Vol. 139, No. 13 — March 26, 2005

Regulations Amending the Employment Insurance Regulations

Statutory authority

Employment Insurance Act

Sponsoring department and Sponsoring agency

Department of Human Resources and Skills Development and the Canada Employment Insurance Commission

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

A Tax Court of Canada Ruling (Mulvenna) has necessitated the Government clarify the policy intent underlying the current regulations addressing the calculation of hours of insurable employment.

The Tax Court ruled in June 2003, that under the current Employment Insurance Regulations (EI), the remuneration received from an employer as a "top-up" to EI maternity and parental benefits constitutes "paid leave" and the period spent on leave must be considered as insurable hours for EI purposes even though these payments were specifically excluded from the definition of insurable earnings. This means that claimants in circumstances similar to those presented in the Mulvenna case, can accumulate additional hours of insurable employment while on maternity and parental leave, which can be then used to qualify for a new claim and/or increase their EI benefit entitlement. The Tax Court decision could also have implications in respect of any other paid leave payment which are excluded from the definition of insurable earnings.

A new section ("10.11") will be added to ensure that people receiving "uninsured" payments such as top-up benefits from their employer while on claim for EI maternity and parental benefits cannot use this leave period to accumulate additional hours of insurable employment. It is a "housekeeping" amendment that will maintain the long standing policy intent that insurable employment be linked to hours worked and that benefits from Supplemental Unemployment Benefit Plans are excluded from insured earnings. If this amendment is not put in place, people who receive top-up benefits while on maternity and parental leave could count this leave period as hours worked even though they do not pay EI premiums on those amounts.

Alternatives

The technical amendment is necessary in order to ensure the Regulations reflect the Government's intent and clarify the concept of hours of insurable employment. The Government did consider the possibility of clarifying the court decision through further legal appeal but felt the most effective recourse was to amend the Regulations. Consequently, no alternatives have been proposed.

Benefits and costs

Since this change only clarifies the existing rules, there is no financial impact, either in the case of administrative costs or program costs. If this amendment is not made, there is a risk that costs could increase due to additional claims and longer entitlement periods without additional work investments.

Consultation

This proposed regulatory amendment was prepared by Employment Programs Policy and Design Branch in consultation with the Insurance Branch, Legal Services and externally, the Canada Revenue Agency.

Compliance and enforcement

Existing compliance mechanisms contained in Human Resources and Skills Development Canada adjudication and control procedures will ensure that this change is properly implemented.

Contact

Judith Richardson, Senior Policy Officer, Employment Insurance Policy, Employment Programs and Policy Design Branch, Human Resources and Skills Development Canada, 140 Promenade du Portage, 9th Floor, Gatineau, Québec K1A 0J9, (819) 994-4455 (telephone), (819) 953-8479 (facsimile).

PROPOSED REGULATORY TEXT

Notice is hereby given that the Canada Employment Insurance Commission, pursuant to subsection 55(1) 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, Senior Policy Analyst, Legislative and Quantitative Policy Analysis, Employment Program Policy and Design Branch, Human Resources and Skills Development Canada, 3rd Floor, 140 Promenade du Portage, Gatineau, Quebec K1A 0J9.

Ottawa, March 21, 2005

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 10.1:

10.11 For the purpose of section 10.1, the amounts that are excluded from an insured person's earnings from insurable employment by subsection 2(3) of the Insurable Earnings and Collection of Premiums Regulations shall not be taken into account in determining the person's hours of insurable employment.

COMING INTO FORCE

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

[13-1-o]

Footnote a

S.C. 1996, c. 23

Footnote 1

SOR/96-332

NOTICE:
The format of the electronic version of this issue of the Canada Gazette was modified in order to be compatible with hypertext language (HTML). Its content is very similar except for the footnotes, the symbols and the tables.

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