New EI rules for tariff relief: what HR needs to know

In response to economic uncertainty triggered by U.S. tariffs, Canada’s federal government has rolled out temporary, expanded rules for Employment Insurance (EI) coverage.

Under the temporary measures, Ottawa is boosting the unemployment rate used to calculate EI eligibility by one percentage point across all regions. No region will see an unemployment rate lower than 7.1%, which allows more workers to qualify for EI with fewer hours.

Plus, the minimum hours required for regular benefits has been capped at 630, and the duration of benefits may increase by up to four weeks.

The new rules make it easier for employees to access EI, so HR would be well-advised to review employee guidance materials, internal policies, and workforce strategies.

Temporary changes reshape EI access and eligibility

According to Stephen Shore, managing partner at Littler in Toronto, the historical and economic context of this move is significant, especially when placed in context of the last several years.

“The experience people had during COVID with CERB and when the availability of employment insurance benefits or the CERB benefits, in that case, had a real impact on people's willingness to work when set against this alternative of being able to access these pretty generous benefits,” Shore says.

“It also can't be lost on us that we're in the middle of a federal election campaign and parliament is dissolved. And so I think that maybe could point things in different directions – maybe the government will be looking for levers it can pull that might make them seem more favourable.”

Guidance for HR on documents, communications

Additionally, the traditional one-week waiting period for EI benefits has been waived, and workers can now access benefits immediately upon becoming unemployed. Plus, severance or vacation payouts will not delay the start of EI payments. These two changes are effective for six months.

The new rules mean that HR professionals must review how layoffs are communicated, especially through standard handouts or Q&A-style documents often used to support employees through job loss.

While not legally required, Shore points out, providing these documents proactively can go a long way to preserving employee morale and employee relationships in the case of recalls.

“Companies should understand what their own internal programs are, and with their internal guidance sheets to employees, make sure that they're not using their standard ‘Here's what to expect now that you've been laid off’ sheet,” he says, adding that EI benefit maximums can affect internal programs.

“This could also be really important: I know a lot of employers sometimes tie short-term disability benefit maximums ... to what the EI maximums are. And so, if the EI maximums are changing ... employers are going to want to have an awareness of that.”

Layoffs or not: what HR needs to consider

For employers considering cost-saving measures, Shore urges them not to view layoffs as the only option, because with temporary EI flexibilities and relaxed rules under the Work-Sharing Program, there may be viable alternatives that keep employees on the payroll.

This is crucial when it comes to valuable, higher-skilled workers, he says — plus, employers should not assume a temporary layoff preserves the employment relationship.

“I've seen employers lose a lot of very good people without the intention of losing them,” he explains. 

“You need to be very strategic and careful as an employer when you lay folks off [that] you're not going to be inadvertently losing a connection and a relationship with a person who you're going to need four weeks, eight weeks, 12 weeks from now, and operate on the assumption that they'll definitely not re-employ elsewhere and come back.”

To help retain talent during downturns, Shore recommends transparent communication and potential incentives like retention or recall bonuses – but with a caveat that no incentive will be a sure thing.

“Be creative, be flexible. Think ahead six weeks, 12 weeks and longer, as to what your operation is going to look like then, and what the impact of losing those relationships could be,” he advises.

“And maybe it is that you are just carrying a person, an extra head, some extra headcount, or some extra resource for a while, in order to make sure you have those strategic roles in place when they're needed.”

Adapting internal policies and employment contracts

HR professionals are well advised to revisit employment agreements and internal flexibility clauses, especially when considering reduced hours or alternate schedules, Shore says.

“Don't make a plan without understanding what flexibility you have that you've created for yourself under these employment agreements, or under collective agreements with unions.”

While constructive dismissal risks remain, he emphasizes that employers can and should consider creative options that meet both legal and operational needs. He points out that employee perceptions of being laid off may not be in line with employers’ – something that may be overlooked and could affect rehire prospects of needed talent.

“Employers might see the changes and might feel like a layoff is not as a harsh an outcome as it might otherwise be for an employee,” he says.

“People losing their opportunity to come to work and earn their regular wages, even under a more generous EI program, is still going to be a pretty strong shock to their individual system.”

And with EI rules and economic conditions continually being disrupted, HR leaders should make responsiveness their modus operandi, Shore says.

“The ground just keeps shifting beneath us, and we just need to be resilient and robust,” he says.

“I think [it’s about] having a good sense of the context that you're operating in … not getting stuck in the previous economy, but making your decisions about what's going on in the new economy.”