ARCHIVED — Vol. 147, No. 1 — January 2, 2013

Registration

SOR/2012-297 December 14, 2012

EMPLOYMENT INSURANCE ACT

Regulations Amending the Employment Insurance Regulations

P.C. 2012-1750 December 13, 2012

RESOLUTION

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.

December 6, 2012

IAN SHUGART
Chairperson
Canada Employment Insurance Commission

MARY-LOU DONNELLY
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), approves the annexed Regulations Amending the Employment Insurance Regulations, made by the Canada Employment Insurance Commission.

REGULATIONS AMENDING THE EMPLOYMENT INSURANCE REGULATIONS

AMENDMENT

1. The Employment Insurance Regulations (see footnote 1) are amended by adding the following after section 77.95:

77.96 (1) The purpose of Pilot Project No. 18 is also to test which method, the one described in subsection 77.94(3) or the one described in subsection 77.95(3), is more effective in encouraging claimants to work more while receiving benefits.

(2) A claimant who had earnings that were subject to subsection 77.94(3) during the period beginning on August 7, 2011 and ending on August 4, 2012 may elect to have subsection 77.94(3), instead of subsection 77.95(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 5, 2012 and ending on August 1, 2015. The election is irrevocable.

(3) 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 by the applicable deadline as follows:

  • (a) if a 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 during the period beginning on August 5, 2012 and ending on January 5, 2013, February 5, 2013 or 30 days after the day on which the last notification in respect of one or more weeks of unemployment included in that benefit period is issued, whichever is later; or
  • (b) if a 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 after January 5, 2013, 30 days after the day on which the last notification in respect of one or more weeks of unemployment included in that benefit period is issued or August 1, 2015, whichever is earlier.

(4) If a claimant informs the Commission of their election after the applicable deadline, 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.

(5) Subject to subsection (6), if no election is made by the applicable deadline, subsection 77.95(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 1, 2015, subsection 77.95(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 5, 2012 and ending on August 1, 2015.

(6) 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 77.95(3) in respect of earnings received during all weeks of unemployment included in any subsequent benefit period.

(7) Despite subsection (5), if, during the period beginning on August 5, 2012 and ending on October 6, 2012, a notification of payment or non-payment of benefits is issued to a claimant in respect of one or more weeks of unemployment included in a benefit period and, after October 6, 2012, no additional notifications are issued to the claimant in respect of one or more weeks of unemployment included in that same benefit period, the claimant may, if no election is made in respect of earnings received during all weeks of unemployment included in that benefit period, make an election in respect of earnings received during all weeks of unemployment included in the subsequent benefit period.

(8) A decision of the Commission in respect of any matter related to an election, including the failure to make an election, is

  • (a) until March 31, 2013, not subject to appeal under section 114 of the Act; and
  • (b) on or after April 1, 2013, not subject to reconsideration under section 112 of the Act.

COMING INTO FORCE

2. These Regulations come into force on January 6, 2013.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: The Pilot Project to Encourage Claimant to Work More While Receiving Benefits (Pilot Project No. 18) came into force on August 5, 2012, for a period of three years. Pilot Project No. 18 allows eligible claimants to keep Employment Insurance (EI) benefits equalling 50% of every dollar earned while on claim, up to 90% of the weekly insurable earnings used to calculate the EI rate of benefits. Under this new pilot project, some claimants indicated that they were receiving lower EI benefits for the same work effort as compared to benefits under the previous Working While on Claim (WWC) pilot project (Pilot Project No. 17). More specifically, these claimants indicated that they cannot find additional work beyond approximately one day per week due to limited employment opportunities. As a result, they were negatively affected under the parameters of Pilot Project No. 18 relative to Pilot Project No. 17.

Description: The Employment Insurance Regulations (EI Regulations) are amended to provide EI claimants with the option of reverting to the rules that existed under Pilot Project No. 17 if 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.

Cost-benefit statement: It is estimated that up to 250 000 claimants, over the full course of the pilot project, will elect to revert to the previous pilot project parameters, at an additional program cost of up to $230 million.

“One-for-One” Rule and small business lens:The amendment does not impose any new administrative or compliance burden on businesses. Therefore, the “One-for-One” Rule and small business lens do not apply.

Background

Under the Employment Insurance Act (EI Act), individuals can work while on claim and keep all of their EI benefits (with the exception of maternity and sickness benefits) until earnings exceed a threshold ($50 or 25% of EI benefits, whichever is greater). This essentially exempts about one-half day of earnings. Any additional earnings result in EI benefits being clawed back dollar-for-dollar.

Previous Working While on Claim (WWC) pilot projects (Pilot Project Nos. 8, 12 and 17), in effect from December 11, 2005, to August 4, 2012, built on the legislated approach and tested whether claimants would increase their work effort if they were allowed to keep a larger share of their EI benefits while working on claim. Specifically, the exemption threshold was increased to roughly one day of earnings ($75 or 40% of EI benefits, whichever was greater). Additional earnings continued to result in EI benefits being clawed back dollar-for-dollar (i.e. the 100% clawback rate remained). Evaluation results confirm that the previous WWC pilot projects had been moderately successful in reducing the duration of EI claims and increasing incentives to work, but only up to the increased allowance earnings threshold.

On August 5, 2012, as part of Economic Action Plan 2012, the Government introduced a new, national three-year WWC pilot project, Pilot Project No. 18, to encourage claimants to work more while on claim. Under Pilot Project No. 18, claimants keep 50% of their benefits from the first dollar earned, up to 90% of weekly insurable earnings to ensure that claimants do not earn more than when they were working. This pilot project tests whether this new approach will further encourage claimants to work additional days while on claim. It is also considered to be fairer since it provides a uniform exemption (subject to the cap) for all those working while on claim, not just those working about one day a week.

Issue

With the implementation of Pilot Project No. 18, some claimants indicated that they were receiving lower EI benefits for the same work effort as compared to benefits under the previous WWC pilot project (Pilot Project No. 17). More specifically, these claimants indicated that they cannot find additional work beyond approximately one day per week due to limited employment opportunities. As a result, they were negatively affected under the parameters of Pilot Project No. 18 relative to Pilot Project No. 17.

Objectives

  • To test whether work patterns have an impact on the choice of approach taken by claimants who have recently collected EI benefits and worked while on claim.

Description

The amendments to the EI Regulations modify Pilot Project No. 18 to allow EI claimants who had earnings that were subject to Pilot Project No. 17 between August 7, 2011, to August 4, 2012, to elect to be subject to WWC Pilot Project No. 17 parameters for the duration of their benefit period. The amendments come into force on January 6, 2013, and apply to claims for any week in the period beginning on August 5, 2012, and ending on August 1, 2015. Beginning January 6, 2013, eligible claimants will be able to elect to revert to the previous pilot parameters up to 30 days after their last notification of payment or non-payment of benefits is issued. If a notification of payment or non-payment of benefits is issued prior to January 6, 2013, claimants will have 30 days from the introduction of this option to elect or 30 days after the day on which the last notification in respect of that benefit period is issued, whichever is later. All elections must be made before the end of the pilot project on August 1, 2015.

A claimant’s decision to revert to parameters of Pilot Project No. 17 will apply to the entire benefit period and is irrevocable, regardless of any change in the claimant’s circumstances. Decisions of the Canada Employment Insurance Commission (CEIC) in respect of any matter related to an election, including the failure to make an election are, until March 31, 2013, not subject to appeal, and on or after April 1, 2013, not subject to reconsideration.

If an eligible claimant does not elect to revert to Pilot Project No. 17 parameters, any future benefit periods will be subject to the 50% exemption from the first dollar earned. There are two exceptions to this rule. Claimants with a last notification of payment or non-payment before October 6, 2012 (before the announcement by the Government of its intent to modify Pilot Project No. 18), will be provided the option to elect for the first time in their next benefit period and eligible claimants that do not work while on claim in a benefit period will be provided the option to elect in their next benefit period.

Regulatory and non-regulatory options considered

A non-regulatory option considered was to maintain the status quo and not amend Pilot Project No. 18. However, it was determined that a regulatory amendment was needed to expand the testing capabilities of Pilot Project No. 18. This would provide the ability to test on the behavioural impact of allowing recent claimants who had earnings while on claim and are accustomed to Pilot Project No. 17 provisions an opportunity to choose the approach to which their earnings will be applied while on claim.

Benefits and costs

As a result of the amendments to the WWC approach, it is estimated that up to 250 000 claimants will elect to revert to Pilot Project No. 17 parameters over the course of the pilot project. The number of claimants who will elect could vary, depending on the ability of claimants to find additional work, future economic prospects and the willingness to undergo the administrative process to obtain additional EI benefits.

The amendments to the pilot project are estimated to cost up to an additional $251.35 million ($230 million in additional program costs and $21.35 million in incremental administrative costs) over four fiscal years.

“One-for-One” Rule

The “One-for-One” Rule does not apply, as this amendment does not impose any incremental administrative burden on business.

Small business lens

The small business lens does not apply to this amendment, as this amendment does not impose any additional administrative or compliance costs on small business.

Consultation

With the announcement of the Pilot Project No. 18, stakeholders representing organized labour groups, provincial/territorial governments and EI claimants expressed concerns over the negative impact on low-income claimants relative to the previous pilot project, Pilot Project No. 17. These stakeholders asked that the Government return to the provisions of Pilot Project No. 17.

Rationale

The amendments to Pilot Project No. 18 provide eligible claimants the option to elect to have Pilot Project No. 17 parameters apply to earnings received during all weeks of unemployment included in a benefit period that falls within August 5, 2012, and August 1, 2015. This will benefit those facing labour market challenges and are unable to find work beyond approximately one day to benefit from the new WWC pilot project by allowing them to receive the same level of income support as provided under Pilot Project No. 17 parameters.

These amendments will allow the CEIC to test which approach is more effective in terms of work incentive and income support when taking into account factors such as claimants’ prior use of EI, occupation, income levels, industrial sector and the varying labour market conditions across the country. Moreover, using two different approaches in the same EI economic region would also allow testing on whether work patterns have an impact on the choice of the approach taken among WWC claimants who have previously collected EI benefits.

This comparative testing will provide the Government with more information that could be used on any future program changes related to earnings while claiming EI. Furthermore, by limiting access to recent claimants, the Government can more accurately target claimants accustomed to working while on EI.

Recent changes to the EI program require claimants to conduct more effective job searches and accept suitable employment opportunities. These modifications are supported by enhancements to the content and frequency of job and labour market information for job seekers. It is expected that these recent changes may further influence the choice of approach to be taken by recent claimants who work while on claim.

Implementation, enforcement and service standards

The amendments to Pilot Project No. 18 will come into force on January 6, 2013.

Before implementation, training of Service Canada officers and communications products will be completed to provide claimants with information regarding the option to revert to the previous pilot parameters for eligible claimants.

Claimants will be informed that their decision related to reversion is irrevocable. Claimants will be encouraged to elect late in their benefit period so they can examine their work pattern, with the assistance of Service Canada officers, over the duration of their claim. This information will support claimants with their decision when it comes to the election.

Existing implementation and enforcement mechanisms contained in Human Resources and Skills Development Canada’s adjudication and controls procedures will ensure that these regulatory amendments are implemented effectively and efficiently.

Performance measurement and evaluation

A performance and measurement evaluation plan has been developed and is available upon request. A summative evaluation of the pilot project will be completed. Pilot Project No. 18 will be assessed on whether it has the anticipated behavioural response on work effort and its impact on income support.

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

Contact

Brian Hickey
Director
Policy Initiatives and Issues Management
Employment Insurance Policy
Skills and Employment Branch
Human Resources and Skills Development Canada
140 Promenade du Portage
Gatineau, Quebec
K1A 0J9
Telephone: 819-934-4576
Fax: 819-934-6631