Losing your job

From: Financial Consumer Agency of Canada

Compensation you may receive

If you lose your job, your employer may owe you money. Your provincial or territorial government oversees how much you should receive.

To find out what your employer owes you, review any documents that outline your salary and terms of dismissal.

These documents may include:

  • the letter of offer you received when you got your job
  • an employee handbook

Types of compensation

Your employer may owe you one or more of the following categories of pay.

Termination pay

Termination pay is money your employer pays you instead of giving you advance notice that you’ll lose your job. For example, instead of telling you your job will end in 2 weeks, your employer gives you termination pay. This means that you leave your job on that same day.

Vacation pay

If you earn a salary instead of an hourly wage, your employer may owe you for unused vacation days.

If you earn an hourly wage, you may receive a percentage of your annual pay as vacation pay. This is usually between 4% and 6% of your pay.

Severance pay 

Severance pay is money your employer owes you when you lose your job through no fault of your own. The amount of money you get depends on how long you worked for your employer.

Learn more about severance pay.

Reviewing your budget

Losing your job means that you’ll be living with less income to pay for household expenses. You may need to reduce your spending to make ends meet.

The first step to budgeting with less income is to understand how you spend your money. Review your expenses and look for areas where you can cut expenses to free-up more money for priority items.

Find out how to make a budget.

Use your savings

If you have easy access to money in a savings account, use it now to pay for living expenses. This will help to avoid using credit products and accumulating debt while you search for a new job. 

If you have an emergency fund, this is the type of situation you can use it for. Make sure to start building your savings again once you’ve got more income.  

Learn more about setting up an emergency fund.

Employment Insurance

Employment Insurance (EI) may help you with your finances until you find a new job. It provides regular benefits if you lose your job through no fault of your own. EI pays a percentage of your previous income, up to a certain amount.

Apply for EI as soon as you stop working because it can take time for benefits to start.

Learn how to apply for Employment Insurance.

Claiming credit and loan insurance benefits

You may have insurance that will help you manage your debts while you’re unemployed.

This may include:

  • credit card balance insurance
  • mortgage payment protection insurance
  • credit and loan insurance

This type of optional insurance usually covers your loan, mortgage, or credit card payments. You can file a claim with your insurer to cover your payments temporarily. This applies in the case of job loss, illness, accident or your death.

Read the terms and conditions of your policy carefully.

Learn more about credit or loan insurance.

You often need to wait a certain period after losing your job before you’re eligible to get benefits. You often must wait to submit a claim until you've held the insurance for a certain time. That period is usually between 30 to 90 days.

Make sure you make at least your minimum debt payments until your insurer decides to approve your claim.

Find out how to make an insurance claim.

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