ARCHIVED — Vol. 150, No. 42 — October 15, 2016

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Regulations Amending the Employment Insurance Regulations

Statutory authority

Employment Insurance Act

Sponsoring department and agency

Department of Employment and Social Development and Canada Employment Insurance Commission

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: The Budget Implementation Act, 2016, No. 1, which received royal assent on June 22, 2016, contains amendments to the Employment Insurance Act (EI Act) to reduce the employment insurance (EI) waiting period from two weeks to one week. In Budget 2016, the Government of Canada announced that the reduction of the waiting period would be effective on January 1, 2017. Consequential amendments to the Employment Insurance Regulations (EI Regulations) are required to align the regulatory provisions with the amendments made to the EI Act.

The change to the EI waiting period may impact some employers who offer benefit plans where they interact with the EI program: (1) in the standards for participation in the EI Premium Reduction Program (PRP); and (2) in the treatment of payments by employers under benefit plans that supplement an employee’s EI benefits. Amendments to the EI Regulations are required to mitigate the impact of the reduction of the waiting period on these plans and employees.

Description: Consequential amendments to the EI Regulations are required to align references to the waiting period in the EI Regulations with a one-week waiting period in the EI Act.

In the proposed Regulations, the requirement relating to the elimination period for the PRP would be amended to reduce the maximum elimination period from 14 consecutive days to 7, to align with the one-week waiting period. As a mitigation measure, a transitional provision would be provided in the EI Regulations to allow affected employers to continue to qualify for participation in the PRP for a period of up to four years. This transitional provision would be repealed on January 3, 2021. Departmental communications planning would take into account the need to contact and remind key stakeholders in advance of the repeal of all transitional measures.

To mitigate the potential impact of the change in the waiting period on employees and their employers where employers provide benefit plans that supplement a claimant’s EI benefits, transitional provisions would be provided in the EI Regulations. These provisions would increase, for a period of four years, the maximum amount of combined employer and EI payments that claimants may receive in the week following the one-week waiting period without reducing their EI benefits. These transitional provisions would also be repealed on January 3, 2021.

Cost-benefit statement: Based on an assessment of the impact on stakeholders, the overall net benefit to affected employers, their employees and the Government of Canada would be zero in relation to the PRP over a 10-year period. The cost for affected employers is estimated to be $4.6 million on an annualized average basis. Employers would receive an equivalent amount in the form of premium reductions and would be required to share $1.9 million on an annualized basis with employees.

“One-for-One” Rule and small business lens: Employers that choose to update their plans would be required to resubmit their adjusted plan to remain in the PRP. However, the “One-for-One” Rule does not apply as the PRP is a voluntary program.

The total cost savings of the flexible option (the recommended option) relative to the initial option (no transitional provision) for small businesses are estimated to be up to $940 per small business, and $3.6 million overall, on an annualized average basis.

Background

In Budget 2016, the Government of Canada announced several initiatives to improve employment insurance (EI), including reducing the EI waiting period from two weeks to one week.

The EI waiting period is defined in the Employment Insurance Act (EI Act) and is referenced throughout the EI Act and the Employment Insurance Regulations (EI Regulations). Pursuant to the EI Act, the EI waiting period is a period of time that must be served before a claimant is entitled to be paid EI benefits. The waiting period has been a key feature of the EI program since its inception and serves as a deductible similar to private insurance. It has been set at two weeks since 1971 and applies to regular, fishing, special and self-employed benefits.

The Budget Implementation Act, 2016, No. 1 contains amendments to the EI Act that reduce the EI waiting period from two weeks to one week. The Government of Canada announced in Budget 2016 that the reduction of the waiting period would take effect on January 1, 2017.

Reducing the waiting period will ease financial pressure at the front end of a claim when EI-eligible individuals become unemployed or leave work temporarily due to health or family pressures and could help claimants defray expenses as they adjust to the income shock in these circumstances. For example, for an eligible claimant who is laid off and subsequently finds work after 12 weeks, up to 11 weeks of EI benefits will be payable whereas only up to 10 weeks are currently payable. This results in an estimated fiscal cost of $650 million per year.

Employer benefit packages play an important role in supporting workers, which is recognized under the EI program.

Premium Reduction Program

The PRP provides a reduction of the employer’s premium rate when an employer provides a plan in respect of illness or injury to their employees that meets the standards established in the EI Regulations. A requirement of the EI Regulations is that the premium reduction be shared between employers and employees in portions of 7/12 and 5/12, respectively. The premium reduction recognizes the savings to the EI Operating Account resulting from workers utilizing employer benefits before accessing EI sickness benefits. To qualify under the PRP, a plan must meet the requirement under paragraph 63(b) of the EI Regulations, which states that where plans have an elimination period (analogous to the EI waiting period), it shall not exceed 14 consecutive days, starting with the first day of the period of incapacity. This is in line with the current EI waiting period of two weeks. To align this requirement with the change to a one-week waiting period under the EI Act, amendments to the EI Regulations are required to reduce the maximum elimination period of an employer plan from the current 14 consecutive days to 7 consecutive days.

Employer supplementary benefit plans

(a) Supplementary unemployment benefit plans

Pursuant to section 37 of the EI Regulations, supplementary unemployment benefit (SUB) plans are provided by employers to provide supplementary income to workers in addition to EI payments during periods of unemployment due to a temporary stoppage of work, training (including for apprentices), illness, injury or quarantine. Payments received by an EI claimant under a SUB plan are not considered earnings and, therefore, do not result in a reduction of EI benefits. To qualify as a SUB plan, paragraph 37(2)(d) of the EI Regulations states that the plan must require that the combination of the weekly payments received from the plan and the portion of the claimant’s EI weekly benefit rate from that employment do not exceed 95% of the employee’s normal weekly earnings from that employment.

(b) Maternity leave, leave for the care of a child and compassionate care leave plans

Under section 38 of the EI Regulations, a second category of employer supplementary benefit plans is composed of plans provided by employers to cover periods of leave because of pregnancy, for the care of a newborn or newly adopted child or for the care or support of a gravely ill family member or critically ill child. Pursuant to subsection 38(1) of the EI Regulations, payments from these plans are treated in a manner similar to SUB plans, namely that they are not considered as earnings and, therefore, do not reduce EI benefits.

Subsection 38(1) of the EI Regulations states that the payments received by claimants are excluded as earnings as long as, when combined with the portion of the claimant’s EI weekly benefit rate from employment, they do not exceed the claimant’s normal weekly earnings from that employment.

Issues

Premium Reduction Program

According to Statistics Canada, there were approximately 1.17 million employer businesses in Canada in December 2015. The 2015 Actuarial Report estimated that 30 800 employers had plans that qualified for participation under the PRP. The vast majority of employers would not be affected by the proposed amendments to the EI Regulations, which would reduce the maximum elimination period from 14 consecutive days to 7 consecutive days, since they already provide for an elimination period of 7 days or less. However, administrative data indicate that approximately 4 700 employers with plans under the PRP have an elimination period of more than 7 days. There would be, therefore, a group of employers who may not meet the proposed new standard when it comes into effect. This group represents approximately 15% of employers participating in the PRP and 0.4% of all employers.

As some PRP plans take the EI two-week waiting period into account in their design and some are embedded in collective agreements or agreements with third party insurance providers, it may not be easy for these employers to make adjustments to their plans in the short to medium term.

Employer supplementary benefit plans

Under the current EI Regulations, the change to a one-week waiting period could result, for some EI claimants, in a combined payment of employer and EI benefits that exceeds the maximum allowable amount in the week following the one-week waiting period, either in regard to employer payments under a SUB (section 37 of the EI Regulations) or under the aforementioned second category of employer supplementary benefit plans (section 38 of the EI Regulations). In other cases, while claimants would still be entitled to the same maximum number of weeks of EI benefit, they could potentially receive one less week of employer benefits. The impact of the change in the EI waiting period on claimants covered by an employer supplementary benefit plan would depend on the specific nature of the existing employer plans, which are often also outlined in collective agreements, as well as the actions of employers in response to the change in the waiting period, both in the immediate term and over the longer term.

Objectives

The objectives of the proposed amendments to the EI Regulations are to

  • Align the references to the waiting period in the EI Regulations with the one-week waiting period in the EI Act;
  • Align the elimination period requirement to qualify for the PRP with a one-week EI waiting period;
  • Provide employers who have an existing PRP plan a transitional period of four years within which to adjust their plan to meet the new PRP requirement, while continuing to receive a premium reduction; and
  • Provide employers who have an existing employer supplementary benefit plan a transitional period of four years within which to adjust their plan while minimizing the impact on their employees.

Description

Consequential amendments to sections 39 and 46 are proposed to align references to the waiting period in the EI Regulations with a one-week waiting period in the EI Act.

Premium Reduction Program

The PRP standards in the EI Regulations would be amended to state that the maximum elimination period in an employer plan cannot exceed 7 consecutive days, instead of the current 14 consecutive days.

A transitional provision would be provided in the EI Regulations to allow existing PRP plans that may not meet the new requirement regarding the elimination period to continue to qualify as a plan under the PRP for a period of four years. This transitional provision would provide employers who are affected by the change with a reasonable period within which to update their plans to meet the new standard, should they wish to do so, while continuing to receive a premium reduction during the transitional period. This transitional provision would be repealed on January 3, 2021.

Employer supplementary benefit plans

In the case of SUB plans, a transitional provision would be added to section 37 of the EI Regulations that would allow the application of plans that were in place prior to the coming into force of the proposed amendments to result in a combined payment of employer and EI benefits that exceeds 95% of the employee’s normal weekly earnings for the week following the one-week waiting period. This would mitigate the impact of the reduction of the waiting period on claimants’ EI benefits and allow these plans to continue to qualify as SUBs for a period of time while providing employers time to adjust to the reality of a one-week waiting period. This transitional provision would be repealed on January 3, 2021.

In the case of the second category of employer supplementary benefit plans, a transitional provision would be added to section 38 of the EI Regulations to increase, for plans that were in place prior to the coming into force of the proposed amendments, the maximum amount of combined employer payments and EI benefits that claimants may receive in the week following the one-week waiting period such that EI benefits would not be reduced if the combined payments exceed the current allowable limit. Thus, it would mitigate the potential impact of the reduction of the EI waiting period on employers and their employees, and provide employers with a period of time to adjust their plans, should they choose to do so. This transitional provision would be repealed on January 3, 2021.

Regulatory and non-regulatory options considered

Premium Reduction Program

The PRP is a voluntary program with standards for participation in the program that are set out in the EI Regulations. As a result, any changes to these standards must be made through regulatory amendments. The premium reduction is estimated to be approximately $900 million per year. Of this amount, it is estimated that affected employers currently receive approximately 11%, or $99 million, in premium reductions.

A non-regulatory alternative that would maintain the status quo in the EI regulations was considered. However, it was determined that this option was not viable since it would result in a misalignment between a legislated one-week waiting period and the current PRP requirement that the elimination period not exceed 14 consecutive days, which is designed to be aligned with a two-week waiting period. If this standard were not adjusted to align with a one-week EI waiting period, employers with plans that exceed a seven-day elimination period would continue to receive a premium reduction, while their employees, if EI-eligible, could claim a week of EI sickness benefits prior to employer benefits becoming payable, on an ongoing basis. As a result, expected savings to the EI Operating Account would not be fully realized.

Given the proposed amendment to shorten the elimination period standard, a key consideration was the minimization of potential adverse impacts. If the elimination period standard were amended but a transitional measure were not provided, an estimated 4 700 employers who would not meet the new standard as of January 1, 2017, would no longer qualify to participate in the PRP and would cease to benefit from a premium reduction. This could represent a significant cost, estimated at approximately $99 million per year in the form of a foregone premium reduction.

In addition, misalignment between the EI waiting period and the elimination period standard for qualifying PRP plans would result in administrative inefficiency and complexity that would impact affected employers and their employees as well as the Government of Canada. Employees claiming one week of EI benefits prior to employer benefits becoming payable would need to apply to the EI program. Employers would need to provide a Record of Employment (ROE) to support a claim for one week of EI benefits and the Government of Canada would need to process these additional claims, none of which would occur if the EI waiting period and elimination period were aligned. In the event that the employee remained unable to work upon exhaustion of employer benefits, he or she could potentially renew his or her EI claim. The resulting process in which claimants alternate between EI and employer benefits is likely to be complex and confusing and to present communications challenges for all parties concerned. From an administrative perspective, the remedy is to amend the EI Regulations to align the elimination period with the one-week waiting period such that employer benefits are used and exhausted first, before EI benefits become payable. This is also in keeping with the overall policy intent of the PRP.

Employer supplementary benefit plans

A non-regulatory approach that would maintain the status quo was considered. However, in the absence of regulatory amendments that provide transitional provisions to mitigate the impact of the legislative change to the waiting period, some employer plans could continue to provide payments that, when combined with EI benefits, would exceed the allowable limits in the week following the waiting period, resulting in EI benefits being reduced for the employee. In addition, in the case of SUBs, the transitional provision would allow these plans to meet the regulatory standards, on an exception basis, and would therefore continue to qualify as a SUB during the transitional period.

Benefits and costs

Premium Reduction Program

Amending the requirement for the elimination period to align with a one-week waiting period would ensure that the PRP standards are consistent with the Government of Canada’s intent that employer benefits be paid before EI benefits become payable. For employers with existing plans that would not meet the new standard once it comes into force, a four-year transitional period would allow their plans to continue to qualify under the PRP during that period of time, as an exception. This would allow employers to continue to receive a premium reduction while they make adjustments to their plans, should they choose to do so.

Based on administrative data, it is estimated that roughly 4 700 employers that would otherwise no longer be eligible for the PRP would continue to receive a premium reduction for the first four years following implementation of the proposed amendments. Following the fourth year, it is assumed that these employers would align their plans with the elimination period standard (maximum seven consecutive days). The cost for these affected employers is estimated to be $4.6 million on an annualized average basis over a 10-year period. Employers would be reimbursed this total through the PRP and would be required to share 5/12 or $1.9 million on an annualized basis with employees. After accounting for the initial cost savings and subsequent reimbursement of employers, there would not be any incremental impacts on the EI Operating Account. The overall net benefit would be zero.

Cost-benefit statement
 

2016–2017 (see nota a)

2017–2018

2025–2026

Total (PV) (see nota b)

Annualized Average

A. Quantified impacts (in millions of dollars, 2015 constant dollars)

Benefits

Affected employers

0.0

0.0

6.2

18.7

2.7

Costs

Affected employers

0.0

0.0

10.8

32.1

4.6

Net benefits

Affected employers (see nota c)

0.0

0.0

-4.5

-13.4

-1.9

Benefits

Employees

0.0

0.0

4.5

13.4

1.9

Costs

Employees

0.0

0.0

0

0

0

Net benefits

Employees (see nota d)

0.0

0.0

4.5

13.4

1.9

Benefits

EI Operating Account

0.0

0.0

10.8

32.1

4.6

Costs

EI Operating Account

0.0

0.0

10.8

32.1

4.6

Net benefits

EI Operating Account

0.0

0.0

0.0

0.0

0.0

Overall net benefits

 

0.0

0.0

0.0

0.0

0.0

B. Quantified impacts in non-$

Positive impacts

Affected employers

Up to an estimated 4 700 (rounded) affected employers continue to receive a premium reduction due to transitional measures to mitigate the change in the elimination period.

Negative impacts

Affected employers

During the transitional period, an estimated 16 400 additional ROEs are issued per year.

Positive impacts

Employees

An estimated 16 400 employees receive an additional week of benefits in Year 1 and continue to receive a premium reduction.

Positive impacts

Government of Canada

As employers comply with the new requirement over the course of the transitional period, the number of EI sickness claims for processing is reduced and recognized through premium reductions.

Negative impacts

Government of Canada

  • Up to 16 400 incremental EI sickness claims to process with one week of benefits in the transitional period.
  • Administratively, up to an estimated 4 700 employers with revised plans to be validated as meeting the new standard by the end of the transitional period.

C. Qualitative impacts

Affected employers: Employers are provided a four-year transitional period during which they continue to qualify for a premium reduction while they make adjustments to plans, should they choose to do. Compliant employers receive a further incremental premium reduction due to an additional week of benefits paid that the Government of Canada would otherwise provide through EI sickness benefits.

Employees: Employees covered under plans provided by affected employers that do not use all of their employer benefit entitlement would receive one additional week of benefits, either through the EI program in the transitional period or from the employer once compliant. During the transitional period, employees of affected employers continue to receive their portion (5/12) of the premium reduction. Subsequently, if their employer complies with the proposed amendments to the Regulations, they will receive a further incremental premium reduction.

Government of Canada: Promotes the retention of employer participation in the PRP and reduces administrative inefficiency.

  • Nota a
    The expected coming-into-force date of the regulatory amendments is January 1, 2017. Therefore, only the fourth quarter of 2016–17 is included.
  • Nota b
    Present value using a 7% discount rate.
  • Nota c
    The target group is employers participating in the PRP with existing plans that have an elimination period greater than 7 consecutive days and that may be affected by the proposed regulatory amendment that would reduce the elimination period standard from 14 days to 7 days.
  • Nota d
    The target group is the employees of the affected employers.
Notes

Figures for affected employers, and by extension their employees, based on a sensitivity analysis in which all would choose to comply. For the purposes of this analysis, the assumed date of compliance is January 2, 2021.

The net cost to the EI Operating Account reflects a maximum based on affected employers waiting four years to make adjustments to their plans, and assuming that employees access sickness benefits for a week before drawing from the employer’s plan due to the reduction of the waiting period.

The PRP is a voluntary program and, as such, neither obligates employers to participate nor compels them to adjust their plans in response to any amendments to standards that may affect qualifications to participate. In regard to the latter, it is recognized that the consequence for those who choose not to comply would be that they would no longer qualify for a premium reduction. Ongoing changes to standards in the EI Regulations that complement the legislative change to reduce the waiting period are restricted to the PRP standards and have been kept to a minimum to contain potential impacts on employers and their employees. That is, the only ongoing regulatory amendment specifically related to the PRP is the reduction of the maximum elimination period from 14 consecutive days to 7 consecutive days, deemed necessary to align with the legislative change that reduces the EI waiting period from two weeks to one.

Employer supplementary benefit plans

There would be no additional costs to the EI Operating Account as a result of the proposed transitional provisions in the EI Regulations regarding employer supplementary benefit plans. These provisions would mitigate the risk that employees would have reduced EI benefits.

Although there are data limitations, there is some information regarding employers and employees who could benefit from the four-year transitional provisions, designed to prevent EI benefits from being reduced.

Approximately 1.9 million employees are covered by employers who provide SUB plans (section 37 of the EI Regulations). Of these, approximately 1.7 million employees (88%) have a plan that currently pays during week two of the waiting period and an estimated 204 000 employees have a SUB plan that is also linked to a collective agreement. These employees/employers are most likely to benefit from a transition period to make adjustments to align with a one-week waiting period.

Regarding the second category of employer supplementary benefit plans (section 38, EI Regulations), employers with these plans are not required to submit their plans to the Canada Employment Insurance Commission (CEIC). However, it is estimated that 20% of EI maternity benefit claimants do have employers that provide a supplementary benefit plan. As there were approximately 169 000 claims for EI maternity benefits in 2014–15, an estimated 33 800 employees, and their employers, may benefit from the transitional period in a given year.

While the maximum weeks of EI benefit entitlements would remain unchanged, it is recognized that some employees are at risk of receiving one less week of employer benefits as a result of the amendment to the EI Act that reduces the waiting period. The transitional provisions targeting affected employers, and their employees, who provide employer supplementary benefit plans is not expected to mitigate this risk.

“One-for-One” Rule

Employers that choose to update their plans would be required to resubmit their adjusted plan to remain in the PRP. However, the “One-for-One” Rule does not apply, as the PRP is a voluntary program.

Small business lens

Given that the majority of employers participating in the PRP are small businesses (80%), it is expected that the majority of employers that would be impacted by this regulatory change (4 700) would be small businesses (3 760). Therefore, the unique needs of small employers have been taken into account in the design of the proposed flexible approach, i.e. that includes a transitional period during which employers would be able to continue to benefit from an EI premium reduction.

The recommended option is to provide a transitional period of four years for employers to adjust to the regulatory change. This has been done in order to provide sufficient time for all affected employers to be able to assess whether or not they would proceed with amendments to their illness or injury plans and to then take the necessary steps to do so, while continuing to benefit from EI premium reductions during the transitional period. Targeted proactive communication activities would bring attention to the upcoming changes and encourage employers, particularly those participating in the PRP (or those with employer supplementary benefit plans), to visit a Web page that would help them determine if they are impacted by the reduction of the EI waiting period.

Allowing for this transition period would have no impact on Canadians’ health, security, safety or environment. Under the initial option where the flexibility provided through transitional provisions is not available, upon the coming into force of the change impacted businesses would no longer receive premium reductions until such time as they updated their illness or injury plans, which could represent a significant cost for affected employers, and their employees, in the form of a foregone premium reduction.

Outreach activities with representatives of the small business community, in addition to large employer representatives, were held to help assess the potential impact as a result of the reduction of the waiting period. Discussions focused largely on employer plans that interact with the EI program, including the PRP and employer supplementary benefit plans. Early indications are that employers would require a period of time to more fully assess the potential impacts, and that the possibility of a transitional period to mitigate impacts and strategies for communicating the changes to employers would be well received. In addition, the Government of Canada was advised that most small employers would not be impacted by changes affecting employer supplementary benefit plans, as these plans were typically provided by larger employers with a unionized force. (see footnote 1)

Regulatory Flexibility Analysis Statement

An amendment to the EI Regulations is proposed to align the elimination period requirement to qualify for the PRP with a one-week EI waiting period. In terms of flexibility, the alternatives are a flexible option (i.e. a four-year transitional period) versus an initial option (no transitional period).

In the absence of the flexible approach, employers who are not in compliance with the amended PRP standard when it becomes effective on January 1, 2017, would cease to qualify for a premium reduction at that time. The cost of non-compliance could be significant, as this group could forego an ongoing premium reduction estimated to be in the tens of millions of dollars for employers and their employees.

Under an initial option where no flexibilities are offered, the costs for small businesses are estimated to be up to approximately $1,000 per small business and $3.8 million overall, on an annualized average basis. These costs would be due to the fact that affected employers would most likely not be in compliance with the amended standard when it comes into force, effective January 1, 2017. Therefore, they would no longer qualify to participate in the PRP and would forego their premium reduction. Under the flexible option, which is the recommended option, impacted small businesses would only carry costs of up to $60 per small business and $200,000 overall, on an annualized average basis. This represents savings of $940 per small business, and $3.6 million overall.

Regulatory Flexibility Analysis Statement (see nota 1*)
 

Initial Option

Flexible Option

New standards for the PRP apply without a transitional period

Participating firms are provided a transitional period for compliance

Number of small businesses impacted (see nota 2*)

3 760

3 760

 

Annualized Average ($)

Present Value ($)

Annualized Average ($)

Present Value ($)

Compliance costs (see nota 3*) (Represents cost of benefits paid and foregone EI premium reductions)

3,800,000

26,400,000

200,000

1,500,000

Total cost per small business

1,000

7,000

60

400

  • Nota 1*
    Using 2015 constant dollars, over a 10-year time horizon and using a 7% discount rate.
  • Nota 2*
    Based on administrative data, approximately 80% of participating employers in the Premium Reduction Program are small businesses and represent approximately 11% of employees.
  • Nota 3*
    Figures rounded.
Note

Assumes that all firms comply with the new requirement at the end of the transitional period. For purposes of analysis, assumed date of compliance is January 2, 2021.

Consultation

Initial reaction to the announcement in Budget 2016 of the Government of Canada’s commitment to reduce the EI waiting period from two weeks to one was positive from employee associations and unions, including Unifor, Centrale des syndicats du Québec, Confédération des syndicats nationaux and Fédération des travailleurs et travailleuses du Québec.

Employer groups were less vocal but at least one, the Canadian Federation of Independent Business, did express concern regarding the potential impact on premium rates overall. Subsequently, consultations on the reduction of the EI waiting period were held via parliamentary debate as part of the tabling of the Budget Implementation Act, 2016, No. 1 in Parliament.

Complementary regulatory amendments

Canadians, including business and groups representing employees, will have 30 days to provide comments following the publication of the proposed amendments to the EI Regulations in the Canada Gazette, Part I. In advance of prepublication, outreach to selected key stakeholders was undertaken by Employment and Social Development Canada (ESDC), including The Canadian Payroll Association, the Canadian Federation of Independent Business and the Canadian Life and Health Insurance Association Inc. Early indicators suggest that a period of transition within which to adjust to the reduction of the waiting period would be very helpful and that communications would be a key success factor.

Rationale

The Budget Implementation Act, 2016, No. 1, which received royal assent on June 22, 2016, contains amendments to the EI Act to reduce the employment insurance (EI) waiting period from two weeks to one week. The legislative change to the EI waiting period may impact employer benefit plans where they interact with the EI program: (1) in the standards for participation in the EI Premium Reduction Program (PRP); and (2) in the treatment of payments by employers under benefit plans that supplement an employee’s EI benefits. Therefore, amendments to the EI Regulations would be required to mitigate the impact of the reduction of the waiting period on these plans and employees.

The Government of Canada’s objective is to align the standards in the EI Regulations regarding PRP plans with a one-week waiting period to ensure consistency with the PRP policy intent as well as to avoid administrative burden for affected employers, their employees and the Government of Canada. At the same time, there is recognition that a change in the PRP standard could affect some employers and their employees. It is the Government of Canada’s intent to provide flexibility to accommodate affected employers.

Implementation, enforcement and service standards

A strategic communications plan has been developed to raise awareness of upcoming changes in both the legislation and regulations, provide information, including information regarding the transitional periods for some of the proposed amendments, manage expectations, and undertake outreach with key stakeholders.

Existing implementation and enforcement mechanisms contained in the ESDC’s adjudication and controls procedures will ensure that these regulatory amendments are implemented properly.

Regarding service standards, the proposed regulatory amendments are not expected to significantly advance ESDC’s continuing objective to reach a decision on 80% of all EI claims within 28 days (4 weeks) of the receipt of all pertinent information, as claim administration is tied to, among other things, employer information largely provided through bi-weekly payroll cycles.

Contact

Andrew Brown
Senior Director
Employment Insurance Policy Directorate
Skills and Employment Branch
Employment and Social Development Canada
140 Promenade du Portage, 7th Floor
Gatineau, Quebec
K1A 0J9
Telephone: 819-654-6849
Fax: 819-934-6631

Small Business Lens Checklist

1. Name of the sponsoring regulatory organization:

Employment and Social Development Canada

2. Title of the regulatory proposal:

Regulations Amending the Employment Insurance Regulations

3. Is the checklist submitted with a RIAS for the Canada Gazette, Part I or Part II?

Canada Gazette, Part I ☐ Canada Gazette, Part II

A. Small business regulatory design

I

Communication and transparency

Yes

No

N/A

1.

Are the proposed Regulations or requirements easily understandable in everyday language?

2.

Is there a clear connection between the requirements and the purpose (or intent) of the proposed Regulations?

3.

Will there be an implementation plan that includes communications and compliance promotion activities, that informs small business of a regulatory change and guides them on how to comply with it (e.g. information sessions, sample assessments, toolkits, Web sites)?

4.

If new forms, reports or processes are introduced, are they consistent in appearance and format with other relevant government forms, reports or processes?

No new forms or processes are being created.

II

Simplification and streamlining

Yes

No

N/A

1.

Will streamlined processes be put in place (e.g. through BizPaL, Canada Border Services Agency single window) to collect information from small businesses where possible?

Small businesses will continue to interact with the Canada Employment Insurance Commission (CEIC).

2.

Have opportunities to align with other obligations imposed on business by federal, provincial, municipal or international or multinational regulatory bodies been assessed?

Affected small businesses will continue to interact with the CEIC; processes have not changed.

3.

Has the impact of the proposed Regulations on international or interprovincial trade been assessed?

There are no trade considerations with this regulatory change.

4.

If the data or information, other than personal information, required to comply with the proposed Regulations is already collected by another department or jurisdiction, will this information be obtained from that department or jurisdiction instead of requesting the same information from small businesses or other stakeholders? (The collection, retention, use, disclosure and disposal of personal information are all subject to the requirements of the Privacy Act. Any questions with respect to compliance with the Privacy Act should be referred to the department’s or agency’s ATIP office or legal services unit.)

Relevant information is not collected by any other departments or jurisdictions.

5.

Will forms be pre-populated with information or data already available to the department to reduce the time and cost necessary to complete them? (Example: When a business completes an online application for a licence, upon entering an identifier or a name, the system pre-populates the application with the applicant’s personal particulars such as contact information, date, etc. when that information is already available to the department.)

The process is paper-based; it is not automated.

6.

Will electronic reporting and data collection be used, including electronic validation and confirmation of receipt of reports where appropriate?

There are no reporting requirements. The process is paper-based; it is not automated.

7.

Will reporting, if required by the proposed Regulations, be aligned with generally used business processes or international standards if possible?

There are no ongoing reporting requirements; affected employers may need to reapply to the CEIC using existing processes.

8.

If additional forms are required, can they be streamlined with existing forms that must be completed for other government information requirements?

There are no additional forms.

III

Implementation, compliance and service standards

Yes

No

N/A

1.

Has consideration been given to small businesses in remote areas, with special consideration to those that do not have access to high-speed (broadband) Internet?

2.

If regulatory authorizations (e.g. licences, permits or certifications) are introduced, will service standards addressing timeliness of decision making be developed that are inclusive of complaints about poor service?

There are no changes to the process for authorizing participation.

3.

Is there a clearly identified contact point or help desk for small businesses and other stakeholders?

B. Regulatory flexibility analysis and reverse onus

IV

Regulatory flexibility analysis

Yes

No

N/A

1.

Does the RIAS identify at least one flexible option that has lower compliance or administrative costs for small businesses in the small business lens section?

Examples of flexible options to minimize costs are as follows:

  • Longer time periods to comply with the requirements, longer transition periods or temporary exemptions;
  • Performance-based standards;
  • Partial or complete exemptions from compliance, especially for firms that have good track records (legal advice should be sought when considering such an option);
  • Reduced compliance costs;
  • Reduced fees or other charges or penalties;
  • Use of market incentives;
  • A range of options to comply with requirements, including lower-cost options;
  • Simplified and less frequent reporting obligations and inspections; and
  • Licences granted on a permanent basis or renewed less frequently.

2.

Does the RIAS include, as part of the Regulatory Flexibility Analysis Statement, quantified and monetized compliance and administrative costs for small businesses associated with the initial option assessed, as well as the flexible, lower-cost option?

3.

Does the RIAS include, as part of the Regulatory Flexibility Analysis Statement, a consideration of the risks associated with the flexible option? (Minimizing administrative or compliance costs for small business cannot be at the expense of greater health, security or safety or create environmental risks for Canadians.)

4.

Does the RIAS include a summary of feedback provided by small business during consultations?

V

Reverse onus

Yes

No

N/A

1.

If the recommended option is not the lower-cost option for small business in terms of administrative or compliance costs, is a reasonable justification provided in the RIAS?

PROPOSED REGULATORY TEXT

Notice is given that the Canada Employment Insurance Commission pursuant to subsection 24(1), section 54 (see footnote a) and subsection 69(3) (see footnote b) of the Employment Insurance Act (see footnote c), proposes to make the annexed Regulations Amending the Employment Insurance Regulations.

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Andrew Brown, Senior Director, Employment Insurance Policy, Skills and Employment Branch, Employment and Social Development Canada, 140 Promenade du Portage, Gatineau, Quebec, K1A 0J9 (tel: 819-654-6849; fax: 819-934-6631; email: andrew.brown@hrsdc-rhdcc.gc.ca).

Ottawa, October 6, 2016

Jurica Čapkun
Assistant Clerk of the Privy Council

Regulations Amending the Employment Insurance Regulations

1 (1) Section 37 of the Employment Insurance Regulations (see footnote 2) is amended by adding the following after subsection (2):

(3) Despite paragraph (2)(d), the application of a supplemental unemployment benefit plan may result in a combined weekly payment to an employee for the week following the waiting period that exceeds 95% of the employee’s normal weekly earnings from that employment if the plan is in place before the day on which section 208 of the Budget Implementation Act, 2016, No. 1 comes into force.

(2) Subsection 37(3) of the Regulations is repealed.

2 (1) Subsection 38(2) of the Regulations is replaced by the following:

(1.1) If a plan is in place before the day on which section 208 of the Budget Implementation Act, 2016, No. 1 comes into force, the following portion of any payments that are paid to a claimant as an insured person for the week following the waiting period is excluded as earnings for the purposes of section 35, namely the portion that, when combined with the portion of the claimant’s weekly benefit rate from that employment, does not exceed the sum of the portion of their weekly benefit rate and their normal weekly earnings from that employment.

(2) However, the portion of any payments referred to in subsection (1) or (1.1) that are paid to a claimant in respect of a week during which benefits are payable to them by reason of illness, injury or quarantine is considered earnings for the purposes of section 35.

(2) Subsections 38(1.1) and (2) of the Regulations are replaced by the following:

(2) However, the portion of any payments referred to in subsection (1) that are paid to a claimant in respect of a week during which benefits are payable to them by reason of illness, injury or quarantine is considered earnings for the purposes of section 35.

3 Subsection 39(2) of the Regulations is replaced by the following:

(2) The maximum amount to be deducted under subsection (1) in respect of a claimant’s earnings in their waiting period is an amount equal to their rate of weekly benefits.

4 Section 46 of the Regulations is replaced by the following:

46 If a claimant becomes employed in work-sharing employment and the waiting period has not been served as required by section 13 of the Act or earnings have not been deducted as required by subsection 19(1) of the Act, the serving of the period or the deduction of the earnings shall be deferred until that employment has terminated.

5 (1) Paragraph 63(b) of the Regulations is replaced by the following:

  • (b) if an insured person is required to serve an elimination period during which no benefit is payable under the plan, that period
    • (i) does not exceed seven consecutive days beginning with the first day of the period of incapacity due to illness or injury, or
    • (ii) does not exceed 14 consecutive days beginning with the first day of the period of incapacity due to illness or injury if, before the day on which section 208 of the Budget Implementation Act, 2016, No. 1 comes into force, the plan provides for an elimination period that exceeds seven consecutive days and the employer benefits under subsection 62(1) from a reduction of the employer’s premium rate in respect of that plan;

(2) Paragraph 63(b) of the Regulations is replaced by the following:

  • (b) if an insured person is required to serve an elimination period during which no benefit is payable under the plan, that period does not exceed seven consecutive days beginning with the first day of the period of incapacity due to illness or injury;

Coming into Force

6 (1) These Regulations, except for subsections 1(2), 2(2) and 5(2), come into force on the day on which section 208 of the Budget Implementation Act, 2016, No. 1 comes into force, even if they are made after that day.

(2) Subsections 1(2), 2(2) and 5(2) come into force on January 3, 2021.

[42-1-o]

  • Footnote 1
    The Canadian Federation of Independent Business estimates that less than 10% of small business is unionized (discussion with Employment and Social Development Canada).
  • Footnote a
    S.C. 2016, c. 7, s. 215
  • Footnote b
    S.C. 2016, c. 38, subpar. 138(g)(i)
  • Footnote c
    S.C. 1996, c. 23
  • Footnote 2
    SOR/96-332