Defrauding the Employment Insurance (EI) Program is a Serious Offence
What you should know…
Mistakes can happen
Consequences of fraud
Penalties for individuals
Penalties for employers
Warning letter to individuals
Warning letter to employers
Violations
Prosecution
Interest charged on fraudulent debts
Voluntary disclosure
What you should know...
Employment Insurance (EI) provides temporary financial assistance to the unemployed while they look for work or upgrade their skills. Workers who are sick, pregnant or caring for a newborn or adopted child, as well as those who must care for a family member who is seriously ill, may also be entitled to EI.
Human Resources and Skills Development Canada (HRSDC) has a responsibility to ensure that benefits are paid only to individuals who are entitled to them. This responsibility is also shared by workers, employers and the Government of Canada.
EI fraud affects everyone and compromises the effectiveness of one of Canada’s strongest social programs. We are committed to protecting the EI Program for all Canadians.
The Department is constantly improving systems for the prevention and detection of abuse. Highly trained staff and advances in technology increase the Department’s ability to prevent and detect fraud and abuse.
Mistakes can happen
We realize that mistakes can happen. If you make a mistake filling out forms or reports, or if there is a change in your circumstances that could affect your EI benefits, advise the Department immediately. Letting us know of a mistake or a change early is your best way to prevent future problems with your claim, or avoid a penalty or prosecution.
To make changes or corrections, call our telephone information service at 1 800 206-7218, from 8:30 am and 4:30 pm, and press "0" to speak to a representative. You can also write or go to your Service Canada Centre to correct the situation.
Tip: Use the reporting calendar — PDF 11 kb — to keep track of your earnings and hours worked. About PDF Files.
Consequences of fraud
You should be aware that it is an offence to knowingly withhold information or provide false or misleading information. It is fraud. When a case of fraud is detected, HRSDC will investigate and may impose severe monetary penalties or prosecute. Committing an offence may also affect your future benefits. See Violations...
Penalties for individuals
If you committed a fraud, in addition to having to repay the EI benefits you were not entitled to, you may also have to pay a monetary penalty. Depending on the circumstances, penalties for fraud are determined as follows:
- The maximum penalty is 3 times your benefit rate for each false or misleading statement; or
- 3 times of the maximum benefit rate, if you were not entitled to benefits.
Monetary penalties are not the only consequence of fraud: you may be prosecuted. You may also find that you have less access to the EI program. See Violations...
Penalties for employers
It is illegal for employers to provide false information to HRSDC. If employers, or employers and employees together, falsify Records of Employment or misrepresent earnings, the reason for separation or hours worked, they are committing an offence.
Employers who engage in fraud, such as falsifying or selling a Record of Employment, are liable for a penalty of up to $12,000 or the total of the individual's penalty, if involved.
Corporate directors or agents may be penalized if they make false statements while acting for an employer. They can also be held liable to pay employer penalties if the employer cannot pay.
Warning letter to individuals
A warning letter is sent when our investigation reveals that you have committed fraud, but there is no overpayment. For example, you worked and you did not declare your earnings before deductions on your reports. Following an investigation, the earnings that you didn't declare will be applied to the period in question. Since the gross earnings are lower than the allowable earnings, no overpayment will be established, but a warning letter could be sent to you.
If you receive a warning letter, even if you do not have to pay a penalty, you will need more insurable hours to qualify for EI, or more insurable earnings if you are a fisher. This situation will hold for 5 years or for the next 2 claims. See Violations...
Warning letter to employers
If, as an employer, you commit EI fraud, the circumstances of the case may result in a warning letter being sent to you instead of a monetary penalty. For example, one of your employees stops working due to illness. You believe that he won't be eligible for sickness benefits, so you indicate "shortage of work" rather than sickness as the reason for separation on the Record of Employment. This doesn't affect your employee’s entitlement to benefits. However by indicating a false reason for separation, you have falsified a Record of Employment and have committed EI fraud.
Violations
A notice of violation is issued when a penalty is imposed or a warning letter is sent following a fraud. The value of the overpayment determines the classification of violation, namely, minor, serious, or very serious. However, if you have already received a notice of violation and commit another fraud, the violation is classified as a subsequent violation and the penalties are stiffer.
Classification of violations:
If a notice of violation is issued, you will need more insurable hours or, for fishers, more insurable earnings, to qualify for benefits.
This increase in insurable hours or insurable earnings is in effect for 5 years or for your next 2 claims, whichever occurs first. There is no exception to this rule, whatever type of benefits are claimed: regular, maternity, parental and sickness, compassionate care or fishing. See examples 1 to 4:
Example 1 — minor violation and regular benefits (calendar available)
On November 5, 2003, you are issued a notice of minor violation following a fraudulent overpayment of $759. On August 8, 2005, you file a claim for regular benefits. Your Record of Employment shows 766 insurable hours. At the time your claim is filed, the unemployment rate is 5.8% and 700 insurable hours are required.
The notice of minor violation issued on November 5, 2003 is still in effect, since fewer than 5 years have passed. For this reason, more insurable hours are required to qualify for regular benefits, i.e. 875 hours.
Example 2 — serious violation and maternity benefits (calendar available)
On February 18, 2001, you are issued a notice of serious violation following a fraudulent overpayment of $2,610. After being out of the labour market for 3 years, you work from January 3, 2005 to September 16, 2005 and accumulate 930 insurable hours. On September 19, 2005, you file a claim for maternity benefits. Normally, 600 insurable hours are required.
However, since fewer than 5 years have passed, the notice of serious violation issued on 18 February 2001 is still in effect. Consequently, more insurable hours are required to qualify for maternity benefits, i.e. 1,365 hours.
Example 3 — minor violation and fishing benefits (calendar available)
On August 17, 2003, you were issued a notice of minor violation following a fraudulent overpayment of $825. On October 3, 2005, you file a claim for fishing benefits. Your Record of Employment shows $4,825 in insurable earnings. At the time your claim is filed, the unemployment rate is 5.5% and earnings of $4,200 are required.
Because the 5 years have not expired since the notice of minor violation was issued on August 17, 2003, extra insurable earnings are required to qualify for fishing benefits, i.e. $5,250.
Example 4 — serious violation and maternity benefits as a fisher (calendar available)
On March 11, 2001, you are issued a notice of serious violation following a fraudulent overpayment of $3,550. After being out of the labour market for 3 years, you work from February 28, 2005 to August 26, 2005 and accumulate $3,869 in insurable earnings. On September 19, 2005, you file a claim for maternity benefits as a fisher. Normally, $3,760 is required.
The notice of serious violation issued on March 11, 2001 is still in effect, since the 5 years have not expired. A higher amount of insurable earnings are required to qualify for maternity benefits as a fisher, i.e. $8,250.
Prosecution
Prosecution is the most serious action that we take to control fraud.
Although all contraventions of the Employment Insurance (EI) Act and Regulations are punishable on summary conviction, there are some infractions that will be prosecuted as an indictable offence under the provisions of the Criminal Code of Canada 
.
Interest charged on fraudulent debts
Interest will be charged on your debts resulting from a fraud and will apply to individuals, employers or third parties that committed the offence. The rate of interest is the Bank of Canada average bank rate plus 3 %, calculated daily and compounded monthly. Interest will begin on the date that you are notified of the debt.
According to EI Legislation, decisions on interest cannot be appealed. Only decisions on debts resulting from fraud can be appealed. You will not be charged interest during the appeal process.
The accumulation of interest ends:
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When the debt has been paid in full;
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Upon death of the debtor;
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When the debt is written off;
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When interest on a debt is written off.
Voluntary disclosure
Knowingly holding back information or making a false or misleading statement could lead to severe monetary penalties or prosecution and may also affect future claims. However, if you notify HRSDC of your actions before an investigation begins, we can waive monetary penalties or prosecution that might otherwise apply.
To make a disclosure, call our telephone information service at 1 800 206-7218, from 8:30 am and 4:30 pm, and press "0" to speak to a representative. You can also write or go to your Service Canada Centre .
