June 11, 2003 by Israel Foulon LLP
Question: What obligations does an employer have when providing severance to a dismissed employee who has received Employment Insurance benefits?
Answer: Under s. 46 of the Employment Insurance Act, an employer who has reason to believe the dismissed employee has received Employment Insurance benefits in respect of the period for which severance is paid has an obligation to ascertain whether there is an amount which is repayable to the Receiver General as an overpayment of benefits.
The employer must deduct an amount equal to the Employment Insurance benefits received by the employee which would not have been paid to the employee had the severance payment been paid at the time of dismissal and the employer must remit this amount directly to the Receiver General.
Therefore, if an employer has reason to believe there may have been an overpayment of benefits to the employee, before making any severance payment employers should either: obtain an acknowledgement from the employee that he has not received Employment Insurance benefits (or for better protection obtain a confirmation from HRDC that the employee has not been in receipt of benefits); or contact the local HRDC office in order to determine the total Employment Insurance overpayment and then deduct the appropriate amount from the severance payment and remit this amount to the Receiver General.
Peter Israel is the senior partner in the Toronto law firm of Israel Foulon LLP – Employment and Labour Lawyers. He can be reached at 416-640-1550 or pi@qtw38575.mywhc.ca. A version of this article originally appeared in the Carswell publication, Canadian Employment Law Today