Vol. 143, No. 10 — May 13, 2009

Registration

SOR/2009-130 April 30, 2009

EMPLOYMENT INSURANCE ACT

Regulations Amending the Employment Insurance Regulations

RESOLUTION

The Canada Employment Insurance Commission, pursuant to paragraph 54(s) and section 109 of the Employment Insurance Act, hereby makes the annexed Regulations Amending the Employment Insurance Regulations.

April 22, 2009

JANICE CHARETTE
Chairperson
Employment Insurance Commission
PATRICIA BLACKSTAFFE
Commissioner (Workers)
Employment Insurance Commission
ANDRÉ PICHÉ
Commissioner (Employers)
Employment Insurance Commission

P.C. 2009-675 April 30, 2009

Her Excellency the Governor General in Council, on the recommendation of the Minister of Human Resources and Skills Development, pursuant to paragraph 54(s) and section 109 of the Employment Insurance Act (see footnote a), hereby approves the annexed Regulations Amending the Employment Insurance Regulations, made by the Canada Employment Insurance Commission.

REGULATIONS AMENDING THE EMPLOYMENT INSURANCE REGULATIONS

AMENDMENTS

1. Subsections 36(9) and (10) of the Employment Insurance Regulations (see footnote 1) are replaced by the following:

(9) Subject to subsections (10) to (11), all earnings paid or payable to a claimant by reason of a lay-off or separation from an employment shall, regardless of the period in respect of which the earnings are purported to be paid or payable, be allocated to a number of weeks that begins with the week of the lay-off or separation in such a manner that the total earnings of the claimant from that employment are, in each consecutive week except the last, equal to the claimant’s normal weekly earnings from that employment.

(10) Subject to subsection (11), where earnings are paid or payable to a claimant by reason of a lay-off or separation from an employment subsequent to an allocation under subsection (9) in respect of that lay-off or separation, the subsequent earnings shall be added to the earnings that were allocated and, regardless of the period in respect of which the subsequent earnings are purported to be paid or payable, a revised allocation shall be made in accordance with subsection (9) on the basis of that total.

(10.1) The allocation of the earnings paid or payable to a claimant by reason of a lay-off or separation from an employment made in accordance with subsection (9) does not apply if

(a) the claimant’s benefit period begins in the period beginning on January 25, 2009 and ending on May 29, 2010;

(b) the claimant contributed at least 30% of the maximum annual employee’s premium in at least seven of the 10 years before the beginning of the claimant’s benefit period;

(c) the Commission paid the claimant less than 36 weeks of regular benefits in the 260 weeks before the beginning of the claimant’s benefit period; and

(d) during the period in which the earnings paid or payable by reason of the claimant’s lay-off or separation from an employment are allocated in accordance with subsection (9) or, if the earnings are allocated to five weeks or less, during that period of allocation or within six weeks following the notification of the allocation, the claimant is referred by the Commission, or an authority that the Commission designates, under paragraph 25(1)(a) of the Act, to a course or program of instruction or training

(i) that is full-time,

(ii) that has a duration of at least 10 weeks or that costs at least $5,000 or 80% of the earnings paid or payable by reason of the claimant’s lay-off or separation from employment,

(iii) for which the claimant assumes the entire cost, and

(iv) that begins during one of the 52 weeks following the beginning of the claimant’s benefit period.

(10.2) If any of the conditions under which the Commission may terminate the claimant’s referral under paragraph 27(1.1)(b) of the Act exists, the earnings paid or payable to the claimant by reason of a lay-off or separation from an employment shall be re-allocated under subsection (9).

2. The Regulations are amended by adding the following after section 77.9:

PILOT PROJECT RELATING TO EXTENDED EMPLOYMENT INSURANCE AND TRAINING INCENTIVE

77.91 (1) Pilot Project No. 14 is established for the purposes of assessing whether the extension of the number of weeks of benefits paid to a qualified claimant who undertakes long-term training encourages the claimant to pursue such training and improves their re-employability.

(2) Pilot Project No. 14 applies in respect of every claimant whose benefit period is established in the period beginning on January 25, 2009 and ending on May 29, 2010.

(3) Pilot Project No. 14 applies in respect of every claimant who meets the following criteria:

(a) the claimant contributed at least 30% of the maximum annual employee’s premium in at least seven of the 10 years before the beginning of the claimant’s benefit period;

(b) the claimant was paid less than 36 weeks of regular benefits in the 260 weeks before the beginning of the claimant’s benefit period; and

(c) within 20 weeks after the beginning of the claimant’s benefit period or before August 23, 2009, if the benefit period began before May 31, 2009, the claimant is referred by the Commission, or an authority that the Commission designates, under paragraph 25(1)(a) of the Act, to a course or program of instruction or training

(i) that is full-time,

(ii) that has a duration of at least 20 weeks, and

(iii) that begins during one of the 52 weeks following the beginning of the claimant’s benefit period, but not before May 31, 2009.

(4) Despite subsections 10(2) and (8) of the Act, the benefit period of a claimant who is included in Pilot Project No. 14 is extended by the duration, in weeks, of the course or program referred to in paragraph (3)(c) — including any periods of interruption of the course or program — and the period granted for job-search purposes, up to a maximum of 104 weeks.

(5) The maximum number of weeks for which benefits may be paid to a claimant who is included in Pilot Project No. 14 is that which is determined by any of subsections 12(2), (3) or (6) of the Act added to, if applicable, the number of weeks that fall within the benefit period established under subsection (4)

(a) during which the claimant is attending the course or program referred to in paragraph (3)(c) or is searching for a job during the period granted for that purpose; and

(b) for which no benefits are payable under subsection 12(1) of the Act.

(6) For the application of subsections (4) and (5), the period granted for job-search purposes is equal to one week of benefits for every five weeks of training completed, up to a maximum of 12 consecutive weeks. This period begins on the Sunday after the last day on which the claimant attends the course or program.

(7) If any of the conditions under which the Commission may terminate the claimant’s referral under paragraph 27(1.1)(b) of the Act exists, subsection (5) ceases to apply on the Sunday after the last day on which the claimant attends the course or program.

COMING INTO FORCE

3. These Regulations come into force on May 31, 2009.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue

The current economic slowdown is accelerating ongoing structural changes within the economy and limits the ability of some workers — often with specialized and non-transferable skills — to re-secure employment in their industry or in an alternative one. While many laid-off workers will be in need of enhanced skills and knowledge to find and retain employment in the changing economy, those workers with non-transferable skills, such as those working in declining industries, are likely to be most in need of skills upgrading. Some will face significant challenges in finding employment of similar quality, as their specialized skills will no longer be in demand, and when they do find work, they may earn significantly lower wages relative to their previous jobs.

While faring better than many other industrial economies, the Canadian economy and labour market continue to decline. Employment fell by 357 000 between October 2008 and March 2009. Core-age workers between the ages of 25 to 54, who have stronger workforce attachment than other age groups, were the hardest hit, representing almost 70% of all job losses in that time period.

Evidence shows that long-tenured workers who lose their job experience significant earnings losses in the first year following displacement, as well as long-term losses that are significantly higher than those of unemployed low-tenured workers. These workers are thus at risk of a significant drop in their standard of living over the longer term.

Workers may decide not to pursue training because of a lack of income support and because the current program does not provide support following the completion of training to facilitate the job search. This support is particularly important for individuals who wish to change occupations and/or industries.

The EI legislation (the Act and the Regulations) considers separation monies such as severance pay, pensions, retirement allowances, or payments for or in lieu of vacation periods, as income arising from employment. Income paid or payable to a claimant by reason of a lay-off or separation from an employment (separation payments) is, pursuant to subsection 36(9) of the Regulations, allocated to the number of weeks that begins with the week of the lay-off or separation at the claimant’s normal weekly rate of pay. In effect, when a loss of income is compensated by a former employer through separation payments, EI benefits are not payable as there is no loss of employment income. This has the effect of delaying EI benefits, or in some circumstances reduces the total amount of benefits paid. For these workers, pursuing re-training at their own expense is often not a financially viable option, since during their period of allocation, earnings from separation is their only source of income.

For those workers who wish to invest in their own training, they would benefit from receiving EI benefits earlier to offset these self-funded investments (amendment to Section 36). For workers from declining industries who require longer term re-training to secure reemployment in an entirely different industry — potentially one facing structural skills shortages — the pilot project would test whether extended EI income support encourages claimants to pursue longer duration training and improves their re-employability (Pilot Project No. 14).

Objectives

All Canadians

Through the 2009 federal budget, Canada’s Economic Action Plan, the Government of Canada introduced the Canada Skills and Transition Strategy, which provides $8.3 billion to help Canadians hardest hit by the economic downturn and to provide them with the necessary training to prosper in the future economy. It consists of a three-pronged strategy to strengthen benefits, enhance the availability of training, and maintain low EI premium rates.

Workers with Prolonged Labour Force Attachment

Specifically for workers with prolonged labour force attachment, the Canada Skills and Transition Strategy committed $500 million over two years to support workers who have paid over a certain level of EI contributions over the course of the last 10 years, and who made limited use of EI Part I regular benefits in the past 5 years, to renew or upgrade their skills while in receipt of EI regular benefits. These regulatory changes provide EI income benefits to qualified claimants participating in training, either through earlier access to benefits (amendment to Section 36), or via the pilot project, through extended benefits. Claimants could be eligible to participate in both measures. These Regulations:

(1) Amend section 36 of the EI Regulations to remove the requirement imposed by subsection 36(9) that earnings, paid or payable because of a lay-off or separation from employment, be allocated to the number of weeks that begins with the week of the lay-off or separation for those eligible claimants who use all or part of their separation earnings to invest in eligible training. The purpose of these amendments is to improve incentives for claimants to pursue eligible skills upgrading and to encourage claimants to invest in their own training. In the context of EI eligibility, earnings from a separation from employment are considered as income, which has the effect of delaying EI benefits for the number of weeks of the severance allocation. Claimants who qualify under these amendments will be entitled to begin receiving EI benefits earlier and may receive benefits for a longer period of time.

(2) Introduce Pilot Project No. 14 (Extended Employment Insurance and Training Incentive [EEITI]). These amendments to the Regulations establish a one-year pilot project which will test whether the extension of the number of weeks of benefits paid to certain claimants who undertake long-term training encourages claimants to pursue such training and improves their re-employability by

• increasing the number of claimants pursuing longer term training,
• facilitating their labour force reintegration, and
• improving post-displacement outcomes such as earnings.

In addition, it will help identify which groups of workers are best to target for significant retraining and which types of training or skills upgrading yield the best labour market results.

Description

Both of these measures will benefit unemployed Canadians with prolonged labour force attachment and limited use of EI Part I regular benefits who would gain from training to improve their chances of finding long-term employment of similar quality to their previous job. For the purposes of these two measures, the following criteria for eligibility apply:

(i) Claimants whose benefit period was established between January 25, 2009 and May 29, 2010;

(ii) Claimants who contributed at least 30% of the maximum annual employee’s premium in at least 7 of the 10 calendar years before the beginning of the claimant’s benefit period;

(iii) Claimants who received less than 36 weeks of EI Part I regular benefits in the 260 weeks before the beginning of the claimant’s benefit period; and

(iv) Claimants must be referred to a course or program of instruction or training that meets certain conditions pursuant to paragraph 25(1)(a) of the Employment Insurance Act.

These measures are aimed at claimants with significant full-time labour force attachment. Analysis of wages across Canada indicates that workers earning the equivalent of the national average earnings of a full-time worker at minimum wage contribute approximately 30% of the maximum annual employee’s premium established by subsection 82(2) of the Employment Insurance Act. As the intent is to include full-time workers, the minimum threshold for contribution levels is set at a level to include those earning the minimum wage.

Requiring that 30% of the maximum annual employee’s premium be contributed in at least 7 of the 10 years immediately preceding the year in which the claimant’s benefit period is established recognizes the varying circumstances of workers with prolonged labour force attachment (10 years) that could include interruptions in their attachment to the workforce for up to 3 years (e.g., for maternity/parental leaves, sickness, or self-employment).

Analysis of workers with prolonged labour force attachment and who had at least one week of EI benefits during the last 5 years indicates that the average number of EI regular benefits claimed is 37 weeks. As these measures are targeting workers with significant labour force attachment who made limited use of EI Part I regular benefits, 35 weeks (which is slightly below the average) is deemed to be an appropriate level to represent limited use of the program.

Amendments to Section 36 of the Regulations

The amendments to section 36 provide that the allocation of the earnings paid or payable to a claimant by reason of a lay-off or separation from an employment done in accordance with subsection 36(9) does not apply if criteria (i), (ii), (iii), and (iv) above are met and

• The referral pursuant to paragraph 25(1)(a) of the Act is obtained during the period in which the earnings paid or payable by reason of the claimant’s lay-off or separation from employment are allocated, or in cases where the allocation is 5 weeks or less, 6 weeks following the notification of the allocation.

The criteria for an eligible course, program of instruction or training are

• Full-time;
• Starts during one of the 52 weeks from the beginning of the claimant’s benefit period;
• Duration of 10 weeks or more; or if the training is less than 10 weeks in duration, then the cost of tuition is at least $5,000, or 80% of the amount of the separation payments; and
• For which the claimant assumes the entire cost.

Upon request, the claimant may be required to provide proof of completion of training to Service Canada. In the event that a claimant does not complete training for one of the reasons set out in subparagraphs 27(1.1)(b)(i), (ii), or (iii) of the Employment Insurance Act, separation payments paid or payable to the claimant will be allocated in accordance with subsection 36(9) of the Regulations, and other penalties in the Act will apply.

This measure is effective for one year, from May 31, 2009 to May 29, 2010. However, eligible participants whose benefit period is established towards the end of the measure could be entitled to benefits up to 50 weeks after the termination of client intake. Claimants whose claim was established between January 25, 2009 and May 30, 2009 who meet all eligibility criteria, will have remaining allocation removed as of May 31, 2009.

Extended Employment Insurance and Training Incentive (Pilot Project No. 14)

Claimants eligible to participate in the EEITI are claimants who meet the requirements of (i), (ii), (iii), and (iv) under “Description” above and the referral pursuant to paragraph 25(1)(a) of the Act must be obtained within the following timelines:

(1) If the claimant has a benefit period that was established between January 25, 2009 and May 30, 2009, the referral must be made by August 22, 2009; or

(2) If the claimant has a benefit period that was established between May 31, 2009 and May 29, 2010, the referral must be made within 20 weeks after the beginning of the benefit period.

The criteria for an eligible course, program of instruction or training for the EEITI are:

• Full-time;
• Starts during one of the 52 weeks from the beginning of the claimant’s benefit period; and
• Duration of 20 weeks or more.

The course may be self-funded or subsidized by the province’s or territory’s or Service Canada’s employment programs.

For these claimants, the benefit period is extended by the duration, in weeks, of the course or program of instruction or training to which the claimant was referred, as well as an additional period for job search purposes (the job search period), to a maximum of 104 weeks. The maximum number of weeks for which benefits may be paid to claimants who are included in the Pilot is the aggregate of the number of weeks that the claimant would have been entitled to under subsection 12(2), (3) or (6) of the Employment Insurance Act, the number of weeks that the claimant is attending the eligible training for the EEITI and the job search period. The job search period is equal to one week for every five weeks of completed eligible training for the EEITI up to a maximum of twelve weeks. The job search period weeks must be taken consecutively, and must immediately follow the final week for which the claimant received benefits while taking eligible training for the Pilot. Claimants must exhaust their benefit entitlement under subsection 12(2) of the Employment Insurance Act before receiving additional weeks of benefits for and during eligible training for the EEITI or for additional weeks of benefits for job search purposes. Claimants participating in the EEITI will not be eligible for benefits referred to in subsections 12(2) or 12(3) of the Employment Insurance Act during the extension of the claimant’s benefit period that is permitted via the EEITI.

In the event that a claimant does not complete training for one of the reasons set out in paragraph 27(1.1)(b) of the Employment Insurance Act, the claimant’s entitlement to additional weeks of benefits during training or for job search purposes would end as of the Sunday following the last day on which the claimant attended the course or program of instruction or training. Benefits received up to that date will not be repayable.

This pilot is effective for one year, from May 31, 2009 to May 29, 2010. However, eligible participants whose benefit period was established towards the end of the measure could be entitled to benefits up to 104 weeks after the termination of client intake.

Regulatory and non-regulatory options considered

Because the requirement that separation payments be allocated to the weeks after a person is laid off or terminated is contained in the Regulations, any changes to this requirement can only be made by regulatory amendment.

Section 109 allows the Commission to make regulations respecting the establishment and operation of pilot projects for testing whether or which possible amendments to the Employment Insurance Act or the Regulations would make the Act or the Regulations more consistent with current industry employment practices, trends or patterns or would improve services to the public. The only non-regulatory alternative to the EEITI is to make temporary or permanent amendments to the Employment Insurance Act and the Regulations. Testing this measure via pilot project will allow for the collection of data that will be used to determine the effectiveness of these measures prior to proposing amendments to the legislation.

Benefits and costs

Amendment to Section 36 of the Regulations

It is estimated that 10 000 claimants could benefit from this measure at a cost of $40 million in 2009-2010 and $40 million in 2010-2011, excluding administrative costs, to be paid for by the EI Account.

The EEITI pilot project

It is estimated that approximately 40 000 claimants will benefit from the EEITI. EI Part I costs are estimated at $155 million in 2009-2010, and $265 million in 2010-2011 excluding administrative costs, to be paid by the EI Account over the course of the pilot. This pilot is in effect for one year. Depending on the timing of the take-up and duration of benefits, expenditures will extend beyond 2010-2011.

In addition to the Part I funding for this measure, it is estimated that up to $290 million will be required for skills development interventions provided under the Labour Market Development Agreements. By providing EI Part I income support for an extended period of time to those undertaking longer term training, an estimated $100 million will be available for provinces and territories and the Canada Employment Insurance Commission to assist other unemployed workers. Canada’s Economic Action Plan 2009 also committed an additional $500 million in EI Part II funding to provinces and territories that can be used for these purposes.

Consultation

Between October 2008 and January 2009, the Government consulted widely via its pre-budget consultations on potential measures that could be included in the economic stimulus package. Providing additional assistance to workers who pursue training was a widely shared objective. In addition, the Government took into account previous consultations with provinces and territories as well as representations and correspondence from concerned individuals, stakeholders groups and businesses. These measures were designed to respond to some of the issues raised during these consultations.

These proposed amendments to the Regulations are supported by the Canada Employment Insurance Commission, which includes representatives for workers and employers.

Implementation, enforcement and service standards

Existing implementation and enforcement mechanisms contained in Human Resources and Skills Development Canada’s adjudication and controls procedures will ensure that these regulatory amendments are implemented properly. The Department’s continuing objective is to reach a decision on 80% of all EI claims within 28 days (4 weeks) of the receipt of all pertinent information.

Performance measurement and evaluation

The Government of Canada will continue to monitor the effects of the EI program, which will be reported in the Employment Insurance Monitoring and Assessment Report, and tabled in Parliament.

A formal evaluation of both measures will be undertaken to determine the impact and the effectiveness. The EEITI pilot project will be evaluated with a view to determine whether the changes to the Employment Insurance Act being tested via the pilot would make the Act more consistent with current employment patterns and trends.

The formal evaluation of the amendments to section 36 of the Regulations will assess whether eligible claimants who take eligible training face lesser post-training labour market transition challenges than other workers. In addition, it will examine whether those workers use their separation payments to invest in skills upgrading or training, and whether labour market outcomes are different for those investing in their own training under this measure. It will also determine if the measure resulted in any unintended impacts such as mobility (from weaker to stronger labour markets), slower than average returns to work, and increased usage of EI.

The formal evaluation of the EEITI will measure whether eligible claimants face greater labour market transition challenges than other workers, and whether the extension of the benefit period encourages participation in longer term training. In addition, it will examine whether labour market outcomes are improving for workers with significant labour force attachment who participate in the pilot. It will also determine if the pilot resulted in any unintended impacts such as mobility (from weaker to stronger labour markets), slower than average returns to work, and increased usage of EI.

Findings will be reported in the Employment Insurance Commission’s annual Monitoring and Assessment Report, tabled in Parliament.

Human Resources and Social Development Canada existing compliance mechanisms will ensure that these provisions are properly implemented.

Contact

Mireille Laroche
Director
Policy Development
Skills and Employment Branch
Human Resources and Social Development Canada
140 Promenade du Portage, 5th Floor
Gatineau, Quebec
K1A 0J9
Telephone : 819-994-4690
Fax : 819-934-6631

Footnote a
S.C. 1996, c. 23

Footnote 1
SOR/96-332

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