Federal EI pilot project may impact employee separation negotiations

The federal government predicts there will be a surge in EI benefits claims in the coming months. This is due to the economic turmoil expected from the threat and introduction of tariffs by the United States and other trading partners. In response, Canada has introduced an Employment Insurance (EI) pilot project (the Pilot Project).

The Pilot Project, beginning on March 30, 2025, and ending on October 11, 2025, aims to test the outcomes of applying specific temporary EI measures in response to shifting economic conditions. The ultimate goal of this project is to relieve the economic pressures experienced by EI-eligible employees whose employment is terminated during this six-month period. 

The Pilot Project is being implemented through the Regulations Amending the Employment Insurance Regulations (Pilot Project No. 24): SOR/2025-115 (the Amending Regulations). The Amending Regulations detail the Pilot Project’s 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. 

Take-aways

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 six-month period, employees who receive EI benefits will 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.