Vol. 145, No. 14 — July 6, 2011

Registration

SOR/2011-127 June 16, 2011

EMPLOYMENT INSURANCE ACT

ARCHIVED — Regulations Amending the Employment Insurance Regulations

P.C. 2011-623 June 16, 2011

RESOLUTION

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

June 7, 2011

IAN SHUGART
Chairperson
Canada Employment Insurance Commission

PATRICIA BLACKSTAFFE
Commissioner (Workers)
Canada Employment Insurance Commission

JUDITH ANDREW
Commissioner (Employers)
Canada Employment Insurance Commission

His Excellency the Governor General in Council, on the recommendation of the Minister of Human Resources and Skills Development, pursuant to section 109 of the Employment Insurance Act (see footnote b), hereby 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The heading before section 77.3 and sections 77.3 and 77.4 of the Employment Insurance Regulations (see footnote 1) are repealed.

2. The Regulations are amended by adding the following after section 77.92:

PILOT PROJECT FOR CALCULATING BENEFIT RATE BASED ON CLAIMANT’S 14 HIGHEST WEEKS OF INSURABLE EARNINGS

77.93 (1) Pilot Project No. 16 is established for the purpose of testing whether paying benefits based on a rate of weekly benefits calculated using the insurable earnings from a claimant’s 14 highest weeks of insurable earnings in the qualifying period would encourage claimants to accept all available work.

(2) Pilot Project No. 16 applies in respect of every claimant whose benefit period is established in the period beginning on June 26, 2011 and ending on June 23, 2012 and who is ordinarily resident in a region described in Schedule I that is set out in Schedule II.91, other than a claimant in respect of whom Part VII.1 of the Act applies or in respect of whom the Employment Insurance (Fishing) Regulations apply.

(3) For the purposes of Pilot Project No. 16,

1. (a) subsections 14(2), (4) and (4.1) of the Act do not apply;
   
2. (b) the reference in subsection 14(3) of the Act to “the rate calculation period” shall be read as a reference to “the qualifying period”;
   
3. (c) the references in section 24.1 to “the rate calculation period” shall be read as references to “the qualifying period”;
   
4. (d) section 24.2 does not apply;
   
5. (e) the insurable earnings in a claimant’s qualifying period shall be the aggregate of
   
   1. (i) the insurable earnings from the 14 highest weeks of insurable earnings in that period, not including any insurable earnings paid or payable to the claimant in the qualifying period under section 24.1, and
      
   2. (ii) any insurable earnings paid or payable to the claimant in the qualifying period under section 24.1; and
      
6. (f) a claimant’s weekly insurable earnings shall be determined by dividing the insurable earnings in the claimant’s qualifying period, determined in accordance with paragraph (e), by 14.
   

(4) If a claimant’s insurable earnings have been reported on the record of employment by pay period, the Commission shall

1. (a) allocate the amount of insurable earnings proportionately over the pay period; or
   
2. (b) if the claimant or the employer provides evidence of the amount of insurable earnings actually earned by the claimant in any week within the pay period, allocate the amount of insurable earnings proportionately over the other weeks in that pay period.
   

3. The Regulations are amended by adding the following after section 77.93:

PILOT PROJECT INCREASING ALLOWABLE EARNINGS FROM EMPLOYMENT WHILE CLAIMANT IS RECEIVING BENEFITS

77.94 (1) Pilot Project No. 17 is established for the purpose of testing whether increasing the amount of a claimant’s allowable earnings from employment while the claimant is receiving benefits would encourage more claimants to accept employment while receiving benefits.

(2) Pilot Project No. 17 applies in respect of every claimant whose benefit period is established or ends in the period beginning on August 7, 2011 and ending on August 4, 2012 and who is ordinarily resident in a region described in Schedule I.

(3) For the purpose of Pilot Project No. 17, subsection 19(2) of the Act is adapted such that the maximum allowable earnings shall be

1. (a) $75, if the claimant’s rate of weekly benefits is less than $188; and
   
2. (b) 40% of the claimant’s rate of weekly benefits, if that rate is $188 or more.
   

(4) This section ceases to have effect on August 4, 2012.

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

(Subsections 18(1), 77.2(2), 77.5(2), 77.7(2), 77.8(2), 77.9(2) and 77.92(2))

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

(Subsections 18(1), 77.2(2), 77.5(2), 77.7(2), 77.8(2), 77.9(2), 77.92(2) and 77.93(2))

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

(Subsections 18(1), 77.2(2), 77.5(2), 77.7(2), 77.8(2), 77.9(2), 77.92(2), 77.93(2) and 77.94(2))

7. Schedules II.3 and II.4 to the Regulations are repealed.

8. The Regulations are amended by adding, after Schedule II.9, the Schedule II.91 set out in the schedule to these Regulations.

COMING INTO FORCE

9. (1) Sections 1, 4 and 7 come into force on the day on which these Regulations are registered.

(2) Sections 2, 5 and 8 come into force on June 26, 2011.

(3) Sections 3 and 6 come into force on August 7, 2011.

SCHEDULE
(Section 8)

SCHEDULE II.91
(Subsection 77.93(2))

REGIONS INCLUDED IN PILOT PROJECT NO. 16

Central Quebec

Chicoutimi – Jonquière

Eastern Nova Scotia

Gaspésie – Îles-de-la-Madeleine

Huron

Lower Saint Lawrence and North Shore

Madawaska – Charlotte

Newfoundland/Labrador

Niagara

North Western Quebec

Northern Alberta

Northern British Columbia

Northern Manitoba

Northern Ontario

Northern Saskatchewan

Northwest Territories

Nunavut

Oshawa

Prince Edward Island

Restigouche – Albert

St. John’s

Trois-Rivières

Western Nova Scotia

Windsor

Yukon

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue

Under sections 109 and 110 of the Employment Insurance Act (EI Act), the Canada Employment Insurance Commission (CEIC) has the authority to make regulations to introduce pilot projects, for a period of up to three years, to test possible amendments to the EI Act or the EI Regulations in order to make them more consistent with current industry employment practices, trends or patterns or to improve service to the public.

Two EI pilot projects, Best 14 Weeks and Working While on Claim, initially introduced in 2005, re-introduced as new pilot projects with modifications in 2008 for a period of two years, and then extended for eight months in 2010 are scheduled to conclude on June 25, 2011, and August 6, 2011, respectively. These pilot projects are intended to test approaches to providing income support and strengthening incentives to accept all available work.

While the pilot projects introduced in 2008 yielded new data, the sudden and drastic economic downturn shortly after and the subsequent Economic Action Plan (EAP) measures introduced to support workers during the economic downturn complicated the CEIC’s ability to assess the effect of pilot projects on the labour market and work incentives. That is, the various economic stimulus measures in place throughout the testing period (2009 and 2010) may have affected claimants’ behaviour, and consequently, the extent to which data collected during this period reflect the impacts of the pilot projects. Moreover, two other pilot projects (i.e. Pilot Project No. 13 Providing Increased Access to Employment and Unemployment Benefits for New Entrants and Re-entrants and Pilot Project No. 14 Relating to Extended Employment Insurance Training Incentive) were in place during this period, which may further complicate the assessment of the effect of the Best 14 Weeks and Working While on Claim pilot projects as claimants may be participating in one or more of these initiatives. While many of these measures expired in fall 2010, many claimants are still collecting benefits from these measures (e.g. the EAP Extra Five Weeks of EI Benefits will continue supporting existing claimants until summer 2011 in areas of high unemployment). Further testing beyond the expiry of Best 14 Weeks and Working While on Claim pilot projects is required to allow for a more accurate assessment of their effectiveness.

Objectives

To introduce two new pilot projects mirroring Pilot Project Nos. 11 and 12 for 12 months in order to collect additional data and continue testing their effectiveness in the absence of certain EAP measures and expired pilot projects.

A 12-month Best 14 Weeks pilot project and a 12-month Working While on Claim pilot project will

• strengthen the evidence base by lengthening the data time series without the EAP measures and pilot projects that have expired;
• provide the CEIC with more conclusive results about the approach being tested to improve incentives to accept all available work prior to claiming EI benefits for Best 14 Weeks pilot project and while in receipt of EI benefits and for regions of both higher and lower unemployment for Working While on Claim pilot project; and
• allow better medium- and longer-term analysis of the pilot projects’ labour market impacts.

Description

The amendments introduce the Best 14 Weeks pilot project for a 12-month period covering benefit periods established up to June 23, 2012. The new pilot project is based on the same parameters and covers the same 25 EI economic regions as Pilot Project No. 11. Under the pilot project, EI benefits are calculated based on a claimant’s 14 highest weeks of insurable earnings over the 52-week period preceding a claim for benefits. The pilot project is not available to fishers or self-employed persons under Part VII.1 of the EI Act.

The amendments also introduce the Working While on Claim pilot project for a period of 12 months until August 4, 2012. The new pilot project is available nationally and is based on the same parameters as Pilot Project No. 12. Under the pilot project, the maximum amount of allowable earnings from employment that a claimant may have while in receipt of EI benefits is increased from the current threshold, under the EI Act, of the greater of $50 or 25% of weekly benefits, to the greater of $75 or 40% of weekly benefits. The pilot project applies to claimants of EI regular (including those under work-sharing agreements), fishing, compassionate care and parental benefits paid under Part I of the EI Act, but do not apply to claims by self-employed persons under Part VII.1 of the EI Act.

The amendments also repeal sections 77.3 and 77.4, which contain the Best 14 Weeks and Working While on Claim pilot projects introduced in 2005 and ceased to have effect in October 2008.

Regulatory and non-regulatory options considered

The only non-regulatory alternative is a legislative amendment to the EI Act. However, issues exist in attributing particular results to a specific pilot project when multiple measures are in place at the same time. Therefore, further testing is required to determine the effectiveness of these pilot projects to better assess whether amendments to the EI Act are desirable.

Benefits and costs

Introducing two new pilot projects which mirror Pilot Projects Nos. 11 and 12 enables the CEIC to continue to test whether these measures achieve their objectives, based on their labour market impacts without being complicated by the impacts of the EAP measures and other pilot projects that have since expired.

During the 12-month testing period, EI claimants may increase their work effort prior to and during their claim for EI benefits, which would result in increased earnings for claimants and increased flexibility for employers.

Further testing of the two pilot projects will generate more conclusive results on the effectiveness and efficiency of these measures in order to enhance future decision-making with respect to the EI program.

It is estimated that approximately 368 000 claimants will benefit from the 12-month Best 14 Weeks pilot project at a cost of $290 million, or an average of approximately $788 per beneficiary.

It is estimated that approximately 545 000 claimants will benefit from the 12-month Working While on Claim pilot project at a cost of $130 million, or an average of approximately $238 per beneficiary.

The combined cost of the introduction of the two pilot projects is $420 million. There are no additional administrative costs associated with the implementation of these pilot projects.

As the introduction of these two pilot projects maintains existing parameters, implementation will require the same payroll information as was required under the previous pilot projects. In the case of Best 14 Weeks, some new employers, who might be less familiar with the Best 14 Weeks reporting requirements for the Record of Employment (ROE) and who do not report electronically may experience minor administrative difficulties such as reporting on the past 53 weeks instead of the past 27 weeks.

Rationale

Shortly after the introduction of the Best 14 Weeks and the Working While on Claim pilot projects in 2008, the economic outlook for Canada deteriorated unexpectedly due to the largest-ever synchronized global recession since the 1930s. The unemployment rate increased from a low of 6.1% in October 2008 to a peak of 8.7% in August 2009.

In response, the Government introduced the EAP to help protect jobs and Canadians directly affected by the global recession. The first phase of the EAP helped steer the Canadian economy to a recovery by supporting economic growth and job creation. EAP measures included investments of

— $6.2 billion in support of reducing the tax burden for Canadians;

— $8.3 billion to assist the unemployed;

— $14.8 billion to support rebuilding of infrastructure and spur creation of jobs;

— $3.8 billion to support Canada’s knowledge economy and job creation;

— $13.2 billion to support industries and communities; and

— Up to $200 billion for improving access to financing and strengthening Canada’s financial system.

In fiscal year 2009–10 four pilot projects were in effect:

1. Best 14 Weeks (Pilot Project No. 11);

2. Working While on Claim (Pilot Project No. 12);

3. New Entrants and Re-entrants (Pilot Project No. 13); and

4. Extended Employment Insurance and Training Incentive (Pilot Project No. 14).

Since the eight-month extension of Pilot Projects No. 11 and No. 12 in October 2010, it has become evident that the combination of various pilot projects operating concurrently in addition to the EAP stimulus measures have complicated the ability to accurately assess the effect of the Best 14 Weeks and Working While on Claim pilot projects on work incentives through the testing period.

The economic downturn resulted in a high number of job losses and dramatically increased use of the EI program. According to Statistics Canada data, the number of initial and renewal claims was over 3 million in 2009–10. Through the EAP, as of March 31, 2011, the Government provided $1.3 billion to strengthening benefits in 2009–10 and an estimated $1.5 billion in 2010–11. In this context, and given a number of ongoing pilot projects, isolating the impact of Best 14 Weeks and Working While on Claim pilot projects is methodologically complex. In addition, the economic downturn made it more difficult to assess the impact of these pilot projects and it must be factored in when interpreting results of the effects of these pilot projects.

The introduction of new Best 14 Weeks and Working While on Claim pilot projects for an additional 12 months, based on the same parameters as Pilot Project Nos. 11 and 12, allows the CEIC to collect additional evidence on their impact on incentives to work by generating data on labour market effects without the various stimulus measures in place and pilot projects that have since expired, thus allowing for a more accurate assessment of their impacts.

This data will inform ongoing policy development and potential ongoing adjustments beyond the testing period for future legislative or regulatory amendments.

Consultation

In the past, reactions to EI pilot projects have generally been positive, and stakeholder groups representing organized labour have called for the pilot projects to be extended or made permanent. Stakeholder groups representing employers have expressed concern about the cost of these measures and the impact on EI premium rates, with some employers expressing support for pilot projects which increase the availability of workers.

Implementation, enforcement and service standards

Existing implementation and enforcement mechanisms contained in adjudication and Human Resources and Skills Development Canada (HRSDC) controls procedures will ensure that these regulatory amendments are implemented properly. The continuing objective is to reach a decision on 80% of all EI claims within 28 days (four weeks) of the receipt of all pertinent information.

Performance measurement and evaluation

A Performance and Measurement Evaluation Plan has been developed and is available upon request. A summative evaluation of the two pilot projects will be completed. The Best 14 Weeks and Working While on Claim pilot projects will be evaluated with a view to determining whether the potential approaches being tested through the two pilot projects will have the anticipated labour market impacts on EI claimants’ behaviour.

The CEIC will continue to monitor the effects of the EI program through the annual Employment Insurance Monitoring and Assessment Report which is tabled in Parliament. Findings on the two pilot projects will be presented in the report when available.

Contact

Irwin Bess
Senior Director
Employment Insurance Policy Directorate
Skills and Employment Branch
Human Resources and Skills Development Canada
140 Promenade du Portage, 5th Floor
Gatineau, Quebec
K1A 0J9
Telephone: 819-994-4690
Fax: 819-934-6631

Footnote a
S.C. 1996, c. 23

Footnote b
L.C. 1996, ch. 23

Footnote 1
SOR/96-332