Vol. 138, No. 39 — September 25, 2004

Regulations Amending the Employment Insurance Regulations

Statutory authority

Employment Insurance Act

Sponsoring department

Department of Human Resources and Skills Development

REGULATORY IMPACT
ANALYSIS STATEMENT

Description

The purpose of the proposed amendment to the Employment Insurance Regulations is to ensure that earnings verification programs conducted by Human Resources and Skills Development Canada (HRSDC), formerly Human Resources Development Canada, in cooperation with employers, satisfy the requirements of federal and provincial legislation pertaining to the disclosure of personal information.

As of January 1, 2004, subsection 7(3) of the federal Personal Information Protection and Electronic Documents Act (PIPEDA), applies to employers who fall under federal jurisdiction (i.e. airlines, banks, interprovincial transportation, radio and television broadcasting or telecommunications industries). Under the Act, these employers may not disclose personal information about an employee to HRSDC without the employee's consent unless HRSDC can demonstrate that it has the lawful authority to obtain this information. In addition, Quebec, British Columbia and Alberta have enacted privacy protection legislation requiring HRSDC to have lawful authority before it can obtain employee information from private sector employers in those provinces without employee consent. Similar legislation is being developed in other provinces.

With the implementation of the above-mentioned privacy legislation, regulatory clarification is required to ensure the ongoing functions of two verification programs administered by the Employment Insurance (EI) program: the Automated Earnings Reporting System (AERS) and the Report on Hirings (ROH) Program. These voluntary programs involve the comparison of EI claim files with current employee information provided to HRSDC by employers. HRSDC's lawful authority to obtain this information needs to be made explicit as a result of PIPEDA implementation. The AERS and ROH programs are currently under suspension (since January 1, 2004) and will be reinstated once the Regulations comes into effect.

Both the AERS and the ROH programs were developed in the late 1970s following recommendations made by stakeholders representing employers and employees. The level of participation has been considerable among employers because these programs are cost-effective and they help to alleviate the significant paper burden of requests for payroll information employers would otherwise receive.

Employees working for participants of AERS and the ROH benefit because the overpayment of EI benefits is minimized keeping financial hardship for the claimant to a minimum if repayments are required. This also means that subsequent administrative penalties or prosecutions are less likely because HRSDC is aware of the problem at the outset. As well, deterrence is achieved by encouraging participating employers to advise their employees that they participate in the AERS or ROH program. HRSDC provides employers with posters and inserts for use in informing employees that they share payroll and hiring information with HRSDC.

The proposed Regulations safeguards the privacy of Canadian workers and at the same time, it reduces the potential for making EI payments to claimants who are not lawfully entitled to receive them. The only information available to HRSDC that is collected from the verification programs, is information matching employees subject to an overpayment.

AERS and ROH are early intervention measures and serve as major deterrents to fraud and abuse of the EI program. HRSDC considers the use of regular and ongoing verification programs as crucial control mechanisms that assist HRSDC in meeting its obligations with respect to sound management practices and its fiduciary responsibility under the Employment Insurance Act.

To support the continuation of these voluntary verification programs, it is proposed that section 55.1 of the Employment Insurance Regulations be added to make explicit that HRSDC has the lawful authority to obtain employee information on a continuing basis. The information to be collected will include information in respect of the date of commencement of employment, duration of employment, amounts earned and reasons for separation from employment. It will apply to employers who (a) hired or recalled ten or more employees in a twelve-month period or expect to do so in the upcoming twelve months or (b) were required to issue ten or more records of employment in a twelve-month period or expect to do so in the upcoming twelve months.

Alternatives

The alternative approach to the new federal and provincial privacy requirements is to require employers to obtain the consent of every employee before they pass on information to HRSDC for the use in verification programs. This alternative is not considered practicable because it would result in significantly increased administration and maintenance costs for the employer and some employers would withdraw from the AERS and ROH programs. Unless all employees consented to the program, it would be difficult for employers to participate as they would have to separate and maintain employee consents. Employers could be expected to withdraw their participation from the verification programs and as a consequence, these programs would become less effective. As well, the effectiveness of the verification programs would be further weakened by employees who are not likely to voluntarily give their consent if there is a likelihood that unreported earnings information would be uncovered.

Benefits and costs

Together the AERS and ROH programs include close to 44 000 employer participants that regularly submit payroll or hiring data to HRSDC. Identified savings from these two programs in 2002-2003 were approximately $42.5 million.

Consultation

This proposed regulatory amendment was prepared by Human Resources and Skills Development Canada's Employment Program Policy and Design in consultation with Insurance Program Services, Investigation and Control, Legal Services and Privacy and Access to Information. External consultations have taken place with Industry Canada which is responsible for PIPEDA and the Department of Justice which agreed to the intent of the Regulations and drafted the wording. The Office of the Privacy Commissioner was also consulted during the developmental stages. The Employment Insurance Commission (including the Commissioners for Workers and the Employers) approved the Regulations in principle on November 14, 2003.

Compliance and enforcement

Existing compliance mechanisms contained in HRSDC's adjudication and control procedures will ensure that these changes are properly implemented.

Contact

Ms. Judith Richardson, Senior Policy Officer, Employment Insurance Policy, Employment Program Policy and Design, Human Resources and Skills Development Canada, 140 Promenade du Portage, 9th Floor, Gatineau, Quebec K1A 0J9, (819) 994-4455 (telephone), (819) 953-9381 (facsimile).

PROPOSED REGULATORY TEXT

Notice is hereby given that the Canada Employment Insurance Commission, pursuant to paragraph 54(q) of the Employment Insurance Act (see footnote a), proposes to make the annexed Regulations Amending the Employment Insurance Regulations.

Interested persons may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Judith Richardson, Policy and Legislation Development, Insurance Branch, Department of Human Resources and Skills Development, 9th Floor, 140 Promenade du Portage, Gatineau, Quebec K1A 0J9.

Ottawa, September 22, 2004

EILEEN BOYD
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE
EMPLOYMENT INSURANCE REGULATIONS

AMENDMENT

1. The Employment Insurance Regulations (see footnote 1) are amended by adding the following after section 55:

Provision of Information

55.1 (1) In order to enable the Commission to substantiate proof provided to it by claimants in respect of their fulfilment of conditions for receiving or continuing to receive benefits, employers shall provide, in writing on a monthly basis to the Commission, information in respect of their employees concerning the date of commencement of employment, periods of employment, amounts earned during employment and the reasons for separation from employment.

(2) Subsection (1) only applies to employers

(a) who hired 10 or more employees within the past 12 months or who advise the Commission in writing that they expect to do so within the next 12 months; or

(b) who were required under subsection 19(2) to complete 10 or more records of employment within the past 12 months or who advise the Commission in writing that they expect that they will be required to do so within the next 12 months.

COMING INTO FORCE

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

[39-1-o]

Footnote a

C.R.C., ch. 870

Footnote 1

SOR/96-332

NOTICE:
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