Getting fired can be stressful, expensive, and unnerving. For that reason, most terminated Ontario employees take any assistance they can get. Employment insurance is often the first stop. While guaranteed cash from employment insurance is nice, it can complicate your wrongful dismissal case – some lawyers even advise against taking EI.
How much Employment Insurance could you receive?
Depending on the unemployment rate in your region, your pay, and the number of insurable hours you’ve worked, terminated employees can receive quite a bit of EI (currently, up to $562 per week for up to 45 weeks). However, your EI payments will not exceed 55% of your normal pay during employment.
Will you have to repay EI?
If you take Employment Insurance and later receive some money in respect of a wrongful dismissal, you will almost always have to pay back some or all of the money you received from EI. This is often referred to as EI clawback. This can be painful for many employees because it feels like a huge chunk has been removed from your wrongful dismissal settlement.
Is there any way to avoid EI clawback?
Yes. Certain payments in a wrongful dismissal settlement may be immune from EI clawback. Your employment lawyer can help you structure a settlement that will minimize the amount and likelihood of EI clawback.
Is there any reason not to take EI?
The main reason you might not want to take Employment Insurance is to avoid the hassle and paperwork associated with the repayment. Some employers may even withhold settlement payments until the employee provides an EI repayment statement from Service Canada. That’s because employers must also do their best to ensure EI is repaid.
Some lawyers also tell their clients not to take EI to help manage expectations about settlement money. Many employees experience “sticker shock” at seeing large amounts of their settlement money be paid back to the government. .
So, should you take EI?
Despite the drawbacks, most employees ought to strongly consider taking
Employment Insurance. That’s because even the strongest wrongful dismissal case is not a 100% guarantee of success. As the old saying goes, a bird in the hand is worth two in the bush. But, as any lawyer will tell you, no two cases are the same. It’s always wisest to have an employment law expert give you advice that is tailored to your case.
Contact Hyde HR Law today if you have questions about employment insurance.
[Crossposted from Goldhawk].