There are many reasons why people find themselves temporarily unemployed, and it can happen to any employee.
Life happens – families grow, people fall ill, additional training is required for a career opportunity, and often the employer has no financial contingency to get the employee through the hardships.
Supplemental Unemployment Benefit Plan (SUB Plan)
A Supplemental Unemployment Benefit (SUB) Plan is an option that can prove beneficial to both employers and employees. It demonstrates that the employer is both compassionate and values work-life balance, and is attractive to potential employees concerned about that added layer of financial security.
These registered plans can be used for unemployment related to temporary stoppage of work, training, injury, illness or quarantine, and are often referred to as a ‘top up’ to Employment Insurance (EI) benefits for employees.
From an employer’s point of view, here are some advantages of a SUB Plan:
- It is attractive to employees because the payments are not considered insurable earnings and are not deducted from the employee’s EI benefits;
- There is no EI cost to the employer, since these payments are not considered insurable earnings;
- It serves to protect the already large corporate investment made in employees for training and the company-specific experience they have developed; and
- Employers can choose which type of temporary employment they want to supplement. Those plans supporting maternity, parental, or compassionate care leave do not require formal approval of the plan from Employment and Social Development Canada – although records still need to be kept.
SUB Plan Requirements
There are specific rules and requirements in setting up your company with such a supplemental unemployment benefit plan. Some considerations include:
- Time and energy invested in setting up and administrating the plan;
- Plan approval must be received before the plan is implemented, if required;
- How the plan will be financed;
- Lump-sum payments to employees do not fall within the guidelines of allowable SUB payments;
- Specific information may be required to register the plan, such as an employee handbook;
- Calculations are required to ensure the employee will not be required to repay unemployment benefits; as well as
- Effective Jan 1, 2017, the EI waiting period was reduced from two weeks to one week; employers should follow up to see how this affects their SUB plans.
Costs of a Supplemental Unemployment Benefit Plan
The cost of offering such a plan is more than offset by the benefit of offering it to your employees. It gives them peace of mind knowing that they have some assistance to financially weather temporary unemployment.
Speak with an advisor for more information related to SUB Plans.
