Laid Off in Canada: Your Money Plan for the First 30 Days

The layoff is the part everyone talks about. The month after it is where the money decisions actually get made, usually by someone who has never had to make them before.

The most useful thing you can do in that first week has nothing to do with job hunting. It’s filing the Employment Insurance claim, and filing it now rather than later, because three temporary rules currently make a claim worth more than it normally would be. All three are set to end on October 10, 2026. What follows is the money side of a layoff, in order: what to file, what EI really pays, how the severance gets taxed, and where to keep it while you look.

What should you do with your money in the first week?

File the EI claim, then work out the two numbers that decide everything else: what EI will pay you each week, and what you spend each month. Do that before you touch the severance, before you cancel anything, and before you decide how much time the cheque actually gives you.

File the claim the day after your last day

There’s a hard deadline on this one. If you apply for EI more than four weeks after your last day of work (opens in a new tab), you may lose benefits. You don’t need your record of employment in hand to start, and you shouldn’t wait for it. Employers file the ROE electronically and you can check for it online after you’ve applied.

You need between 420 and 700 hours (opens in a new tab) of insurable employment in the 52 weeks before your claim starts, and how many depends on the unemployment rate where you live. And Service Canada will ask for the dates and earnings of your highest-paid weeks in that period, so have your pay stubs somewhere you can find them.

Find out what stopped when the job did

Group health and dental usually end within days of your last day, not at the end of the month, and the conversion window to an individual plan is short. Check the date in writing. If you have a pre-authorized payment coming out of an account you were about to drain, move it or cancel it first, because a returned payment costs more than the $10 NSF cap once the company you were paying adds its own fee.

Does severance delay your EI right now?

Normally yes. At the moment, no. Money paid because you separated from a job is usually allocated to the weeks after you leave, which pushes your EI start date out until the severance is used up. A temporary measure has suspended that, and two other rules with it.

The first two came in March 2025 (opens in a new tab), for workers hit by US tariffs, and cover claims established from March 30 that year. The extra weeks for long-tenured workers came later, announced in October 2025 and reaching back to claims that started on or after June 15, 2025. To qualify as long-tenured you need to have collected fewer than 36 weeks of regular benefits in the past three years and paid at least 30% of the annual maximum EI premiums in 7 of the last 10 years.

The deadline has already moved twice

October 10, 2026 is the third version of this date. The measures were first set to run out on October 11, 2025, Ottawa pushed them to April 11, 2026, and then on March 20, 2026 (opens in a new tab) to where they stand now, each time by about six months. That last extension was expected to reach 632,000 additional claims through the waived waiting week, 136,000 through the severance suspension, and 43,500 through the extra weeks.

So a third extension is plausible. It also isn’t announced, and the rule that matters is the one about your claim’s start date, not today’s date. A claim that starts before October 10 is covered. One that starts after it, if nothing changes, isn’t.

How much does EI actually pay?

For most people, 55% of average insurable weekly earnings. The ceiling is where it stops tracking your salary. As of January 1, 2026, the maximum yearly insurable earnings (opens in a new tab) amount is $68,900, which works out to a maximum of $729 a week before tax.

Everyone earning above roughly $69,000 receives the same cheque. That $729 is the number to build a budget on. EI is also taxable, and tax comes off before the payment reaches you, so the monthly column above is the before-tax figure rather than what lands.

How long the money has to last

Longer than most people plan for. Of the 1.5 million Canadians who were unemployed in August 2026, 24.0% had been searching for 27 weeks or more (opens in a new tab), against a 17.1% average over the three years before the pandemic. The national unemployment rate that month was 6.4%.

A regular claim runs 14 to 45 weeks depending on your region and your hours. Nearly a quarter of the people currently out of work have been searching for longer than that stretch, so the severance is what pays for the last part of the search rather than a bonus on top. That’s the argument for spending it slowly and for building an emergency buffer out of it before anything else.

How is severance taxed in Canada?

It depends on what the payment is called, and your employer picks the label. A payment made purely as damages for the loss of your job is a retiring allowance, which the CRA has its own withholding rules for. Wages in lieu of termination notice are ordinary employment income and get taxed through payroll like a paycheque. If your employer pays a lump sum with no breakdown, the whole thing is generally treated as a retiring allowance (opens in a new tab).

On a retiring allowance, your employer withholds at a flat rate set by the total for the year: 10% up to $5,000, 20% from $5,001 to $15,000, and 30% at $15,001 or more. Quebec residents see lower federal rates (5%, 10% and 15%) because Revenu Québec collects its own share separately. No CPP contributions and no EI premiums come off a retiring allowance.

The withholding is not the tax bill

30% is a withholding rate, not your marginal rate. A $60,000 severance sitting on top of eight months of salary can easily be taxed above 40% once the return is filed, and the difference is payable next spring. Work out roughly what you’ll owe on the total year and set that money aside now, while it’s still in the account.

There’s a second trap in the same arithmetic. If your 2026 income from all sources tops $86,125, you repay 30% of the lesser (opens in a new tab) of the amount over that line or the regular EI benefits you were paid. A severance counts toward that total. Check the exemption before you assume you owe. You don’t repay anything if you received less than one week of regular benefits in the previous 10 tax years, which covers most people claiming for the first time.

The RRSP question, and who it actually helps

Moving part of a retiring allowance straight into an RRSP defers the tax on it, and it can be done without withholding. Most people can only do this against their existing contribution room. The exception is service before 1996: $2,000 for each year or part year worked before 1996, plus $1,500 for each year before 1989 in which no employer pension contributions were vested. That transfer doesn’t use any RRSP room at all. It’s a large benefit for someone with 30 years at one employer and worth nothing to anyone hired after 1995.

Where should the money sit while you look for work?

Somewhere you can reach it in a day. A job search is the wrong time to have money locked in a GIC or invested in something you might have to sell at a bad moment. A high-interest savings account keeps the balance liquid and pays something while it waits.

Prefer a TFSA over an RRSP for the part you might need. A TFSA withdrawal isn’t income, so it doesn’t touch your EI and doesn’t add to the $86,125 threshold above. An RRSP withdrawal is income on both counts, and you lose the contribution room permanently. Keep the RRSP for the retiring-allowance transfer, if you qualify for one, and keep the cash where you can spend it.

A reason to leave the balance alone

The hardest part of making money last is not spending it. Every week you leave the balance alone is a week where nothing happens, which is a thin reward for the one financial decision that matters most right now.

That’s what Lodavo is for. It’s a free Canadian app that makes protecting your savings something you look forward to instead of a chore. You connect the savings or chequing account you already use, your balance updates each week, and every $25 in that account earns you a ticket in a free weekly draw for prizes up to $10,000, with at least $100 going to a user every week. Nothing leaves your account, and there’s nothing to pay.

Want a reason to keep the balance where it is? Download Lodavo free on the Apple App Store (opens in a new tab) or Google Play Store (opens in a new tab) and start earning tickets for the weekly draw.

This article is general information, not tax or legal advice. Your province, your bracket and the wording of your severance agreement all change the numbers.

Terms and conditions apply. No purchase necessary (alternate method of entry available). Skill-testing question required. Open to legal residents of Canada who are the age of majority. Odds depend on the number of eligible entries received. Full rules and odds at our contest rules.