Sep 29, 2026
Hundreds of Hamilton, Ontario steelworkers are about to learn how far a severance cheque stretches. Starting Oct. 9, Stelco Holdings, owned by Ohio-based Cleveland-Cliffs (NYSE:CLF), will indefinitely idle its cold-rolled and coated operations at Hamilton Works. The move will affect up to 500 employees according to a company spokesperson speaking to CBC News. The President of United Steelworkers Local 1005, Ron Wells, estimates at least 350 workers will be laid off. What’s worse, members have “no idea the duration of these layoffs.”
Cleveland-Cliffs acquired Hamilton-based Stelco in a CA$3.4-billion cash-and-stock deal that closed in November 2024.
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Under normal rules, laid-off employees would be required to wait a week before applying for Employment Insurance (EI) benefits — along with a delay of about 28 days before being able to collect benefits. But Ottawa temporarily suspended these regulatory requirements — removing the wait time for anyone experiencing a job loss. Even better, laid-off workers collecting severance pay will not have to wait before collecting EI benefits.
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Here’s what Canadians need to know.
What exactly did Ottawa extend?
The Department of Finance Canada is the federal department responsible for economic and fiscal policy. It announced a $3.5 billion package of Rapid Response Supports for Workers and Employers on Aug. 25, 2026. Through this package, laid-off employees can expect:
- A one-year extension of the waiver that removes the one-week delay that is typically required before applying for EI
- A one-year extension of the rule that removes the requirement to first use all severance or vacation pay before being eligible to collect EI
- An eight-month extension of 20 extra weeks of benefits for long-tenured workers
- A new one-year measure so workers who recently quit a job aren’t penalized, as long as their latest job loss wasn’t their fault
According to Ontario employment law firm Siskinds, those first two rules have been pushed out to October 10, 2027, while the extra-weeks measure now runs through May 10, 2027.
These rules aren’t limited to tariff-hit industries. Service Canada administers EI and waives the standard waiting period for new claims within the eligible timeframe.
Why does severance normally delay EI?
Under normal rules, any money you get after losing your job — like severance, pay in lieu of notice, accrued vacation pay, or sick leave credits — can delay when your EI benefits begin.
For example, suppose you lose your job on Oct. 1 and your employer gives you 20 weeks’ worth of severance. Normally, EI treats that money as though your employer is continuing to pay you for the next 20 weeks — even if you received the severance as one lump sum.
Under typical rules, a laid-off employee would have to wait until their entire severance or additional funds were used before applying and being eligible for EI.
Under the temporary measure, separation earnings aren’t deducted from your benefits — meaning you can keep your severance and collect EI at the same time.
How much could this be worth to you?
EI regular benefits pay 55% of your average insurable weekly earnings, up to a maximum of $729 a week in 2026, according to Service Canada.
By eliminating the one-week waiting period, a laid-off worker could receive one extra week of benefits — worth as much as $729.
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Veteran employees — known as long-tenured workers — with a history of paying into EI (and relatively little history of collecting it), may qualify for up to 20 additional weeks of regular EI benefits. So, instead of a maximum of 45 weeks, an eligible long-tenured worker could potentially receive benefits for as many as 65 weeks. At the maximum weekly benefit, those extra 20 weeks could be worth $14,580, before tax.
But that doesn’t mean every long-serving employee who loses their job gets $14,580. Qualification requires meeting two criteria:
- Claiming fewer than 36 weeks of regular benefits over the preceding three years
- Contributing at least 30% of the annual maximum EI premiums in 7 of the last 10 years
Is the October 2027 extension date guaranteed?
As of Sept. 24, 2026, Service Canada’s own page still lists Oct. 10, 2026, as the end date for new claims. That happens to be one day after Stelco’s wind-down begins.
But this could be a delay in paperwork, rather than a pause in regulatory waivers. Past extensions took effect once amending regulations were published in the Canada Gazette, the federal government’s official publication for new regulations.
As a result, any Canadian experiencing a lay-off shouldn’t wait for employer paperwork before taking action. Under today’s rules, setting up your claim on or before Oct. 10, 2026, secures your EI coverage regardless of any delays.
What to do now
- Apply the moment you stop working. Service Canada advises submitting an application as soon as your job ends.
- Check in with your employer to see when they’ll submit your Record of Employment (ROE).
- Check whether you count as a long-tenured worker. If you qualify, the extra weeks are added to your claim automatically.
- Ask if your workplace offers a Supplemental Unemployment Benefit (SUB) plan. If they do top up your pay through a SUB plan, serving that standard waiting period first might actually work out to your advantage.
- Plan for tax: EI and severance are both taxable. Ask whether part of your severance can go directly into your RRSP using the available contribution room.
- Search Job Bank. Ottawa says it will highlight job opportunities tied to major projects, defence procurement, and the Build Canada Homes initiative.
For now, think of severance and EI as two separate cushions rather than one. Lock in your claim as soon as possible so EI covers the weekly bills. Then decide what the severance should be used for — such as building up an emergency fund, paying down high-interest debt or contributing to your RRSP before losing contribution room.
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Amy Tokic is an SEO content editor for Money.ca. She holds a B.A. in Communications from the University of Windsor. Amy is an award-winning author and has been writing professionally for 15 years, publishing articles in the lifestyle and health sectors.
