COVID-19: Will I have to pay back CERB money if my former employer gives me a severance payment?

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Question:

Janet wrote: “I was temporarily laid off on March 25, 2020 from my company and have been receiving CERB [the Canada Emergency Response Benefit] to date. On June 16th, 2020, my company called and sent me a permanent layoff letter but the most crucial thing is the letter stated my layoff date as March 25, 2020 and not June 16th, 2020. They also provided me with a severance package. During the time between my temporary layoff, March 25, to the time I received permanent layoff, June 16, I have been receiving CERB and nothing being paid out to me from my company. Would this letter with a backdated termination date of March 25 and the promised severance that I have not yet received impact my CERB payments in between and future be affected by that time frame, given the extension of the CERB?”

Answer:

In late March, The federal government created the Canada Emergency Health Benefit, in response to the skyrocketing unemployment sparked by the COVID-19 pandemic.

The benefit gives $2,000 every four weeks to Canadians who have been put out of work due to the pandemic. More than eight million people had applied for CERB as of June 4, according to the most recent statistics available.

Prime Minister Justin Trudeau announced in mid-June that the CERB would be extended from 16 to 24 weeks, meaning millions of Canadians whose cheques would have stopped coming at the end of August can now expect them to keep coming through October if they remain unemployed.

The CERB has also temporarily replaced employment insurance benefits for people who have been put out of work for reasons out of their control.

But employment lawyer Nathan Rayan said the emergency benefit has some holes and unknowns.

“CERB was introduced in great haste [in] the middle of the pandemic, and as a result there a number of trickier issues, like this one, [that] were not addressed in advance,” he said.

“There are definitely going to be situations where employees find themselves having to repay benefits. So as a starting point, I would advise any affected employee to exercise caution, and consider getting legal advice, if they find themselves receiving what they think might be a windfall.”

Rayan said the severance package now being offered to Janet will “most likely” affect her ability to keep receiving CERB and could force her to pay back some of the money.

“The issue of the timing of the termination is particularly relevant, as CERB is meant to be a temporary bridge for employees who are out of work. The federal government will consider a severance payment to fulfil part of that same function, and so it could make a big difference for this employee when their (permanent) termination begins.”

But, he said, Janet’s right to receive CERB and keep the money she already has depends on a number of details of her individual situation and he recommends she speak to an employment lawyer, who can also help assess her severance package offer – which is likely inadequate.

“All too many employers capitalize on their employees’ lack of knowledge about reasonable notice/severance entitlements to get them to accept severance offers that are far lower than they are actually entitled to; employers’ initial severance offers are often only 20 per cent or less of an employee’s actual entitlement on termination,” he said.

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