Employment Insurance Regulations - Amendments
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations)Description
Except for the changes listed below, the sections of these regulations, which are made pursuant to the EI Act, are similar to the Unemployment Insurance Regulations. The sections have been renumbered and arranged in a more appropriate order. Language and structure have been simplified where possible, and the terminology has been made gender neutral.
The regulatory provisions, listed below in the order they occur in the regulations, are consequential to the Employment Insurance (EI) Act:
(1) Alternate Methods of Pay - Determining Hours Worked
(2) Prescribed hours/weeks of labour force attachment
(3) Value of a violation - average weeks of benefits
(4) Interruption of earnings in cases of preventive withdrawal
(5) Undeclared earnings - definition of earnings and period of employment
(6) Deduction of training allowances
(7) Allocation of hours and earnings to qualifying
(8) Amounts of insurable earnings
(9) Proportionality in counting weeks of regular benefits paid
(10) Self-employment that is minor in extent
(11) Family Supplement
(12) Definition of Income - Trustees in Bankruptcy
(13) Employment measures
(14) Assignment of benefits - Indian bands
(15) Other minor amendments
(16) Electronic Systems
(17) Special benefits for new entrants/re-entrants
(18) Transitional/Interim provisions
(19) Regional boundaries
Note: New provisions for the Employment Insurance (Fishing) Regulations will be included in a separate package because of the requirement to table these before the House of Commons after they are made.
(1) Alternate Methods of Pay - Determining Hours Worked
Section 10 is consequential to section 55 of the EI Act and implements the new hourly coverage system. It provides methods so that employers can complete the Records of Employment for workers not paid on an hourly basis. It is based generally upon the degree of the employer's knowledge of the actual hours worked by the employee. If the employer knows the hours worked then they are simply recorded, regardless of the method of pay. It also gives conversion provisions for situations when hours are not known.
Section 11 deals with occupations where a full-time job is limited to less than thirty-five hours of work per week pursuant to federal or provincial legislation, for example, because of health or safety laws ( pilots/65 hours a month). It also addresses police forces and the armed forces where employment may be considered twenty-four hours a day, but duty is usually in regular shifts of 7 or 8 hours.
(2) Prescribed Hours/Weeks of Labour Force Attachment
Section 12 of the EI Regulations is substantially the same as the prior regulatory definition, except it presents the requirements in hours to reflect the new hourly-based coverage system. In order not to be considered a new entrant or re-entrant and thus require an increased number of hours of insurable employment to qualify for EI benefits, a claimant must, in the 52 weeks preceding the qualifying period, have 490 hours
(the equivalent of 14 35-hour weeks) of labour force attachment. These weeks/hours may be comprised of employment, unemployment and employment benefits paid, training to which the claimant has been referred, workers' compensation, group wage loss payments.
The same provision will be also used to define the weeks that will be ignored in counting the 26 weeks that must be included in the Rate Calculation Period. This permits a form of "extension" of that period during gaps where attachment to the labour force is proven.
(3) Value of a Violation - average weeks of benefits
Section 13, for purposes of paragraph 7.1(6) of the EI Act, deals with how to determine the amount of a penalty when a fraudulent act was committed, but a benefit period had not yet been set up or the claimant was disentitled to benefit, before the fraud resulted in unwarranted benefit payments.
A method is therefore provided for determining the average benefits that could have been paid. The method takes total benefits payable on the claim, minus the amount already paid, and then divides that figure in half. This figure is used in the calculation to classify the violation as to its severity.
(4) Interruption of Earnings - Preventive Withdrawal
Subsection 14(7) recognizes the situation where a pregnant or nursing mother has accepted a lower-paying job from her employer as well as a salary top-up from a provincial program in order to protect herself or her child during pregnancy or breast-feeding. It permits the claimant to set up a claim as soon as she starts the lower-paying job in order that her claim for maternity and parental benefits will be based on her regular wage level. It thereby encourages these women to remain employed as long as possible, rather than refusing this assistance and quitting to ensure a higher weekly benefit rate.
(5) Undeclared Earnings - Definition of Earnings and Period of Employment
Section 15 is required to define the earnings to be taken into account and the period of employment that are referred to in subsection 19(3) of the EI Act. This period is one in which the claimant has worked and earned money but has not declared a part of or all of their earnings.
The period is defined here as beginning on the first day that the activity giving rise to the money was conducted and for which some earnings were not declared on the claimant's weekly report cards resulting in unwarranted unemployment benefits being paid.
(6) Deduction of Training Allowances
Section 16 is consequential to subsection 19(4) of the EI Act and basically the same as the prior provision. It specifies exactly what training allowances should be deducted from benefits paid under Part I of the Act. It provides that training allowances paid for income support from sources outside the EI Act will be deducted from benefits when the claimant has not been referred to the course by the Commission or an authority the Commission has designated.
(7) Allocating Hours and Earnings - Qualifying and Rate Qualifying Periods
Section 22 and subsection 23(6) are consequential to subsections 12(2) and 14(2) of the EI Act. They deal with the manner in which hours of employment will be determined to fall in the qualifying period, or insured earnings will be determined to fall in the rate calculating period, respectively, when periods of employment overlap the start of these specified calendar periods. Basically, the total hours or total earnings will be prorated on the basis that the claimant worked the same number of hours/earned the same amount of insurable earnings for each of the seven days of each week.
(8) Amounts of Insurable Earnings
Sections 23 and 24 are new to this section of the regulations. It allocates all types of insurable earnings to the rate calculation period (RCP) for setting a claimant's weekly rate of benefit. It is written so that only the moneys earned in, or properly belonging to, the RCP are counted.
Previously, the allocation of the insurable earnings was done through the Unemployment Insurance Collection of Premiums Regulations because it was necessary to first allocate earnings to specific weeks before determining their insurability.
(9) Proportionality in Counting Weeks of Regular Benefits Paid
The authority for this new provision, section 25, is found in subsection 2(5) of the EI Act. A claimant's weekly benefit rate under the "intensity rule", or the rate at which benefits must be repaid via the income tax system is based on the number of weeks of regular benefit that were paid to the claimant in the five prior years (260 weeks). In order to credit claimants who work while on claim and thus reduce their reliance on the EI program, this provision stipulates that the history of benefits paid will only count the exact proportion of a week's benefit that is actually paid to the claimant.
(10) Self-Employment - Minor in Extent
Section 30 remains substantially the same as the prior provision but a change to subsection (3) clarifies that the extent of a claimant's involvement in self-employment should be judged on six factors rather than just on the time spent on the activity. It eliminates an apparent discrepancy between the English and French versions of the regulatory texts. The factors to be considered include the time spent, the extent of investment, the nature of the occupation and three other listed factors in a balanced, more objective assessment of the extent of the claimant's involvement in self-employment.
(11) Family Supplement
The Family Supplement replaces the existing 60% dependency rate for new claims effective on or after January 5, 1997. Section 34 provides the rules to enable the payment of the family supplement (FS) described at section 16 of the EI Act. The amount of the FS will be directly related to the Child Tax Benefit (and associated Working Income Supplement) and reduced progressively to nil for family incomes between $20,921 and $25,921. The FS will be a top up to the regular rate of 55% of the claimant's weekly insurable earnings but will not exceed 80% of those weekly insurable earnings (80% cap phased in over 4 years starting 1997). Any future increases to the CTB will not result in an automatic linking with the FS. A further limitation is the maximum weekly benefit rate of $413 under section 17 of the EI Act.
(12) Definition of Income - Trustees in Bankruptcy
Section 35 defines what monies must be deducted from unemployment benefits and it is substantially the same as the same provision under the Unemployment Insurance Regulations with minor rewording and reorganization of the provisions.
For, instance, a minor rewording to the definition of income clarifies that separation payments paid out by a trustee in bankruptcy have not lost their essential nature as earnings arising from employment just because they were paid out by a trustee. They will be treated the same as the same type of monies paid out by an employer directly. This ensures that the money remains deductible to prevent double-dipping for the weeks covered by the separation payments.
(13) Employment Measures
Non-Insurability of Job Creation Partnerships
Job Creation Partnerships is an Employment Benefit which provides individuals with opportunities through which they can gain work experience which leads to on-going employment. Because Employment Insurance Funds are used to fund Job Creation Partnerships, these activities should not serve to re-qualify individuals for Employment Insurance once the Job Creation Partnership activity has terminated. Section 7(f) of the Regulations has been drafted to exclude Job Creation Partnerships from being insurable. It also covers similar benefits carried out by provincial governments or other organizations which are the subject of agreements under Section 63 of the Act.
Work-Sharing
Since no policy changes have been made to Work-Sharing, the regulations which have been drafted are essentially the same as those established pursuant to the former Unemployment Insurance Act. (Sections 42 to 49). Work-sharing is an intervention designed to avert temporary layoffs by offering Unemployment Benefits to qualified claimants who are willing to work a temporarily reduced work week. Individuals who participate in Work-Sharing receive their wages for the time worked and Unemployment Benefits for the days they do not work.
Status of Claimants on Courses, Programs and Employment Benefits
Section 25 of the Act specifies that claimants attending a course or program of instruction or training at the claimant?s own expense or under Employment Benefits or participating in any other employment activity under prescribed Employment Benefits are unemployed, capable of and available for work. The purpose of Regulation 50 is to identify Job Creation Partnerships and Self-Employment as Employment Benefits to which the above status of claimants applies.
National Employment Service
The purpose of the National Employment Service is to provide information on employment opportunities across Canada to help workers find suitable employment and help employers find suitable workers. The regulations will allow for the continuation of the National Employment Service which has been designed to be consistent with the International Labour Organization convention to which Canada is a signatory. Since the Act provides regulation-making authority for the National Employment Service only with respect to information, these regulations reflect that focus. (sections 58, 59)
(14) Assignment of Benefits - Indian bands
Subsection 57(4) has been added in order to include councils of Indian bands as authorities with whom agreements may be reached to deduct from EI payments designated for a claimant, amounts necessary to reimburse the bands for social assistance payments advanced to that claimant for an interim period. The
regulation is made pursuant to subsection 42(3) of the EI Act.
(15) Other Minor Amendments
Minor changes are included in sections 80 and 81 to ensure that the Chairperson of the Board of Referees has authority to set procedures and timing of hearings.
(16) Electronic Systems:
Sections 91 and 92 are consequential to section 143 of the EI Act. Section 91 provides the general criteria to allow a claimant to make an initial claim for benefits or a weekly report by any electronic means such as by telephone, or by a computer in an office or service kiosk.
Section 92 provides general criteria for the depositing of a claimant's benefits directly into their bank account by electronic means. It does away with the previous pilot project nature of this service.
(17) Special Benefits for New Entrants and Re-entrants
As part of the general reform included in the EI Act, the entrance requirement for new entrants and re-entrants (NERE) to the labour force was raised from 20 weeks to 910 hours (the equivalent of 26 weeks of 35 hours) of insurable employment. A new entrant/re-entrant is defined as someone who has less than 490 hours (the equivalent to 14 weeks of 35 hours) of labour force attachment in the second year before they file their claim.
This would have meant that new entrants could not be paid special benefits, including maternity and parental, even though they met the basic maternity or parental qualification requirement of 700 hours. Consequently, authority was provided in section 153.1 of the Act to create section 93 of the EI Regulations, which allows payment of special benefits to NERE claimants who have 700 or more hours of insurable employment. Claimants cannot be paid regular benefits on the claim, unless they go back to work after the special benefits and work long enough to accumulate more hours of work which, when added to those used to set up the special benefits claim, total 910 hours or more.
(18) Transitional/Interim Provisions
Since the provisions of the EI Act in hours rather than weeks only come into force on January 5, 1997, some transitional/interim regulatory provisions are required for the period from June 30, 1996, to January 5, 1997. Interim provisions for the following will be provided: determining weeks of insurable employment; completion of the record of employment in weeks; the qualification of new entrants/re-entrants for special benefits with 20 weeks of insurable employment rather than 26 weeks; pilot projects, and the dependency rate, etc.
(19) Regional Boundaries
Schedule I is a new realignment of regional boundaries in Canada. Regional differentiation in the operation of the EI program was originally introduced in 1971 in recognition of the fact that not all areas of the country have equal employment opportunities. This principle is reflected in both variable entrance requirements and weeks of benefit entitlement which may vary depending on the regional unemployment rate. For this purpose, the country is divided into EI economic regions on the basis of homogeneity of labour market and reliability of employment statistics. The unemployment rate, as a measure of employment availability and stability, within each region, is then used to determine the benefit entitlement and qualifying conditions within that region. Under EI Reform, the minimum divisor (14 to 22) by which earnings will be averaged would also depend on the unemployment rate.
Since the current system of 62 EI economic regions was implemented in 1991, there have been significant changes in labour markets and economic conditions in various regions of the country. The result of these changes is that many of the current EI economic regions no longer reflect local economic realities or labour market conditions. A comprehensive review of the current EI regions was launched in 1993. On the basis of an in-depth analysis carried out by the Department of Human Resources Development, a new configuration of 54 EI economic regions is included in Schedule 1 of the Employment Insurance Regulations.
Alternatives
These regulations are necessary for the implementation of the EI Act. The regulations have been drafted to result in more equitable treatment for claimants and employers and more efficient administration of the programs.
Benefits and Cost
Since these provisions are consequential to Bill C-12, they do not have independent impact. By 2001/02, the implementation of the provisions of the EI Act and Regulations will result in a reduction of insurance benefit costs of about $2 billion per year. $800 million of these savings will be reinvested into EI employment benefits.
Consultations
Bill C-12, which gives rise to these consequential provisions, was the subject of consultation with various government departments, Members of Parliament, interest groups, and was debated in the House of Commons and the Senate.
The regional boundaries provisions were distributed to Members of Parliament and prepublished on April 13, 1996. One minor change to the Owen Sound, Ontario area has been made since pre-publication.
Compliance and Enforcement
Existing compliance mechanisms contained in the Revenue Canada and Employment Insurance Commission's control procedures
will ensure that these provisions are properly implemented.
Contact
Glen Ramsay
Senior Policy Advisor,
Policy and Legislation Development, Insurance
Human Resources Development Canada
140 Promenade du Portage
11th Floor
Ottawa, Ontario
K1A 0J9
(819) 953-9381 (telephone)
(819) 994-6044 (fax)
