Vol. 143, No. 24 — November 25, 2009

Registration

SOR/2009-297 November 5, 2009

EMPLOYMENT INSURANCE ACT

Regulations Amending the Employment Insurance Regulations

The Canada Employment Insurance Commission, pursuant to section 69 (see footnote a) of the Employment Insurance Act (see footnote b), hereby makes the annexed Regulations Amending the Employment Insurance Regulations.

Ottawa, October 9, 2009

P.C. 2009-1851 November 5, 2009

Her Excellency the Governor General in Council, on the recommendation of the Minister of Human Resources and Skills Development, pursuant to section 69 (see footnote c) of the Employment Insurance Act (see footnote d), 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. Subsection 67(2) of the Employment Insurance Regulations (see footnote 1) is replaced by the following:

(2) Subject to section 71, if a plan referred to in section 63, 64, 65 or 66 becomes a qualifying plan or ceases to be a qualifying plan under subsection (4) at any time during the year for which a reduction of the employer’s premium rate is made under subsection 62(1), the reduction shall apply to the number of months in the year during which the plan is a qualifying plan.

2. The portion of subsection 68(1) of the Regulations before paragraph (c) is replaced by the following:

68. (1) An application for a reduction of the employer’s premium rate in respect of insured persons, or for the continuation of such a reduction after the modification or replacement of a plan, shall be made to the Commission by the employer and shall

(a) be accompanied by a copy of the documents that represent the formal commitment referred to in subsection 67(1) or, if the application is for the continuation of a reduction, by a copy of the documents that have been modified or replaced;

(b) provide all the information necessary to determine whether the plan meets or continues to meet the requirements of this Part; and

3. (1) The portion of subsection 69(1) of the Regulations before paragraph (a) is replaced by the following:

69. (1) In the case of an application for a reduction of the employer’s premium rate, or for the continuation of such a reduction, an employer shall group the insured persons employed by the employer into the following categories:

(2) Subsection 69(2) of the Regulations is replaced by the following:

(2) In the case of an application for a reduction, the employer shall

(a) on notification by the Commission that a plan satisfies the requirements of section 63, 64, 65 or 66, request immediately from the Canada Revenue Agency a separate account number for each category of insured persons who are covered by a plan that entitles the employer to a reduction; and

(b) notify the Commission immediately on receipt of those account numbers.

(3) If a modification or replacement of a plan results in a change to the previously established categories of insured persons, the employer shall

(a) on notification by the Commission that the plan as modified or replaced satisfies the requirements of section 63, 64, 65 or 66, request immediately from the Canada Revenue Agency a new account number for any newly established category; and

(b) notify the Commission immediately on receipt of that account number.

(4) For each year for which a reduction of the employer’s premium rate is applicable, the employer shall

(a) beginning not later than the first remittance for the first month from which the employer’s reduction is applicable, remit to the Canada Revenue Agency the employer’s premium payable in respect of all insured persons in each category for which an account number has been received; and

(b) submit to the Canada Revenue Agency, for each account number, an information return that shows the total amount of insurable earnings, of employees’ premiums and of employer’s premiums in respect of all insured persons in the category for which the account number was issued.

4. Sections 70 to 72 of the Regulations are replaced by the following:

70. If the plan on which a reduction of the employer’s premium rate is based is modified or replaced, the employer shall

(a) notify the Commission within 30 days after the modification or replacement; and

(b) apply for a continuation of the reduction in accordance with section 68.

71. The effective date of a reduction of the employer’s premium rate under subsection 62(1) is,

(a) in the case of an initial application for a reduction,

(i) the first day of the month following the month in which the application was made, if it was made on or before the 15th day of the month, or

(ii) the first day of the second month following the month in which the application was made, if it was made after the 15th day of the month, and

(b) in the case of an application for the continuation of a reduction, the effective date of the modification or replacement of the plan.

72. (1) On receiving an application that is in accordance with section 68, an officer of the Commission shall decide whether the employer meets or continues to meet the requirements for receiving a reduction under this Part and shall notify the employer of the decision.

(2) If an employer does not comply with section 70, an officer of the Commission shall, after learning of the non-compliance and giving the employer an opportunity to be heard, make the decision referred to in subsection (1) and notify the employer of the decision.

(3) If an employer’s plan ceases to meet the requirements of paragraph 63(d), an officer of the Commission shall terminate entitlement to the reduction and notify the employer of the decision.

5. Section 74 of the Regulations and the heading before it are replaced by the following:

TERMINATION OF PLAN

74. An employer shall, within 30 days after termination of a plan on which a reduction of the employer’s premium rate is based, notify the Commission of the plan’s termination.

COMING INTO FORCE

6. These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issue and objectives

The existing renewal process for wage-loss plans under the Employment Insurance Premium Reduction Program (PRP) has been identified by employers as overly burdensome as it requires employers to annually renew their previously approved wage-loss plan regardless of whether the existing information, previously submitted to the Canada Employment Insurance Commission (Commission), has changed or not. This requirement has resulted in approximately 37 000 renewal applications needing to be processed every year by the Commission, the majority of which contain redundant information that has not changed.

The objective of the regulatory amendment is to remove the requirement for the annual renewal of employer wage-loss plans. Employers will be required to notify the Commission and apply for a continuation of a premium reduction in the event of the modification or replacement of their qualifying plan. Commission audits will ensure the integrity of the program. Ultimately, the regulatory amendments will contribute to efficiency in administering the PRP, as well as complementing efforts to streamline and automate administrative processes.

Description and rationale

Part III of the Employment Insurance Regulations (EIR) provides for a reduction of an employers’ employment insurance (EI) premium if they have an employer wage-loss plan that meets the requirements of the EIR, thereby reducing or eliminating the use of EI sickness benefits by employees. To be considered for a premium reduction, an employer’s wage-loss plan must provide at least 15 weeks of benefits and must match or exceed the level of benefits provided under EI. The premium reduction to employers corresponds to savings to the EI program as a result of employer plans providing sick leave benefits.

Employers are currently required to submit an initial application and annually confirm their eligibility by manually completing a renewal application. The renewal application requires employers to resubmit the same information as was provided in the initial application and which, in most cases, has not changed. A 2003 program review found that less than 4% of participating employers annually make changes to their plans that affect their premium reduction rate.

Under the authority of section 69 of the Employment Insurance Act, the change will eliminate the annual renewal process for employers participating in the PRP by repealing section 71 of the EIR. With this amendment, following the initial application and approval of the employer plan, employers’ participation in the PRP will be ongoing. Employers will continue to receive the same premium reduction, without the need to annually renew plans that have not changed, and the nature of how employers pass that reduction on to employees will not be affected. The amendments will also enable the PRP to notify employers of new yearly premium rates without rendering a new decision on qualified plans.

The EIR will continue to require employers to notify the Commission within 30 days following any modifications to or the replacement of their wage-loss plan. Employers will then have to apply for a continuation of the premium reduction and a decision will be rendered as to whether the employer still meets the requirements for receiving a premium reduction.

The amendments directly contribute to the government-wide commitment to the Paper Burden Reduction Initiative (PBRI), reducing unnecessary paper burden and duplication of information provided by employers through the renewal process. The elimination of the renewal form, which contains 29 fields for employers to complete, represents a key part of Human Resources and Skills Development Canada’s commitment to reduce employer paper burden as part of the PBRI.

Additionally, the reduction in employer administrative burden will provide an incentive for more employers to register wage-loss plans with the PRP. In 2007, 60% of the workforce was covered by a registered employer wage-loss plan under the PRP, amounting to estimated savings of $600M. Increased participation by employers would result in more workers in Canada being covered by employer sick leave plans, reducing the need for them to apply for EI sickness benefits, resulting in additional savings, as well as a more responsive means of receiving sickness benefits than through EI.

A review of the PRP has found that the removal of the obligation for annual renewal of plans will pose a very low risk to the Commission, as the majority of employer plans never change, and the regulatory amendments will have no impact on employers’ ability to apply or qualify for a premium reduction under the PRP. Additionally, the implementation of a post-audit of 400 randomly selected employer plans per year will ensure ongoing review of employer submitted PRP information and the eligibility of plans under the PRP.

Consultation

The PRP renewal process has been a concern for stakeholders such as the Canadian Payroll Association (CPA) for the past 2-3 years, and was raised during a review of the PRP in 2007. Under the current Regulations, employers are required to renew their PRP in their busiest season of the year (Christmas and tax time) as renewals need to be submitted in time to confirm the premium rate for the new calendar year, and employers have indicated that this makes the administrative burden particularly onerous.

To ensure that the renewal requirement is removed before the next call for updates (December 2009), it is intended that these amendments would come into force by early November 2009. This would allow for the notification of the premium reduction for employers with registered wage-loss plans to include notification of the automatic renewal of employer plans.

Stakeholders, including the CPA, were consulted on issues relating to the PRP in 2008. As the amendments to the Regulations are in direct response to concerns regarding complexity and delivery aspects of the PRP raised by stakeholders during consultations, employers are expected to be uniformly supportive of these Regulations. At this time, additional questions/concerns were not raised by stakeholders concerning premium rate reduction or program administration with respect to the PRP. It is not expected that further consultation will result in new information or changes in stakeholder views.

The Regulations were prepared by the Skills and Employment Branch at Human Resources and Skills Development Canada and the Department of Justice. As these Regulations concern a direct relationship between the Commission and employers, there are no provincial/territorial considerations. The Commission supports the regulatory amendments.

Implementation, enforcement and service standards

Employers will be informed of the coming into force of these Regulations when they receive notification of their annual premium rate reduction from the Commission for the upcoming calendar year in November or December 2009. At this time, program participants will be notified of their responsibility to submit an application for the continuation of a premium reduction only if a plan on which a premium reduction is based is modified or replaced, and the carbon-copied renewal application previously mailed to employers will be discontinued. These Regulations do not affect existing service standards, as set out in the Service Canada Service Charter. (see footnote 2)

Standard investigation and control measures, including audits and review of individual files, will apply to ensure program integrity and enforcement of these Regulations. Existing compliance mechanisms contained in the Revenue Canada and the Commission’s control procedures will ensure that this provision is properly implemented.

The elimination of the yearly renewal application process will result in reduced contact between the Commission and participant employers. To ensure the continued integrity of the PRP, a post-audit quality assurance process will be implemented in 2010. This process will annually subject a sample of 400 employers, randomly selected, to verification of the accuracy of file information and documentation with respect to their qualifying plan(s) and the information on file with the Commission. Reporting on the results of this process will be integrated with reporting to Canadians on the EI program through the annual Monitoring and Assessment Report.

Contact

Michael Duffy
Director
Legislative and Regulatory Policy Design
Skills and Employment Branch
Human Resources and Skills Development Canada
140 Promenade du Portage, 5th Floor
Gatineau, Quebec
K1A 0J9
Telephone: 819-997-5034
Fax: 819-934-6631

Footnote a
S.C. 2005, c. 38, subpara. 138(g)(i)

Footnote b
S.C. 1996, c. 23

Footnote c
S.C. 2005, c. 38, subpara. 138(g)(i)

Footnote d
S.C. 1996, c. 23

Footnote 1
SOR/96-332

Footnote 2
Service Canada Service Charter available online at www.servicecanada.gc.ca/eng/about/charter/charter.shtml.

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