Vol. 149, No. 13 — July 1, 2015

Registration

SOR/2015-151 June 17, 2015

EMPLOYMENT INSURANCE ACT

Regulations Amending the Employment Insurance Regulations

P.C. 2015-818 June 17, 2015

The Canada Employment Insurance Commission, pursuant to section 109 of the Employment Insurance Act (see footnote a), makes the annexed Regulations Amending the Employment Insurance Regulations.

May 22, 2015

His Excellency the Governor General in Council, on the recommendation of the Minister of Employment and Social Development, pursuant to section 109 of the Employment Insurance Act (see footnote b), approves the annexed Regulations Amending the Employment Insurance Regulations, made by the Canada Employment Insurance Commission.

REGULATIONS AMENDING THE EMPLOYMENT INSURANCE REGULATIONS

AMENDMENTS

1. The Employment Insurance Regulations (see footnote 1) are amended by adding the following after section 77.96:

PILOT PROJECT TO ENCOURAGE CLAIMANT TO WORK MORE WHILE RECEIVING BENEFITS (2)

77.97 (1) Pilot Project No. 19 is established for the purpose of testing whether deducting from benefits payable to any claimant who has earnings during a week of unemployment 50% of those earnings, until the earnings exceed 90% of their weekly insurable earnings, would encourage claimants to work more while receiving benefits.

(2) Pilot Project No. 19 applies in respect of every claimant who makes a claim for benefits for any week in the period beginning on August 2, 2015 and ending on August 6, 2016 and who is ordinarily resident in a region described in Schedule I.

(3) For the purpose of Pilot Project No. 19, section 19 of the Act is adapted by adding the following after subsection (2):

(2.1) The amount to be deducted under subsection (2), except for the purpose of section 13, is equal to the total of

• (a) 50% of the earnings that are less than or equal to 90% of the claimant’s weekly insurable earnings used to establish their rate of weekly benefits, and
• (b) 100% of any earnings that are greater than 90% of the claimant’s weekly insurable earnings used to establish their rate of weekly benefits.
  

(4) For the purpose of Pilot Project No. 19, section 152.18 of the Act is adapted by adding the following after subsection (2):

(2.1) The amount to be deducted under subsection (2), except for the purpose of section 152.15, is equal to the total of

• (a) 50% of the earnings that are less than or equal to 90% of the sum of the amounts referred to in paragraphs 152.16(1)(a) and (b) divided by 52, and
• (b) 100% of any earnings that are greater than 90% of the sum of the amounts referred to in paragraphs 152.16(1)(a) and (b) divided by 52.
  

(5) This section ceases to have effect on August 6, 2016.

77.98 (1) The purpose of Pilot Project No. 19 is also to test which method, the one described in subsection 77.94(3) or the one described in subsection 77.97(3), is more effective in encouraging claimants to work more while receiving benefits.

(2) A claimant may elect to have subsection 77.94(3), instead of subsection 77.97(3), apply to earnings received during all weeks of unemployment included in a benefit period, or the portion of a benefit period, that falls within the period beginning on August 2, 2015 and ending on August 6, 2016 if the claimant

• (a) had earnings that were subject to subsection 77.94(3) during the period beginning on August 7, 2011 and ending on August 4, 2012; and
• (b) made every election that they were entitled to make under section 77.96, other than an election in respect of a benefit period that began before August 2, 2015 if the last notification of payment or non-payment of benefits in respect of one or more weeks of unemployment included in that benefit period is issued to the claimant on or after August 2, 2015.
  

(3) Any election made under section 77.96 in respect of a benefit period is deemed to apply to earnings received during all weeks of unemployment included in the portion of that benefit period that falls within the period beginning on August 2, 2015 and ending on August 6, 2016 if the last notification of payment or non-payment of benefits in respect of one or more weeks of unemployment included in that benefit period is issued to the claimant on or after August 2, 2015.

(4) Any election made under subsection (2) in respect of a benefit period that began before August 2, 2015 also applies to earnings received during all weeks of unemployment included in the portion of that benefit period that falls before August 2, 2015.

(5) A claimant must inform the Commission of their election, if any, in respect of earnings received during all weeks of unemployment included in a given benefit period not later than 30 days after the day on which the last notification of payment or non-payment of benefits in respect of one or more weeks of unemployment included in that benefit period is issued to the claimant or August 6, 2016, whichever is earlier. The election is irrevocable.

(6) If a claimant informs the Commission of their election after the day on which the deadline expires, the election is considered to have been made by that deadline if the claimant shows that there was good cause for the delay throughout the period beginning on the day on which the deadline expired and ending on the day on which the claimant informs the Commission of their election.

(7) Subject to subsection (8), if no election is made by the applicable deadline, subsection 77.97(3) applies in respect of earnings received during all weeks of unemployment included in the benefit period in question and earnings received during all weeks of unemployment included in any subsequent benefit period. If a benefit period ends after August 6, 2016, subsection 77.97(3) applies only in respect of earnings received during all weeks of unemployment included in the portion of that benefit period that falls within the period beginning on August 2, 2015 and ending on August 6, 2016.

(8) If a claimant has no earnings during the weeks of unemployment included in the benefit period in question, the failure to make an election by the applicable deadline does not result in the application of subsection 77.97(3) in respect of earnings received during all weeks of unemployment included in any subsequent benefit period.

(9) A decision of the Commission in respect of any matter related to an election, including the failure to make an election, is not subject to reconsideration under section 112 of the Act.

2. Schedule I to the Regulations is amended by replacing the references after the heading “SCHEDULE I” with the following:

(Paragraphs 17(1)(a) and (b), subsections 17.1(1) and 18(1), paragraph 77.2(2)(b), subsections 77.5(2), 77.7(2), 77.8(2) and 77.9(2), paragraph 77.92(2)(a) and subsections 77.93(2), 77.94(2), 77.95(2) and 77.97(2))

COMING INTO FORCE

3. These Regulations come into force on August 2, 2015.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Background

Working while on claim allows EI claimants to increase their total income — EI benefits plus earnings from employment — and encourages them to maintain their attachment to the labour force. Under the Employment Insurance Act (EI Act), claimants (excluding claimants receiving sickness or maternity benefits) can work while on claim and keep all of their weekly EI benefits if their earnings are less than the threshold of $50 or 25% of their weekly EI benefits, whichever is greater. Earnings beyond this threshold reduce weekly EI benefits dollar-for-dollar (i.e. a 100% clawback). This provision exempts about half a day of earnings per week from the clawback provision.

A series of WWC pilots — regional (Pilot Project No. 8) and national (Pilot Project Nos. 12 and 17) — were in effect from December 11, 2005, to August 4, 2012. Building on the legislated approach, these pilots tested whether claimants would increase their work effort if they were allowed to keep a larger share of their weekly EI benefits while working on claim. Specifically, the threshold under which claimants kept all of their weekly EI benefits was increased to $75 or 40% of the weekly EI benefits, whichever was greater. Earnings beyond this threshold reduced weekly EI benefits dollar-for-dollar. This provision exempted about one day of earnings per week from the clawback provision.

A new, national three-year WWC pilot (Pilot Project No. 18) was introduced on August 5, 2012, to encourage claimants to work more while on claim. This WWC pilot reduces claimants’ weekly EI benefits by 50 cents for each dollar earned while on claim, starting with the first dollar earned. Earnings beyond the threshold of 90% of the weekly insurable earnings used to calculate the EI rate of benefits reduce weekly EI benefits dollar-for-dollar. This 90% cap ensures that claimants cannot earn more while on claim than when they were working. The WWC pilot applies to claimants receiving regular, fishing, compassionate care, parental or parents of critically ill children benefits, as well as self-employed persons receiving compassionate care, parental benefits or parents of critically ill children benefits.

After the introduction of Pilot Project No. 18, some claimants expressed concern that they were receiving lower weekly EI benefits for the same work effort as compared to the previous WWC pilot. To help these claimants transition to the parameters of the new WWC pilot, Pilot Project No. 18 was amended on January 6, 2013. This amendment applied retrospectively to the beginning of Pilot Project No. 18 on August 5, 2012. The amendment gave individuals who were on an EI claim and had earnings between August 7, 2011, and August 4, 2012, the option of reverting to the rules that existed under Pilot Project No. 17 (an earnings allowance of $75 or 40% of the weekly EI benefits, whichever is greater).

The amended WWC pilot is testing which approach, a 50-cent reduction in weekly EI benefits for each dollar earned while on claim, up to a cap of 90% of the weekly insurable earnings, or an earnings allowance of $75 or 40% of the weekly EI benefits, is more effective in encouraging claimants to work more while receiving benefits.

Issues

Pilot Project No. 18 is scheduled to end on August 1, 2015. Preliminary results indicate that since the WWC pilot was implemented, the average number of hours or days worked per week has increased for those working while on claim. Specifically, the tendency for claimants to work only one day per week has been reduced and a greater percentage of claimants are working two to four days per week while on claim. In 2009, under the previous pilot, 30% of weeks worked while on claim were for one day (or less) of earnings and 43% of weeks worked were for two to four days of earnings. In 2013, under the current pilot, only 19% of weeks worked while on claim were for one day (or less) of earnings, and 50% of weeks worked were for two to four days of earnings. This analysis is based on weeks in which claimants received EI benefits and worked while on claim.

However, further testing is required to more conclusively assess if the parameters of Pilot Project No. 18 are effectively encouraging claimants to work more while on claim.

Objectives

The objective of the regulatory amendments is to determine whether the parameters of Pilot Project No. 18 (50-cent reduction in weekly EI benefits for each dollar earned while on claim, up to a cap of 90% of the weekly insurable earnings) encourage claimants to work more while receiving benefits. The regulatory amendments will also test which approach is more effective in encouraging eligible claimants to work more while receiving benefits, the 50-cent reduction in weekly EI benefits for each dollar earned while on claim (Pilot Project No. 18) or an earnings allowance of $75 or 40% of the weekly EI benefits (Pilot Project No. 17).

Description

Amendments to the EI Regulations introduce a new, national WWC pilot for one year, from August 2, 2015, to August 6, 2016. Pilot Project No. 19, Pilot Project to Encourage Claimant to Work More While Receiving Benefits (2), will have the same parameters as Pilot Project No. 18. A claimant’s weekly EI benefits will be reduced by 50 cents for each dollar earned while on claim, starting with the first dollar earned. Any earnings that are greater than 90% of the weekly insurable earnings used to calculate the EI rate of benefits will reduce a claimant’s benefits dollar-for-dollar.

Claimants will also have the option of reverting to the rules that existed under Pilot Project No. 17 if (1) they were on an EI claim and had earnings between August 7, 2011, and August 4, 2012, and were eligible to benefit from the provisions of Pilot Project No. 17; and (2) for all eligible EI claim they were on between August 5, 2012, and August 1, 2015, they reverted to the rules that existed under Pilot Project No. 17.

Eligible claimants will be able to revert to the rules that existed under Pilot Project No. 17 up to 30 days after their last notification of payment or non-payment of benefits is issued or until August 6, 2016, whichever is earlier. Claimants may be able to revert to the rules that existed under the previous pilot after the applicable deadline, if they show that there was good cause for the delay in requesting the reversion.

A claimant’s decision to revert to the parameters of Pilot Project No. 17 will apply to earnings received during all weeks of unemployment within the period beginning on August 2, 2015, and ending on August 6, 2016. However, any decision to revert to the parameters of Pilot Project No. 17 in respect of a benefit period will also apply to any portions of that benefit period that fall before August 2, 2015, and any decision to revert in respect of a benefit period that was made before August 2, 2015, will also apply to any portions of the benefit period that fall within Pilot Project No. 19. The decision will be irrevocable, regardless of any change in a claimant’s circumstances. Decisions of the Canada Employment Insurance Commission (CEIC) in respect of any matter related to a reversion, including the failure to revert to the rules of the previous pilot, are not subject to a request for reconsideration, and therefore cannot be appealed to the Social Security Tribunal. Once a claimant does not revert an eligible claim to the rules of Pilot Project No. 17, any future claims will be subject to the 50-cent reduction for each dollar earned while on claim.

The new WWC pilot will apply to claimants receiving regular, fishing, compassionate care, parental or parents of critically ill children benefits, as well as self-employed persons receiving compassionate care, parental benefits or parents of critically ill children benefits.

Regulatory and non-regulatory options considered

A non-regulatory alternative considered was to introduce the parameters of Pilot Project No. 18 into legislation. However, it was decided that making the rules of Pilot Project No. 18 permanent may be premature as further testing is required to assess if the parameters of the pilot are effectively encouraging claimants to work more while on claim.

Benefits and costs

Based on current work patterns, it is estimated that 390 000 claimants per year will benefit from the new, national WWC pilot versus the legislated approach. This represents the number of EI claimants who will receive more EI benefits due to the regulatory amendments rather than 390 000 additional EI claimants per year. On average, these claimants will have their benefits increase by $423 per claim. It is also estimated that 264 000 claimants per year will be negatively affected relative to the legislated WWC rules, with an average decrease of $445 per claim. Additionally, providing eligible claimants with the option of reverting to the rules that existed under Pilot Project No. 17 is estimated to positively impact 5 500 claimants per year, with an average increase of approximately $1,000 per claim. The estimated positive and negative impacts include all types of EI Part I benefits and reflect any change in EI benefits, including increases or decreases of as little as $1. As a result of the regulatory amendments, EI claimants will cumulatively receive $53 million more EI benefits. These estimates do not account for potential behavioural adjustments in response to the regulatory amendments.

The cost, including program and administrative funding, is estimated to be $55.2 million over two fiscal years from 2015–2016 to 2016–2017. Program funding of $53 million will be sourced from the fiscal framework and charged to the EI Operating Account, which is funded by the EI premiums paid by employers and employees. Administrative costs of $2.2 million will fund the processing of reversions and baseline administration of the new pilot.

Women and men have the same likelihood of benefiting from the 50-cent reduction in weekly EI benefits for each dollar earned while on claim. It is estimated that the pilot will increase EI benefits for 178 000 women per year (23% of female claimants) and 212 000 men per year (23% of male claimants). In contrast, it is estimated that the pilot will decrease EI benefits for 115 000 women per year (15% of female claimants) and 149 000 men per year (16% of male claimants). More details on the cost-benefit analysis conducted and the underlying data are available on request.

Cost-benefit statement (see note 1)

		First Year 2015–2016	Second Year 2016–2017	Total
A. Quantified impacts (in millions of Canadian dollars, 2015 constant dollars)
Benefits	EI claimants: more EI benefits due to regulatory amendments	$110.0	$55.0	$165.0
	EI claimants who revert to the rules that existed under Pilot Project No. 17: more EI benefits due to regulatory amendments	$3.7	$1.8	$5.5
Costs	EI claimants: fewer EI benefits due to regulatory amendments	$78.3	$39.2	$117.5
	EI Operating Account	$35.4	$17.6	$53.0
	Government of Canada (ESDC): baseline administration funding	$1.0	$0.4	$1.4
	Government of Canada (ESDC): administration funding for reversions to the rules that existed under Pilot Project No. 17	$0.5	$0.3	$0.8
Net value (see note 2)		($1.5)	($0.7)	($2.2)
B. Quantified impacts in non-dollars
Positive Impacts	EI claimants: more EI benefits due to regulatory amendments			390 000
	EI claimants who revert to the rules that existed under Pilot Project No. 17: more benefits due to regulatory amendments			5 500
Negative Impacts (see note 3)	EI claimants: fewer EI benefits due to regulatory amendments			264 000
C. Qualitative impacts
EI Claimants	The regulatory amendments may encourage EI claimants to work more while on claim and maintain their attachment to the labour force.
Employers	The regulatory amendment may make it easier for employers to find workers to fill temporary labour shortages.
Government of Canada (ESDC)	Continuance of Government’s commitment to connect Canadians with available jobs and remove disincentives to work.

• Note 1
  The table presents the benefits and costs over the two fiscal years the regulatory amendments will be in effect, from August 2, 2015 (2015–2016), to August 6, 2016 (2016–2017). Benefits and costs are based on the current work patterns of EI claimants and do not take behavioural adjustments in response to the regulatory amendments into account.
• Note 2
  The $53 million cumulative increase in EI benefits due to the regulatory amendments will be sourced from the fiscal framework and charged to the EI Operating Account. Therefore, the net value of the regulatory amendments represents the administrative funding that will be absorbed by ESDC.
• Note 3
  The cost-benefit analysis is based on EI administrative data from 2010, a year in which Pilot Project No. 12 was in force. The work patterns of EI claimants may have changed since 2010. Further, the analysis does not account for potential behavioural adjustments in response to these regulatory amendments.

“One-for-One” Rule

The amendments do not impose any new administrative or compliance burden on businesses. Therefore, the “One-for-One” Rule does not apply.

Small business lens

The small business lens does not apply to this proposal, as there are no costs to small business.

Consultation

The CEIC makes regulations for EI pilot projects, under the authority of section 109 of the EI Act, with the approval of the Governor in Council. The Commissioner for Workers and the Commissioner for Employers represent their respective stakeholders and convey the positions of workers and employers regarding EI policies and program delivery. To do this, the Commissioners establish and maintain discussions with organizations and individuals interested in and affected by ESDC programs and services, such as the EI program.

The CEIC also has the legislated mandate to monitor and assess the EI program. The CEIC’s annual EI Monitoring and Assessment Report is delivered to the Minister of Employment and Social Development by fiscal year end, for tabling in Parliament. The 2013–14 EI Monitoring and Assessment Report includes analysis on the impact of the current WWC pilot on EI claimants and the labour market. The report found that since the introduction of Pilot Project No. 18, there has been a shift in the distribution of weeks worked while on claim towards higher earnings compared to the previous pilot, implying that the average number of hours or days worked while on claim per week has increased. The data also suggest that, with the increase in work intensity, there could be a slight decline in the overall number of individuals working while on claim as well as the number of weeks worked while on claim. To examine work intensity on an aggregate level, employment income earned while on claim can be compared with the regular benefits paid. This comparison suggests that the overall intensity of working while on claim has increased in recent years, as earnings expressed as a percentage of total regular benefits paid to all claimants has increased since 2011 (46.2% to 52.7%).

Pilot Project No. 19 renews the parameters of the previous WWC pilot. These parameters reflect views expressed publicly by stakeholders including provinces and territories, Members of Parliament, the CEIC and labour groups. Specifically, some negative reaction followed the implementation of the previous WWC pilot, prompting the Government of Canada to respond and provide eligible claimants with the option of reverting to the rules that existed under Pilot Project No. 17.

Many businesses across Canada will likely support the regulatory amendments as they maintain improved work incentives at a time when some employers are struggling to find available workers. While stakeholders and claimants have been generally supportive of the option to revert to the rules of Pilot Project No. 17, maintaining the existing eligibility criteria could be met with some criticism from claimants because only a targeted group of individuals would be eligible. However, relatively few claimants have elected to be treated by the rules of Pilot Project No. 17 (as of March 31, 2014, only 11 740 of the 324 890 individuals who had the opportunity to revert to the rules of the previous pilot), which may indicate that most claimants are successfully transitioning to the 50-cent reduction in weekly EI benefits for each dollar earned while on claim.

Rationale

Working while on claim allows EI claimants to maintain their attachment to the labour force and increase their total income — EI benefits plus earnings from employment. A national three-year WWC pilot (Pilot Project No. 18) was introduced on August 5, 2012, to encourage claimants to work more while on claim.

Pilot Project No. 18 is scheduled to end on August 1, 2015. Preliminary results indicate that since the WWC pilot was implemented, the average number of hours or days worked per week has increased for those working while on claim. However, further testing is required to more conclusively assess if the parameters of Pilot Project No. 18 are effectively encouraging claimants to work more while on claim.

Introducing a new, national WWC pilot that renews the parameters of Pilot Project No. 18 will allow further testing to determine if a 50-cent reduction in weekly EI benefits for each dollar earned while on claim, up to a cap of 90% of the weekly insurable earnings, encourages claimants to work more while receiving benefits. The new pilot will also test which approach is more effective in encouraging eligible claimants to work more while receiving benefits, the 50-cent reduction in weekly EI benefits for each dollar earned while on claim or an earnings allowance of $75 or 40% of the weekly EI benefits.

By renewing the existing WWC parameters, these regulatory amendments will ensure stability for EI claimants and employers who have been transitioning to these parameters since August 2012.

Implementation, enforcement and service standards

The amendments to the EI Regulations will come into force on August 2, 2015, and will be in effect until August 6, 2016.

Claimants who work while on claim are required to declare their total earnings before deductions on their biweekly EI reports. If a claimant knowingly withholds information or misrepresents the facts regarding their earnings while on claim, they may be penalized or prosecuted.

Since the new, national WWC pilot renews the parameters of the previous WWC pilot, Service Canada officers have already completed training, and communications products will be updated to provide claimants with information regarding the parameters of Pilot Project No. 19, including the option of reverting to the rules that existed under Pilot Project No. 17. Claimants will continue to be encouraged to make a decision regarding reversion late in their benefit period so that they can examine their complete work pattern. Since more information regarding claimants’ work while on claim will be available, claimants will be able to make more informed decisions regarding whether reversion will be beneficial in their situation.

Existing implementation and enforcement mechanisms contained in ESDC’s adjudication and controls procedures will ensure that these regulatory amendments are implemented effectively and efficiently. The total administrative costs of $2.2 million to implement and enforce the amendments to the EI Regulations will be absorbed by ESDC.

Contact

Brian Hickey
Director
Employment Insurance Policy Directorate
Skills and Employment Branch
Employment and Social Development Canada
140 Promenade du Portage, 5th Floor
Gatineau, Quebec
K1A 0J9
Telephone: 819-654-3067
Fax: 819-934-6631

• Footnote a
  S.C. 1996, c. 23
• Footnote b
  S.C. 1996, c. 23
• Footnote 1
  SOR/96-332