The Financial Impact of Job Loss
As we enter the second year of the COVID-19 pandemic, Canadian job loss has become a harsh reality of our times.
If you are one of the many Canadians experiencing unemployment right now, there are essential steps you can take to support yourself during this transition. There are also several resources available to help alleviate the financial impact of job loss.
Let’s look at the key things you can do to regain control of your situation and move forward with new employment opportunities.
Review Severance Payments
If you lose your job due to a circumstance such as a layoff or business closure, review the termination clause in your employment contract. Depending on the agreement, your former employer may offer you a severance package or settlement payment to compensate for being terminated without cause.
You are entitled to negotiate your severance or settlement package with your former employer. We recommend evaluating the details closely to understand the specifics of the severance offer. For example, will these payments be issued in a lump sum or installments? How your severance is paid out may impact your entitlement to Employment Insurance (EI) benefits. It’s also important to note that you will be required to pay income tax on your severance pay, and this amount will differ depending on whether you receive it as a lump sum or as a continuation of your salary.
Obtain Record of Employment
Your Record of Employment (ROE) is an important document to obtain immediately after you are terminated from your job. Without this record, you will not be able to receive employment insurance benefits.
Ask your former employer how your ROE will be issued. Many employers submit ROEs electronically, which go directly to Service Canada. However, if the company issues you a paper copy of your record, you will need to manually submit it. This can be done by mailing the original document to Service Canada or by bringing it to your local Service Canada office.
Apply for Employment Insurance
Even if you are waiting for your ROE, apply for Employment Insurance (EI) benefits as soon as your employment ends. You risk losing your benefits if you delay in completing your application for more than four weeks after your last day of work.
If you are hesitant to file an EI claim because of the eligibility requirements, we encourage you to still apply. Service Canada will review your claim based on a comprehensive list of factors. Also, temporary changes have been made to the EI program to support Canadians during COVID-19. These changes will be in effect until September 2021 and include more flexibility with eligibility requirements like minimum insured hours.
Utilize Employment Resources
While you apply for temporary financial assistance, there are many employment resources available to support you. The Ontario Government provides information for job seekers such as training opportunities, and the Government of Canada Job Bank is regularly updated with new job postings.
Your local employment centre can also connect you to employers who do not have postings online but who are hiring in your area.
Prepare a Budget
During this uncertain time, we suggest reviewing your budget to determine if you can make adjustments. Perhaps there are expenses you can do without to help you regain financial stability.
One helpful way to structure your budget is to use the 50/30/20 rule. This approach will help you adjust your spending habits and determine your ideal percentage for an emergency savings fund. This careful planning may help you avoid the need to file for personal bankruptcy.
If you are unable to resolve your debt, reach out to us at Crawford, Smith and Swallow Inc. Our Licensed Insolvency Trustee can review your financial situation to determine how a consumer proposal or other debt relief options can help you during this difficult time.