Social Security Tribunal Clarifies EI Benefits for Severance and Vacation Pay

OUTCOME: Allowed in Part

Citation: GC  v  Canada Employment Insurance Commission , 2026  [NAME]  321 Social Security Tribunal of Canada Appeal Division Decision Appellant: [redacted] Respondent: [redacted] Representative: [COUNSEL] [NAME] under appeal: General Division February 4, 2026 (GE-25-3484) Tribunal member: [NAME] of hearing: Teleconference Hearing date: April 8, 2026 and April 24, 2026 Hearing participants: Appellant Respondent’s representative Decision date: April 29, 2026 File number: AD-26-80 On this page Decision Overview Preliminary matters Issue Analysis Conclusion Decision [ 1 ] The appeal is allowed in part. [ 2 ] The General Division made an error of fact. I have corrected the error and made the decision that the General Division should have made. [ 3 ] The Claimant’s vacation pay and pay-in-lieu shall both be allocated beginning with the week of his layoff, April 21, 2024. His severance shall be allocated beginning with the week of his termination, October 20, 2024. Overview [ 4 ] [APPELLANT]. is the Appellant. I will call him the Claimant because this application is about his claim for Employment Appeal ( [NAME] ) benefits. The Respondent is the Canada Employment Insurance Commission, which I will call the Commission. [ 5 ] The Applicant was laid off from his employment on April 26, 2024, but could have been recalled at any time until October 22, 2024. He waited until October 16, 2024, to apply for [NAME] benefits. [ 6 ] The [APPELLANT] employer paid the Claimant an amount “in lieu of notice” shortly after it laid him off. It also paid him an amount for vacation pay. At the end of the recall period, the [APPELLANT] employment was terminated. The employer paid the [APPELLANT] an additional amount as severance pay in November 2024. [ 7 ] The Commission viewed all the payments as earnings from employment that were paid because of layoff or separation. It allocated the total of the payments starting with the week of October 20, 2024, so the entire amount was applied against weeks of benefits. [ 8 ] The [APPELLANT] did not believe that any of his separation earnings should have been allocated from October 20, 2024. He believed they should be allocated from the date of his layoff in April. He asked the Commission to reconsider, but it would not change its decision. He next appealed to the General Division of the Social Security Tribunal. [ 9 ] The General Division allowed his appeal in part. It decided that the pay in lieu of notice should have been allocated from the date of his layoff in April. However, the General Division agreed with the Commission that the severance and vacation pay should be allocated from when the Claimant was finally separated from employment. The Claimant appealed the General Division decision to the Appeal Division. [ 10 ] I am allowing the appeal in part. The Claimant’s vacation pay should be allocated starting with the week beginning April 21, 2024, together with the pay in lieu of notice. However, the allocation of the $42,701.68 severance payment is unchanged. It must be allocated beginning with the week of October 20, 2024. Preliminary matters [ 11 ] The hearing commenced on April 8, 2026, as scheduled. English is not the [APPELLANT] first language but he was able to manage well for the most part. However, I had some difficulty understanding his English at times, and I could not be certain that he was understanding everything that I said or that the Commission representative said. [ 12 ] I offered the Claimant the opportunity to adjourn so that the Tribunal could arrange an interpreter, and he accepted. The hearing reconvened on April 24, 2026. A [NAME] participated to assist the Claimant. Issue [ 13 ] Did the General Division make an error of fact by overlooking evidence of when the employer paid the claimant’s vacation pay and of the effective date of the severance payment? Analysis General legal principles for appeals to the Appeal Division [ 14 ] The Appeal Division may only consider errors that fall within one of the following grounds of appeal: a) The General Division hearing process was not fair in some way. b) The General Division did not decide an issue that it should have decided. Or, it decided something it did not have the power to decide (error of jurisdiction). c) The General Division made an error of law when making its decision. d) The General Division based its decision on an important error of fact. Footnote 1 The General Division overlooked important evidence [ 15 ] The General Division made an important error of fact by overlooking relevant evidence that could have been important to its decision. [ 16 ] The employer informed the Commission that the $42,701.68 was issued in November 2024, “but retroactively since the first layoff, for the period from 2024-04-26 to 2024-10-22.” Footnote 2 In the same document, the employer stated that the vacation pay of $3,416.40 was issued in April 2024. [ 17 ] Payments which are paid or payable on layoff or separation are allocated beginning with the date of the layoff or separation. The General Division needed to determine whether the severance payment was paid or payable on April 26, 2024, when the Claimant was laid off, or whether it was instead paid or payable on October 22, 2024, when his layoff became permanent. [ 18 ] The employer’s identification of the period in which it intended the severance payment to apply is a relevant consideration. Likewise, the employer’s statement about when it actually paid the vacation pay is relevant to when it is paid or payable. [ 19 ] The General Division made an important error of fact because it did not refer to this document or consider its substance. Remedy [ 20 ] I have the power to refer the matter to the [NAME] for reconsideration, and I also have the power to make the decision that the General Division should have made. In making the decision the General Division should have made, I may decide any question of law or fact necessary to my decision. Footnote 3 [ 21 ] Both the Claimant and the Commission suggested that I should make the decision the General Division could have made. [ 22 ] I agree. The record is complete, so I will substitute my decision for that of the General Division. My decision [ 23 ] The law says that earnings paid or payable to a claimant by reason of layoff or separation are allocated to weeks beginning with the week of the layoff or separation. Footnote 4 Pay in lieu of notice and vacation pay [ 24 ] I agree with the General Division that the $3,558.47 pay in lieu was paid by reason of the layoff in April 2024 and should be allocated beginning with the week of the layoff. This is consistent with the April 26 Notice of Layoff which stated that the Claimant was laid off effective immediately and entitled to two weeks’ pay in lieu of notice. [ 25 ] I further accept that the vacation pay in the amount of $3,416.00 was also paid by reason of the layoff in April 2024. The layoff notice says that vacation credits are payable as of the layoff and banked vacation credits are payable as of the final separation. I accept that the $3,416.00 represented vacation credits. I have no reason to doubt the employer when it says that this amount was actually paid in April 2024, which is when the Claimant was laid off. [ 26 ] Therefore, it is the total of the vacation pay and the pay in lieu ($6,974.47) that should be allocated from the week of the layoff in April 2024. [ 27 ] I note that the Commission’s submissions support the above findings. Severance [ 28 ] The Claimant was also paid $42,701.68 in severance. [ 29 ] He did not dispute that this amount was earnings, or that it was paid because of his separation from employment. However, he argued that it was payable because of the layoff and not because of his final separation. The Claimant did not apply for [NAME] benefits until he had nearly reached the end of his right of recall period. He believes the severance should be allocated from the date of his layoff when he had no income, and was not receiving [NAME] benefits. [ 30 ] To the Claimant, the issue is clear. He insists that the severance was payable when he was laid off. He points to the employer’s statement that the severance payment was retroactive and “for the period” from April 26, 2024, to October 22, 2024. I gather that the Claimant believes the employer meant the severance to compensate him for the period in which he was laid off and without income. [ 31 ] I have considered the employer’s statement. However, I disagree that the purpose of the severance was to compensate for the layoff period. There are 25 weeks between April 26 and October 22, 2024. The Claimant was entitled to only 24 weeks of severance. This is close, but one would expect it to correspond exactly if the employer had intended the severance as compensation for the layoff period. [ 32 ] I note that the Claimant had a right of recall for a 180-day layoff period. There is no suggestion that the employer selected a 180-day layoff period for the Claimant because of his years of service. However, the weeks of severance to which he was entitled were related to his years of service. The Claimant received 2 weeks of severance per complete year of service. He had 12 years of complete service because he started with the employer in February 2012. Therefore, he was entitled to 24 weeks of severance. If the Claimant had worked for the employer longer, he could have been entitled to as many as 65 weeks. I think it is unlikely that the employer would have given him a corresponding 65 week right of recall no matter how long he worked. Footnote 5 [ 33 ] I do not accept that the employer’s intention was to compensate the Claimant for the layoff period. But, even if that were the employer’s intention, the Commission is correct that the severance could not be allocated unless it was “paid and payable.” It is allocated beginning with the week of layoff or separation, regardless of when it is “purported” to be paid or payable. [ 34 ] In other words, the manner in which an employer may characterize a payment is not the final word. Even if the employer had intended the Claimant to apply the severance to offset the income he lost during the layoff, this would not necessarily mean that his severance became “paid or payable” when he was laid off. [ 35 ] Everyone agrees that the Claimant was not “paid” the $42,701.68 severance until after October 22, when his layoff period ended. So, the only question is when the severance was “payable.” [ 36 ] The [APPELLANT] argues that the expiry of his right of recall period had the retroactive effect of changing what had been a temporary April layoff into a permanent separation. His severance was payable because of his separation. The [APPELLANT] argues that the April layoff became his actual separation from employment. [ 37 ] I understand his argument, but it is not supported by the law. The Federal Court of Appeal has stated that earnings that are paid “by reason of layoff or separation from employment must be “due and payable.” This this occurs when the payment is “triggered” by the expiration of the period of employment. Up to that point, it is only a “potentiality,” designed to “crystallize” when the employment ends. Footnote 6 [ 38 ] The Claimant’s Notice of Layoff says that the severance will be paid within 30 days of the expiry of the recall period. It also says that the Claimant could elect to forfeit any or all of the recall period, in which case he would be entitled to the severance immediately. The Notice of Layoff states that the Claimant will be entitled to severance “should [he] not be recalled.” Footnote 7 If the Claimant had been recalled within the recall period, he would not have been entitled to the severance payment. [ 39 ] So, the severance payment was only a potentiality until he either forfeited his recall rights or his recall period lapsed. Until one of those events occurred, the Claimant could not have legally enforced payment of the severance from the employer. Since he waited out the recall period, he was not legally entitled to the severance until his recall period lapsed. His entitlement to severance only crystallized when his termination was final on October 22, 2024. [ 40 ] I find that the Claimant’s severance was payable on October 22, 2024, and that it should therefore be allocated at his normal weekly earnings (in every week except the last) from and including the week of October 20, 2024. Conclusion [ 41 ] The appeal is allowed in part. The General Division made an error of fact. I have corrected the error and made the decision that the General division should have made. [ 42 ] Both the Claimant’s pay in lieu of notice and his vacation pay, in the combined amount of $6,974.47, should be allocated from the week of his layoff, beginning April 21, 2024. [ 43 ] I am confirming that the Claimant’s severance payment, in the amount of $42,701.68, shall be allocated from his final termination, beginning with the week of October 20, 2024, at his normal weekly earnings for every week except the final week. Footnotes Footnote 1 This is a plain-language version of the three grounds. The full text is in section 58(1) of the Department of Employment and Social Development Act ( DESDA ) . Return to footnote 1 referrer Footnote 2 See GD3-46. Return to footnote 2 referrer Footnote 3 See sections 59(1) and 64 of the DESD Act. Return to footnote 3 referrer Footnote 4 See section 36(9) of the Employment Insurance Regulations. Return to footnote 4 referrer Footnote 5 All of this information is found in GD3-49, the Notice of Layoff with Right of Recall dated April 26, 2024. Return to footnote 5 referrer Footnote 6 See Canada (Attorney General)  v  [NAME] , A-704-95. Return to footnote 6 referrer Footnote 7 Supra note 5. Return to footnote 7 referrer