Tariffs and Temporary Relief: EI Changes Employers Should Watch

Written by: Robert Richler & Adriana Trichilo

In the face of rising economic uncertainty, including the impact of U.S. tariffs on Canadian goods, the federal government has introduced temporary Employment Insurance (EI) measures aimed at supporting both workers and businesses. These changes are designed to make EI benefits more accessible and responsive to today’s evolving economic landscape.

Historically, the EI program has played a critical role as an economic stabilizer during downturns. It helps employers avoid layoffs and provides workers with income support, retraining opportunities, and a pathway back to employment. In times of economic shock, like the one we’re currently facing, temporary EI enhancements have proven to be an effective tool to soften the blow—offering much-needed stability when it’s needed most.

These changes could have important implications for your organization’s workforce planning, especially if you’re considering cost-saving measures like layoffs or reduced hours.

 Waiving the Waiting Period

Normally, employees must go through a one-week waiting period before EI benefits kick in. As part of the temporary relief measures, this waiting period has been waived for all new EI claims that begin between March 30, 2025, and October 11, 2025. This means eligible employees can start receiving support right away, helping to bridge income gaps more effectively.

Additionally, for the same six-month period, the government has suspended the usual requirement that severance, vacation, and other separation payments be exhausted before EI benefits can begin. This change will help ease the financial pressure on employees immediately following the loss of their job or being placed on reduced hours.

Boosted Regional Unemployment Rates to Expand Access

Another key update involves how unemployment rates are used to determine eligibility for regular EI benefits. The number of hours an employee needs work to qualify for EI benefits is based on the unemployment rate in their region – the higher the unemployment rate, the fewer hours the employee needs to work to qualify. The government is artificially boosting unemployment rates to ensure broader access, for claims made between April 6 and July 12, 2025.

Here’s how it works:

• If a region’s true unemployment rate is 6.1% or less, it will be set at 7.1%.
• If the true rate falls between 6.2% and 12%, an extra 1% will be added.
• Rates between 12.1% and 13% will be adjusted to 13.1%.
• Regions already at or above 13.1% will remain unchanged.

This artificial boost reduces the number of hours required to qualify for benefits to no more than 630 hours and increases the number of weeks employees can receive benefits by up to four additional weeks. While this measure is temporary (in effect for three months), it could be a critical lifeline for businesses in harder-hit areas.

What HR Needs to Know: Getting Ahead of the Curve with Temporary EI Measures

In times of uncertainty, clear and strategic HR guidance is more important than ever. With temporary EI measures now in place, including expanded access to benefits and flexibility under the Work-Sharing Program, HR professionals have an opportunity to support employees and mitigate legal risk—if they take proactive steps.

Here’s what HR leaders should be considering:

1. Rethink the Usual Playbook

Now is the time to revisit your go-to employee resources. That standard “What to Expect When You’ve Been Laid Off” handout might be outdated. With new government supports in play, HR teams should revise internal materials including FAQs, guidance documents and talking points to reflect available alternatives like reduced hours and EI top-ups through work sharing.

2. Don’t Overlook the Details

Many employers tie short-term disability (STD) maximums to EI maximums. If EI caps shift, as they can under temporary measures, STD plans may need adjusting too. This is a small but critical detail that can impact payroll planning and benefit costs.

3. A Layoff Isn’t the Only Option

Too often, layoffs are treated as the default response to a slowdown. But with new flexibilities around EI and work sharing, you may have options that help you retain your talent and reduce costs. Keeping your team partially working and financially supported could be the key to riding out a tough stretch — without burning bridges or incurring extra hiring costs later.

And one important caution: Don’t assume that issuing a temporary layoff preserves the employment relationship. If there’s no temporary layoff clause in an employee’s contract, doing so could result in a claim for constructive dismissal. These risks remain real, even in the face of economic pressure.

For more information, please check out our post about work sharing here.

4. Look at the Fine Print in Contracts

If you’re considering reduced hours or other cost-saving measures, review your employment agreements carefully. Flexibility clauses, if they exist, can help. But remember that an employer’s view of a “small adjustment” may be very different from an employee’s experience of being effectively laid off. Be mindful of the risk of constructive dismissal.

That said, there are creative, legally sound options available. With the right approach, employers can adapt operations while staying compliant and maintaining employee goodwill.

Please contact us if you’re looking for more clarity in this evolving landscape.

contact@hrlawyers.ca

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