Regulations Amending the Employment Insurance Regulations: SOR/2021-3
Canada Gazette, Part II, Volume 155, Number 4
SOR/2021-3 January 29, 2021
EMPLOYMENT INSURANCE ACT
P.C. 2021-19 January 29, 2021
The Canada Employment Insurance Commission, pursuant to paragraph 54(a) footnote a of the Employment Insurance Act footnote b, makes the annexed Regulations Amending the Employment Insurance Regulations.
January 25, 2021
Canada Employment Insurance Commission
Canada Employment Insurance Commission
Canada Employment Insurance Commission
His Excellency the Administrator of the Government of Canada in Council, on the recommendation of the Minister of Employment and Social Development, pursuant to paragraph 54(a)footnote a of the Employment Insurance Act footnote b, approves the annexed Regulations Amending the Employment Insurance Regulations, made by the Canada Employment Insurance Commission.
Regulations Amending the Employment Insurance Regulations
1 The Employment Insurance Regulations footnote 1 are amended by adding the following after section 39:
- Temporary Waiving of the Waiting Period
39.01 The Commission may waive the waiting period in respect of any benefit period that begins on a day that is not earlier than the day on which this section comes into force and not later than September 25, 2021.
2 Section 39.01 of the Regulations and the heading before it are repealed.
3 The heading before section 39.1 of the French version of the Regulations is replaced by the following:
- Suppression du délai de carence — apprentis
Coming into Force
4 (1) Subject to subsection (2), these Regulations come into force on January 31, 2021, but if they are registered after that day, they come into force on the day on which they are registered.
(2) Section 2 comes into force on September 26, 2021.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
The COVID-19 global pandemic has had a significant impact on the Canadian labour market resulting in job loss. In this situation, Canadian workers in insurable employment look to the Employment Insurance (EI) program to provide financial assistance during periods of unemployment. Currently, individuals who qualify for EI benefits must serve a one-week waiting period before they are entitled to be paid benefits. For public health reasons and to encourage those who are sick to remain at home, the waiting period has been waived for EI sickness benefit claimants for a year beginning September 27, 2020. Temporarily waiving the EI waiting period for all EI benefits will enable eligible EI claimants to be paid for the first week of unemployment.
Some of the mandatory analytical requirements related to this proposal may have been adjusted, as it is related to the Government of Canada's response to COVID-19.
On March 11, 2020, the World Health Organization (WHO) declared the COVID-19 outbreak a global pandemic. COVID-19 is a respiratory disease in which affected individuals may develop symptoms including fever, cough or difficulty breathing. COVID-19 has clearly demonstrated that it can cause severe, life-threatening respiratory disease. In more severe cases, infection can cause pneumonia, severe acute respiratory syndrome, kidney failure and death.
Human-to-human transmission is the main driving force of the current COVID-19 outbreak and is exacerbated by a lack of immunity in the general population. As of January 12, 2021, there were a total 674 473 cases of COVID-19 in Canada, with 17 233 deaths reported, with daily cases rising in some jurisdictions. The spread of the disease has had a significant impact on the Canadian labour market. The unemployment rate rose from 5.6% in February 2020 (pre-COVID-19) to a high of 13.7% in May 2020, and stood at 8.6% in December 2020. Given the rise in the unemployment rate attributed, in part, to shutdowns that occurred early on in the pandemic, upward pressure on the unemployment rate is expected as a result of shutdowns in the second wave of COVID-19. In situations such as this, Canadians may need a variety of supports, including EI benefits.
Pursuant to the Employment Insurance Act, once an EI claimant's 52-week benefit period has been established, the claimant must serve a one-week waiting period, during which they are not entitled to be paid 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. The waiting period applies to all EI benefits, including regular, fishing, sickness, maternity, parental and caregiving benefits. A waiting period is not required for a person to receive the Canada Recovery Benefit, which is a temporary suite of three benefits introduced in September 2020 to provide income support in the context of the pandemic. In particular, the Canada Recovery Benefit supports workers ineligible for EI who, for reasons related to COVID-19, are not employed or self-employed, or are working but have had their earnings reduced by at least 50%.
As a result of the waiting period, EI claimants typically experience a week without income at the beginning of their claim; at a time when they may need it most. A regulatory change to waive the one-week waiting period until September 25, 2021, will allow benefits to be paid with respect to that first week of a claimant's benefit period.
The objective of this regulatory amendment is to temporarily waive the EI waiting period. The policy intent is to ease the financial pressure when eligible individuals seek EI benefits during the ongoing COVID-19 pandemic.
An amendment to the Employment Insurance Regulations will waive the requirement for EI claimants to serve a one-week waiting period before being entitled to be paid EI benefits. This includes claims for EI benefits under Part I (regular, maternity, parental, sickness, compassionate care and family caregiver), Part VII.1 (special benefits for self-employed) and Part VIII (fishing) of the Employment Insurance Act where the claims are established on or after January 31, 2021, and before September 26, 2021.
This is a broad waiver that applies to all types of claims under the Employment Insurance Act as long as the claims are established within the specified timeframe.
The amendment comes into force on January 31, 2021, or on the day on which the Regulations are registered if that date is later than January 31, 2021.
These Regulations are being advanced on an expedited basis in response to the evolution of the pandemic. While formal consultations have not been undertaken with all provinces and territories, discussions were held with Ontario and Quebec (two of the provinces where economic restrictions are currently in place to slow the spread of the virus) and they are supportive of this measure.
The situation related to COVID-19 is uncertain, and it is important that the Government of Canada take all the steps necessary to support Canadian workers experiencing financial hardship during these unprecedented times.
As these measures are beneficial for all EI-eligible claimants and are responding to the COVID-19 pandemic, no prepublication was undertaken.
Modern treaty obligations and Indigenous engagement and consultation
There are no implications for modern treaty obligations or Indigenous engagement in these Regulations.
There is no discretionary authority in the Employment Insurance Act that would permit waiving the waiting period. The most expedient means to accomplish this is through regulatory amendment, the only other alternative being a legislative amendment. This measure was chosen as an effective way to contribute to the well-being of Canadians in the context of a comprehensive Government-wide response.
Benefits and costs
Beyond easing the financial pressure for all EI claimants at the beginning of a claim, for the period between January 31, 2021, and September 25, 2021, this measure will provide one week of additional income support to an estimated 600 000 claimants who return to work before exhausting all of their weeks of benefit entitlement. For example, for an EI-eligible claimant who is laid off and subsequently finds work after four weeks, they would receive four weeks of benefits, whereas a person in similar circumstances that must serve a waiting period would only be entitled to three weeks of benefits. The estimated incremental program cost for additional income support is $320 million.
Waiving the waiting period does not change the total number of weeks of benefit entitlement. A person beginning a claim between January 31, 2021, and September 25, 2021, who exhausts benefits will continue to receive the same number of weeks of benefits. This person would receive benefits for the first week of unemployment, however, their entitlement to EI benefits will also end one week earlier.
The EI program is financed through mandatory premium contributions made by both employers and employees in a ratio of 7/12 to 5/12, respectively. Based on this ratio, the $320 million program cost will be shared by employers and employees. The costs to employers and employees can be found in the table below.
|Employees||$133 million||$320 million|
This cost will have a small impact on the EI premium rate, set at $1.58 per $100 of insurable earnings for 2021 and 2022. At an estimated cost of $320 million, this measure would put upward pressure on the EI premium rate of less than 1/3 of a cent (0.3 cents). Program costs will be charged to the EI Operating Account and will be factored into the calculation of the EI premium rate in future years.
The Government will incur minor costs associated with development and testing of IT systems to implement the waiver. These costs will be absorbed through existing funding.
Uncertainties surrounding the pandemic, shifting response measures in various jurisdictions, vaccine rollouts, variable propensity on the part of the public to abide by public health guidance and restrictions make it challenging to accurately forecast regional distribution with any degree of confidence. The estimate of the 600 000 claimants expected to gain an additional week of income support is based on historical data, aggregated at the national level. Regional distribution of the impacts of these Regulations is expected to align roughly with the distribution of EI benefits historically.
Small business lens
Analysis under the small business lens determined that small businesses will incur increased payroll costs in future years associated with any necessary increase in EI premium rates. The cost of this measure will be paid from the Employment Insurance Operating Account and consequently will factor into calculations for EI premiums. As all employees and employers pay premiums, a portion of the costs of the measure will ultimately be borne by small, medium and large businesses. However, EI premiums are frozen for 2021 and 2022. Therefore, the financial impact of this measure will be spread over the seven years following 2022 in accordance with the premium rate setting formula. Consequently, there will be no additional cost to employers or employees until 2023. It is not feasible to determine a dollar cost figure that would be incurred by small businesses, due to uncertainties in the labour market related to the pandemic. However, as the impact on EI premiums over seven years is estimated to be $0.003 per $100 in earnings, the overall impact on an individual small employer is expected to be small to negligible.
Additional flexibility was not provided to small businesses as the measure is time limited and the increased costs associated with increased premiums are expected to be low.
This amendment does not result in administrative burden to business.
Regulatory cooperation and alignment
This amendment is not related to any commitments with other regulatory jurisdictions.
Strategic environmental assessment
A preliminary environmental scan revealed no environmental impacts associated with this regulatory amendment.
Gender-based analysis plus (GBA+)
As of January 10, 2021, 1 044 680 males (49.4%) and 1 069 820 females (50.6%) were active claimants in receipt of EI payments. This suggests that the effect of the regulatory measure would be roughly gender balanced. EI program data does not contain information that would allow additional analysis based on distinguishing characteristics such as race, ethnicity or disability.
It is important to note that these Regulations do not target persons of any gender or identified group. The changes will benefit EI eligible workers regardless of other characteristics. Persons who are not eligible for EI will not directly benefit from the Regulations.
This amendment will allow the EI Program to better support individuals and families affected by COVID-19. They will do so through enhancing access to temporary income support for EI claimants at a time of emotional and possible financial crisis for such persons.
As the pandemic continues, provinces and territories are announcing further restrictions to slow the spread of the virus. For example, both Ontario and Quebec have recently put in place strict lockdown measures. Waiving the EI waiting period for new claimants ensures fairness between recipients of EI and the Canada Recovery Benefit during these restrictive periods. The recovery benefits have no waiting period, which can be perceived as disadvantageous for EI claimants who are unable to find employment during this second wave of the virus.
Implementation, compliance and enforcement, and service standards
These Regulations will come into force January 31, 2021, or on the day on which the Regulations are registered if that date is later than January 31, 2021. No additional measures or coordination is required, and implementation will be accommodated within normal EI program operations.
Performance measurement and effectiveness of these Regulations will be undertaken as part of the ongoing monitoring and assessment of the EI program.
Compliance and enforcement
These Regulations do not change existing service standards. Service standards will be maintained to the greatest extent possible for all EI claims submitted.
Standard investigation and control measures will continue to apply to ensure program integrity and enforcement.
Acting Executive Director
Employment Insurance Policy Directorate
Skills and Employment Branch
Employment and Social Development Canada
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