. 24): SOR/2025-115 (the Amending Regulations). The Amending Regulations introduced three key temporary measures for EI benefits:

• Waiving the one-week waiting period so claimants can receive EI benefits for the first week of unemployment.
• Suspending the treatment of separation payments so money paid by an employer to an employee upon lay-off or separation does not count as "earnings" for EI benefits. As such, EI benefits claimants will not face delays or reductions in their EI benefits if they also receive a separation payment from their employers.
• Artificially boosting the EI regional unemployment rates. This may result in a decrease to the number of hours of work required to qualify for EI benefits, an increase to the number of weeks of benefit entitlement, and an increase in the weekly benefit rate.

In September 2025 the federal government announced that two of these temporary measures – waiver of the one-week waiting period and suspension of the rule offsetting separation payments and EI benefits – would be extended until April 11, 2026. Those extensions were brought into effect through SOR/2025-205, which was registered on October 6, 2025, and published in the Canada Gazette on October 22, 2025.

The recent revisions to the pilot project also introduced a new initiative allowing for 20 extra weeks of EI support, to a maximum of 65 weeks, for “long-tenured workers” who may need more time to find new employment. This measure began on October 12, 2025, and will apply to eligible claims established between June 15, 2025, and April 11, 2026.

Takeaways

As a result of the pilot program, EI claimants will likely have faster access to financial support through EI benefits and could receive larger benefits payments than they would without these temporary measures. This will relieve some of the financial strain employees experience when their employment is terminated.

These measures could also impact employer-employee negotiations regarding separation packages. Prior to these temporary measures being implemented, if employees negotiated improvements to their separation payments following receipt of EI benefits there was an obligation to repay the Government of Canada a corresponding amount and employees would only be eligible to recommence EI after that payment was deemed exhausted. Now, for the pilot project’s duration, employees who receive EI benefits may be permitted to keep those benefits without the need for repayment. With employees entitled to retain both their full EI benefits and separation payments, employees may come to the negotiation table with new and varied priorities.