Severance Pay and EI: Will My Package Delay My Benefits?

If you’ve recently been laid off, your severance package is likely your primary financial lifeline. Traditionally, the "Golden Rule" of Employment Insurance was that you couldn't touch EI until your severance "weeks" ran out. If you received 10 weeks of pay, you waited 10 weeks for your first EI check. In 2026, however, we are in the middle of a massive, temporary Policy Loophole that every Canadian worker needs to know.

Due to temporary measures in effect until April 11, 2026, Service Canada has suspended the "allocation" of separation earnings. This means your severance package, vacation pay, and pay in lieu of notice no longer delay your EI claim. For a short window, you can receive your full severance payout and your weekly EI benefits at the exact same time.

As a critical part of our Employment Insurance Master Guide, this article explains how to navigate this 2026 "Double-Dip," why the waiting period is currently gone, and the 0-competition strategies to protect your package from being "eaten" by taxes.

1. The 2026 Rule Flip: Normal vs. Temporary

To understand why this is a "Street Hack" for 2026, you have to look at how the rules usually work compared to the current temporary suspension.

The Old Rule (Pre-March 2025)

• The Logic: Severance is "earnings." Service Canada assumes you aren't "unemployed" as long as your severance money is meant to cover your wages.
• The Delay: If your package equals 4 months of salary, your EI is delayed by 4 months.

The New 2026 Temporary Measure (Valid until April 11, 2026)

• The Logic: To support workers during shifting economic conditions, the government has suspended this deduction.
• The Reality: You can receive a $20,000 severance check on Friday and start receiving your **$729 weekly EI benefit** on Monday.

Answer Between March 30, 2025, and April 11, 2026, severance pay and other separation earnings do not delay the start of your EI benefits. This temporary measure allows claimants to receive their full severance and EI regular benefits concurrently. Additionally, the standard one-week waiting period is waived for all claims starting within this period.

Severance Loophole Hacks

This deep dive identifies the technical maneuvers to ensure you get every dollar from both your ex-employer and the federal government before this window closes.

1. The April 11 Deadline Rush

When do the new EI severance rules end

• The Street Angle: This is not a permanent change. It is a temporary "Relief Valve."
• The Hack: If your claim starts on April 11, 2026, your severance is not deducted. If it starts on April 12, 2026, the old rules return, and your package will delay your benefits.
• The Strategy: If you are offered a "delayed" departure date by your employer, ensure your last day of work and your EI application are completed before the April 11 cut-off to lock in your right to double-dip.

2. The Waiting Period Ghost

EI waiting period waiver 2026.

• The Hack: Usually, you have one unpaid week at the start of every claim. In 2026, this is waived.
• The Move: This means the transition from your last paycheck to your first EI deposit is seamless.
• The Strategy: Combine this with the severance suspension, and a laid-off worker in 2026 actually has higher cash flow in the first month of unemployment than they did while working.

3. Reporting Your Package: The One-Time Disclosure

How do you report a $50,000 check on your bi-weekly report?

• The Trap: People report their severance as "earnings" on their weekly report, which causes the system to stop their payment.
• The Hack: Severance is a separation payment, not "worked earnings."
• The Strategy: You must disclose the severance during your initial application or through the "Documents" section of My Service Canada Account (MSCA).
• The Move: Once Service Canada has your Record of Employment (ROE) showing the severance, you do not need to report it again on your bi-weekly reports. The "Working While on Claim" rules (50 cents on the dollar) do not apply to severance under this temporary measure.

4. The RRSP "Tax Shield" for Payouts

A rising search in 2026 is transfer severance to RRSP to keep EI.

• The Reality: While transferring to an RRSP saves you immediate tax, it doesn't change your EI eligibility.
• The Hack: In 2026, since the money isn't deducted anyway, the RRSP move is strictly for Tax Bracket Protection.
• The Strategy: Since you are receiving EI + Severance + possibly a new job salary all in one year, your 2026 tax bill will be massive.
• The Move: Use the "Direct Transfer" method (where the employer sends the money straight to your RRSP) to avoid the 30% withholding tax on the payout.

5. Vacation Pay: The Secondary Bonus

Many workers ask: "Does my unused vacation pay delay my EI?"

• The 2026 Rule: Like severance, vacation pay paid out on separation is currently suspended.
• The Move: If you have 4 weeks of accrued vacation, you get that cash as a lump sum, and your EI starts immediately. Under the old rules, those 4 weeks would have added a one-month delay to your benefits.

3. Summary Table: Severance Treatment 2026

Severance and EI 2026

Does severance pay delay EI benefits in Canada for 2026? No. Under a temporary federal measure effective until April 11, 2026, earnings paid due to a separation from employment—including severance pay, vacation pay, and pay in lieu of notice—are not deducted from or used to delay your Employment Insurance benefits. This allows workers to receive their severance package and EI payments concurrently. Additionally, the standard one-week EI waiting period is currently waived for all new claims.

Frequently Asked Questions (FAQ)

Q: I already received my severance and my EI was delayed. Can I get that money back?

A: If your claim started after March 30, 2025, and Service Canada delayed your benefits because of severance, you should request a Reconsideration. The 2026 temporary measure is retroactive to that start date.

Q: What if I settle my severance in court after my EI has already started?

A: Usually, you would have to pay EI back (the "overpayment"). However, during this temporary window (until April 11, 2026), even a later court settlement for severance should not be deducted from your benefits.

Q: Does this apply to EI Sickness or Maternity benefits?

A: Yes. The suspension of separation earnings applies to all types of EI benefits, including regular, sickness, and maternity/parental claims.

Q: Do I still need 600 hours to qualify?

A: Yes. The suspension of earnings doesn't change the basic eligibility requirements. You still need your 600 insurable hours (or the regional requirement) to establish a claim.

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About the Author

Jeff Calixte (MC Yow-Z) is a Canadian labour market researcher and digital entrepreneur specializing in government benefit data and cost-of-living support. As the founder of CanadaPaymentDates.ca and BetterPayJobs.ca, Jeff helps newcomers, students, and workers navigate the Canadian social safety net—from tracking CRA payment schedules to finding entry-level work.

Sources

1. Service Canada: Temporary EI measures to respond to major changes in economic conditions
2. Government of Canada: Digest of Benefit Entitlement Principles - Chapter 5.12 (Moneys paid on separation)
3. Gazette du Canada: Regulations Amending the Employment Insurance Regulations (SOR/2025-205)

Note

Official 2026 payment dates and benefit amounts are determined by the Canada Revenue Agency (CRA) and provincial governments. While we strive to keep this information current, government policies and schedules are subject to change without notice. All data in this guide is verified against official CRA circulars at the time of publication and should be treated as an estimate. We recommend confirming the status of your personal file directly via CRA My Account or by calling the CRA benefit line at 1-800-387-1193.