Common challenges

COVID-19 Question Series: More Answers About What You May Owe Employees

April 03, 2020

We received many questions during our recent webinar on COVID-19. In case you missed it, you’ll find a link to the recording at the bottom of this article. In a difficult time like this, we wanted to make sure the answers to these challenging questions were available, so we’ve created a multi-part question series on our blog to help ensure employers and HR professionals have access to the information they need. We will continue to post these COVID-19 Question Series articles, so keep your eye on our blog and subscribe for updates.

In this article, we address additional questions we’ve received about what you may owe your employees or may wish to provide to your employees.

If an employee cannot work due to COVID-19, even remotely, and they have not accrued any paid time off (like vacation or sick time) to cover the illness, what are their options for wage replacements?

If the employee cannot work and has no accrued time, you should issue a Record of Employment using Code D for illness or injury.

Some wage replacement options include determining whether you will offer additional paid sick time or whether the employee can work with flexible or reduced hours. If flexible or reduced hours may be an option, talk to the employee to determine what solution works best for them.


If we temporarily lay off employees, can we top up the Employment Insurance benefits they receive to bridge the difference between the benefits and their regular wages?

This is a complicated area because we have entered into unprecedented times. Some businesses are considering offering a supplemental unemployment benefit (SUB) plan.

Keep in mind that the federal government provides guidance on the requirements for SUB plans. SUB plans are intended for periods of unemployment caused by a temporary stoppage of work. Termination of employment caused by a re-organization or a shutdown of a plant or operation is not considered temporary unemployment.

In the current pandemic situation, where the business shuts down based on government orders or as a result of the COVID-19 pandemic and it is likely the business will re-open and the employee will be brought back, a SUB plan may be appropriate. SUB payments may not form part of a separation package, be used to bridge to retirement, nor form any part of a work-sharing agreement or short-week benefits.

If a temporary stoppage of work exists, Service Canada will want an estimated return-to-work date on the Record of Employment to support that this is a temporary stoppage of work. If the business is considering a strategy of offering supplementary benefits, the plan must be registered with the government, and the business should estimate a return-to-work date, being mindful that this date could change based on how the COVID-19 pandemic evolves.

Currently the government has not provided any updated information related to SUB plans. However, the government has indicated that they are being more lenient on the acceptance of applications related to the COVID-19 pandemic, provided that the business fully completes the registration form and provides the required program details.

If your business is considering implementing a SUB plan, you must complete a supplementary unemployment benefit (SUB) plan policy: consider using the template within our Coronavirus Resource Centre.

An acceptable plan:

  • Identifies the group of employees covered and the duration of the plan;
  • Covers a period of unemployment caused by one or a combination of the following:
    • Temporary stoppage of work;
    • Training; or
    • Illness, injury, or quarantine;
  • Requires employees to apply for and be in receipt of Employment Insurance benefits in order to receive payments under the plan;
  • Requires that the combined weekly payments from the plan and the portion of the Employment Insurance weekly benefit rate does not exceed 95% of the employee’s normal weekly earnings;
  • Requires it to be entirely financed by the employer;
  • Requires that on termination, all remaining assets of the plan revert to the employer or be used for payments under the plan or for its administrative costs;
  • Requires that written notice of any change to the plan be given to Service Canada within 30 days after the effective date of the change;
  • Provides that the employees have no vested right to payments under the plan except during a period of unemployment specified in the plan; and
  • Provides that payments in respect of guaranteed annual remuneration, deferred remuneration, or severance pay will not be reduced or increased by payments received under the plan.


In addition to aligning your plan to the above conditions, you need to register the plan. Visit the government site to complete the registration form and learn more:

Get the webinar replay and more information

Click here to download the webinar replay and get answers to the top
questions about the coronavirus.

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As the COVID-19 pandemic progresses, keep checking back here.

We will continually update our blog as frequently as possible during this time to provide you with the resources and answers you need. You can also read the previous article in our COVID-19 Question Series: COVID-19 Question Series: More Record of Employment and Layoff Answers


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