What to Do Financially If You Lose Your Job in Canada 2025

Updated March 2025 • 11 min read

Losing your job is one of the most stressful financial events you can face. Acting quickly and systematically in the first days and weeks after job loss can significantly reduce the financial damage. Here is exactly what to do.

Day 1–3: Immediate Actions

1. Apply for EI Immediately

Apply for Employment Insurance (EI) as soon as possible after your last day — ideally within the first week. Do not wait for your Record of Employment (ROE) from your employer. Apply online at canada.ca and your employer will submit the ROE electronically. Delaying your application can delay your benefits by weeks.

EI pays 55% of your average insurable weekly earnings up to a maximum of approximately $668/week in 2025. There is a 1-week unpaid waiting period before benefits begin. Regular EI benefits last 14–45 weeks depending on the unemployment rate in your region and how many insurable hours you worked.

2. Review Your Severance

If you received severance pay, understand how it affects your EI eligibility. Severance pay may delay when EI benefits begin — the CRA allocates severance as a period of "earnings" before EI kicks in. See our page on Severance Pay in Canada for details.

3. Know What You're Owed

Review your final pay to ensure you received all amounts owed: outstanding wages, vacation pay (unused vacation must be paid out in most provinces), and any other accrued entitlements.

Week 1–2: Revise Your Budget

Create an emergency budget immediately. Separate your expenses into:

• Non-negotiable: Rent/mortgage, utilities, groceries, minimum debt payments, insurance
• Can reduce: Dining out, entertainment, subscriptions, non-essential shopping
• Can pause: Extra savings contributions, discretionary purchases

Temporarily reduce or pause RRSP and TFSA contributions. Preserving cash flow is more important than investing during a period of unemployment. Resume contributions when you return to stable income.

Managing Debt During Job Loss

Prioritize debts in this order:

1. Secured debts with consequences: Mortgage (risk of losing home), car loan (risk of repossession)
2. Credit card minimums: To prevent damage to your credit score and avoid penalty interest rates
3. Unsecured loans: Personal loans, lines of credit

Contact lenders about hardship programs. Many banks and credit card issuers have formal programs for customers facing unemployment: reduced minimum payments, interest rate relief, or payment deferrals.

RRSP Withdrawals

Withdrawing from your RRSP during a period of low income can be tax-efficient. If your income for the year is low (due to job loss), RRSP withdrawals may be taxed at your lowest marginal rate — possibly 0% to 20%. However, withdrawals permanently lose the contribution room. Consider RRSP withdrawals only if:

• You have depleted all other options
• Your income for the year will be very low
• The tax cost is manageable

TFSA Withdrawals

Your TFSA is the best emergency fund tool. Withdrawals are tax-free at any time for any reason. Unlike RRSP withdrawals, TFSA room is restored the following calendar year. Use your TFSA before your RRSP during job loss.

Government Benefits to Check

Beyond EI, explore other available benefits:

• GST/HST credit: Automatically recalculated based on your tax return; lower income means higher payments
• Canada Child Benefit: Notify CRA of your income change — benefits recalculate based on current year income in some circumstances
• Provincial social assistance: If EI runs out or you don't qualify, provincial programs like Ontario Works, BC Income Assistance, or Alberta's AISH (disability) provide a safety net
• Provincial employment services: Free job search, resume writing, and skills training programs

Health Insurance During Job Loss

Group benefits through work typically end when employment ends (sometimes immediately, sometimes with a brief continuation period). Check with HR about conversion options — converting your group plan to individual coverage without a new medical review. This is time-limited. Consider a private health and dental plan if you have ongoing medical needs.

Protect Your Credit Score

Job loss does not directly affect your credit score — but missing payments does. Strategies to protect your credit:

• Pay at least the minimum on all credit cards
• Contact lenders before missing a payment
• Do not close credit card accounts (this reduces available credit and can lower your score)
• Avoid applying for new credit during this period unless necessary (hard inquiries temporarily lower your score)

Job Loss Financial Checklist

1. Apply for EI immediately
2. Confirm all final pay entitlements received
3. Revise budget to emergency mode
4. Contact mortgage lender about deferral options
5. Contact credit card issuers about hardship programs
6. Pause non-essential savings contributions temporarily
7. Use TFSA before RRSP for emergency cash needs
8. Check provincial employment support programs
9. Review group benefits continuation options
10. Update LinkedIn and begin job search immediately