Vol. 150, No. 14 — July 13, 2016

Registration

SOR/2016-162 June 22, 2016

EMPLOYMENT INSURANCE ACT

Regulations Amending the Employment Insurance Regulations

P.C. 2016-589 June 21, 2016

The Canada Employment Insurance Commission, pursuant to sections 54 (see footnote a) and 109 of the Employment Insurance Act (see footnote b), makes the annexed Regulations Amending the Employment Insurance Regulations.

His Excellency the Governor General in Council, on the recommendation of the Minister of Labour, pursuant to sections 54 (see footnote c) and 109 of the Employment Insurance Act (see footnote d), approves the annexed Regulations Amending the Employment Insurance Regulations, made by the Canada Employment Insurance Commission.

Regulations Amending the Employment Insurance Regulations

Amendments

1 (1) Section 9.002 of the Employment Insurance Regulations (see footnote 1) is amended by adding “and” at the end of paragraph (b) and by repealing paragraphs (d) to (f).

(2) Section 9.002 of the Regulations is renumbered as 9.002(1) and is amended by adding the following:

(2) However, employment is not suitable employment for the purposes of paragraphs 18(1)(a) and 27(1)(a) to (c) and subsection 50(8) of the Act if

• (a) it is in the claimant’s usual occupation either at a lower rate of earnings or on conditions less favourable than those observed by agreement between employers and employees, or in the absence of such agreement, than those recognized by good employers; or
• (b) it is not in the claimant’s usual occupation and it is either at a lower rate of earnings or on conditions less favourable than those that the claimant might reasonably expect to obtain, having regard to the conditions that the claimant usually obtained in the claimant’s usual occupation, or would have obtained if the claimant had continued to be so employed.
  

(3) After a lapse of a reasonable interval from the date on which an insured person becomes unemployed, paragraph (2)(b) does not apply to the employment described in that paragraph if it is employment at a rate of earnings not lower and on conditions not less favourable than those observed by agreement between employers and employees or, in the absence of any such agreement, than those recognized by good employers.

2 Sections 9.003 and 9.004 of the Regulations are repealed.

3 The Regulations are amended by adding the following after section 77.98 of the Regulations:

Pilot Project Relating to Earned Income While Receiving Benefits

77.99 (1) Pilot Project No. 20 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 are greater than 90% of their weekly insurable earnings, would encourage claimants to work more while receiving benefits.

(2) Pilot Project No. 20 applies in respect of every claimant who makes a claim for benefits for any week in the period beginning on August 7, 2016 and ending on August 11, 2018 and who is ordinarily resident in a region described in Schedule I.

(3) For the purpose of Pilot Project No. 20, 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. 20, 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 11, 2018.

77.991 (1) The purpose of Pilot Project No. 20 is also to test which method, the one described in subsection 77.94(3) or the one described in subsection 77.99(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 77.99(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 7, 2016 and ending on August 11, 2018.

(3) Any election made under section 77.98 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 7, 2016 and ending on August 11, 2018 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 7, 2016.

(4) A claimant who was eligible to make an election under section 77.98 in respect of a benefit period that began before August 7, 2016 and has not ended on or before that day may make an election under subsection (2) in respect of that benefit period if the last notification of payment or non-payment of benefits in respect of that benefit period is issued to the claimant on or after August 7, 2016.

(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 the 30th day 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 11, 2018, 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) 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.

Coming into Force

4 (1) Sections 1 and 2 come into force on July 3, 2016.

(2) Section 3 comes into force on August 7, 2016.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Background

Budget 2016 announced several initiatives to improve EI, including simplifying the job search responsibilities for EI claimants with respect to suitable employment they are expected to search for and accept, and establishing a new WWC pilot project for 2 years that would expand the parameters of the current pilot project to provide the flexibility for all claimants (except self-employed) to revert to the rules of Pilot Project No. 17.

Simplifying job search responsibilities for EI claimants

Pursuant to the Connecting Canadians with Available Jobs initiative announced in the 2012 Budget, amendments were made to the Employment Insurance Act (the Act) and the EI Regulations were also amended to define what constitutes “reasonable and customary efforts” that a claimant is expected to make to obtain suitable employment as well as to define “suitable employment” (all henceforth referred to as the 2012 amendments). The regulatory criteria came into force on January 6, 2013. These amendments aimed at clarifying long-standing obligations under the Act that claimants receiving EI regular and fishing benefits need to actively look for, and be willing to accept, offers of suitable employment.

The 2012 amendments established six criteria for determining what constituted suitable employment, including among others, criteria related to the commuting time to or from work, the wage and the type of employment a claimant was required to search for and accept. The wage and type of employment were based on the claimant’s previous EI usage and the time spent on claim. For these purposes, claimants were assessed according to three categories which can be referred as frequent claimants, occasional claimants and long-tenured workers.

In practice, less than 1% of claimants who were disqualified from EI benefits in 2013–2014 were as a result of their failure to search for work or due to their refusal to accept suitable employment.

Working while on claim

Working while on claim (WWC) encourages EI claimants to maintain their attachment to the labour force, preventing the skills loss that can be associated with long-term unemployment and allows them to increase their total income — EI benefits plus earnings from employment — by working while in receipt of EI benefits. For some employers, the WWC provision makes it easier to fill temporary labour shortages.

Under the 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. This provision exempts about half a day of earnings per week from the dollar-for-dollar benefit reduction provision. If earnings while on claim are great enough to reduce weekly EI benefits to zero, then the week of EI benefits is “deferred” and may be paid later. If earnings while on claim are not great enough to reduce weekly EI benefits to zero, then a reduced amount of EI benefits is paid and the remaining initial entitlement is reduced by one week. A 2015 study (see footnote 2) of WWC found that many claimants are being laid off by their employer during a temporary work shortage, with the possibility of returning intermittently during their EI claim when their employer requires it, and returning full time when the work shortage subsides. It was found that 80% of working claimants had worked for the same employer previous to their claim, while 82% stayed with the same employer they worked for on claim after their claim had ended.

Beginning in 2005, a series of Working While on Claim (WWC) pilot projects — regional (Pilot Project No. 8) and national (Pilot Project No. 12 and Pilot Project No. 17) — were in effect to test 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 roughly one day of earnings per week under pilot projects nos. 8, 12 and 17 (100% earnings allowance of up to $75 or 40% of their weekly EI benefits, whichever was greater). Like the provisions in the Act, earnings beyond this threshold resulted in weekly EI benefits being reduced dollar-for-dollar.

In 2012, a new national 3-year WWC pilot project (Pilot No. 18) began testing an approach that reduces claimants’ weekly EI benefits by 50 cents for each dollar earned while on claim. Earnings beyond the threshold of 90% of average weekly earnings reduce weekly EI benefits dollar-for-dollar. This 90% cap ensures that claimants cannot earn more while on claim than when they were working. Analysis of this pilot project suggests that it has reduced the disincentives to accepting more than one or two days of work for both low and higher income EI recipients.

After the introduction of Pilot Project No. 18, some claimants expressed concern that they could not find more than one day of work a week, and were thus worse off under the new rules. To address these concerns, the Government of Canada subsequently introduced the option for claimants to elect to be treated by the rules of Pilot Project No. 17. The amendment gave individuals who worked while on claim between August 7, 2011, and August 4, 2012, (roughly 750 000 people) the option to have their earnings while on claim treated using the $75/40% approach.

Concerns were subsequently raised in focus groups and by stakeholders that the rules for reverting based on this implementation window were too restrictive and were not well communicated when introduced.

Issues

Simplifying job search responsibilities for EI claimants

The 2012 amendments prescribe the criteria for determining what constitutes suitable employment a claimant is expected to search and obtain through the duration of their claim (for EI regular benefits) based on the claimant category to which they belong. This added complexity to the EI program. The daily commuting time to and from work was also prescribed, requiring some claimants to accept employment which offered lower rates of pay with longer commuting times.

These changes introduced a different treatment for different EI claimants and limited certain claimants’ flexibility in the type of employment and earnings which they were required to search for and accept.

Working while on claim

The current WWC pilot project is set to expire on August 6, 2016, which would result in a return to legislated WWC provisions in the Act which would provide less incentive for workers to work while on claim after reaching the threshold of $50 or 25% than the current pilot projects.

Analysis showed that the legislated provisions and the pilot projects with dollar-for-dollar reduction thresholds resulted in a number of claimants only working up to a certain earnings threshold. This corresponds to approximately a half day of work under legislation and a full day under the $75/40% approach of the past pilot projects.

While the 50% approach of the current WWC pilot project have succeeded in reducing disincentives to working more than one day per week (which existed under the previous pilot project rules and legislation), results described in the 2014–2015 Monitoring and Assessment Report suggest that fewer individuals may be working while on claim. Specifically, under the Pilot Project No. 17 rules ($75/40% rule), 55% of claims had weeks with work while on claim, compared to 51% of claims under the current pilot project with lower income claimants over-represented in those not working in later periods. These margins will be investigated under the new pilot project.

In addition, concerns have been raised in focus groups and by stakeholders that the rules for reverting were only available to a limited number of former claimants and the option to revert was not well communicated when introduced.

Objectives

Simplifying job search responsibilities for EI claimants

The objectives of these amendments are to simplify claimants’ responsibilities to seek and accept suitable employment, by reversing to some of the criteria that existed prior to the 2012 amendments; to continue to enable Service Canada staff to monitor claimants’ eligibility and ensure claimants are fulfilling their responsibilities; and to support claimants to return to work.

Working while on claim

The objective of the new pilot project parameters is to test how providing both options for treating income earned while on claim will encourage people to accept work, particularly low income workers.

A second objective of this proposal is to establish a new WWC pilot project to take effect immediately following the expiry of the current pilot project, and to address the concerns of these individuals and stakeholders by offering all WWC-eligible claimants (except self-employed) the flexibility to have their earnings while on claim treated using Pilot Project No. 17 rules (100% earnings allowance up to $75 or 40% of the weekly EI benefits).

Description

Simplifying job search responsibilities for EI claimants

The regulatory amendments will maintain the criteria for determining suitable employment related to a claimant’s health and physical capabilities to allow them to commute to the place of work and to perform the work , the hours of work in terms of compatibility with family obligations or religious beliefs and the nature of work as it relates to moral convictions or religious beliefs, as these criteria recognize that an employment’s suitability is in part dependent on a claimant’s particular circumstances. The criteria prescribing the daily commuting time will be repealed.

The requirements related to the type of employment and offered earnings which claimants were required to search for and accept will return to those in place as specified in the Act prior to the 2012 amendments. These requirements will now be specified in the EI Regulations. Criteria defining employment which is not suitable would be applicable to all regular and fishing claimants.

Employment would not be suitable if it is in the claimant’s usual occupation either at a lower rate of earnings or on conditions less favourable than those observed by agreement between employers and employees, or in the absence of such agreement, than those recognized by good employers.

The employment is unsuitable if it is outside the claimant’s usual occupation and offers lower earnings or less favourable conditions than those that the claimant might reasonably expect to obtain, having regard to the conditions that the claimant usually obtained in the claimant’s usual occupation, or would have obtained if the claimant had continued to be so employed.

Employment that is not in the claimant’s usual occupation and is either at a lower rate or conditions less favourable could become suitable after a reasonable interval has elapsed, providing the rate of earnings are not lower and conditions not less favorable than those observed by agreement between employers and employees, or in the absence of such agreement, that those recognized by good employers. Under this provision, the claimant would be required to expand their job search accordingly in order to maintain entitlement to benefits.

Working while on claim

The new pilot project will continue to reduce claimants’ weekly EI benefits by 50 cents for each dollar earned while on claim. Earnings beyond the threshold of 90% of average weekly earnings would reduce weekly EI benefits dollar-for-dollar. This 90% cap ensures that claimants cannot earn more while on claim than when they were working.

Unlike the current pilot project, the new pilot project would expand the flexibility for all claimants (except self-employed) to choose to revert to the $75/40% approach. A claimant’s decision to revert to the $75/40% approach would apply to their entire claim and would be irrevocable for the duration of their claim, regardless of any change in their circumstances.

The new WWC pilot project would apply to claimants receiving regular, fishing, compassionate care, parental or parents of critically ill children benefits. The pilot project does not apply to maternity and sickness claimants.

The new 2-year WWC pilot project would be in effect from August 7, 2016, to August 11, 2018. During this time, the Government will review the pilot project in order to develop a finalized solution.

Regulatory and non-regulatory options considered

Simplifying job search responsibilities for EI claimants

The criteria defining what constitutes suitable employment are contained in the EI Regulations. As a result, any changes to these criteria must be made through regulatory amendments.

Working while on claim

A non-regulatory alternative was considered which would have introduced the Pilot Project No. 19 parameters (50% approach) into legislation. However, given concerns that the ability to revert was too restrictive under Pilot Project No. 19, further testing is required before implementing a finalized solution.

Benefits and costs

Benefits and costs — Simplifying job search responsibilities for EI claimants

Simplifying job search responsibilities will ensure all claimants are treated in an equitable manner and have similar responsibilities. Regardless of their previous EI contributions and usage, claimants would have the same obligations as they conduct job searches and would be allowed the same flexibilities to secure employment suited to their particular needs or circumstances. This is aligned with the purpose of EI regular benefits which are to provide temporary financial assistance to workers who have lost their job through no fault of their own, while they look for work or upgrade the skills.

Less than 1% of claimants who were disqualified from EI benefits in 2013–2014 were disqualified because they failed to search for work or refused to accept suitable employment. Therefore, it is expected that the financial benefits of this proposal for EI claimants would be negligible. Likewise, no EI expenditure changes are expected as a result of changing the definition respecting suitable employment.

Benefits and costs — working while on claim

In total, over the 2-year timeframe of the WWC pilot project, it is estimated that the current 50% approach to working while on claim would increase EI benefits for 838 000 claimants by $373.6 million versus the legislated approach in the Act.

Additionally, providing claimants with the option to revert to the $75/40% approach is estimated to increase EI benefits by $36.4 million over 2 years for 36 200 claimants.

Overall claimant impacts are anticipated to be positive as all claimants (except self-employed) will now have the option to select the $75/40% approach. Given that the previous pilot project rules, in almost all cases, (see footnote 3) are more generous than the legislated rules ($50/25% approach), the new pilot project provides claimants with the opportunity to be better off compared to legislation.

While claimant impacts are expected to be positive overall given the removal of restriction on the ability to revert, it is also estimated that 283 500 claimants will receive less EI benefits due to these Regulations, compared to legislation, (averaging $456 over a claim or $23 per week) because some claimants that may be better off under Pilot Project No. 17 may decide not to revert for a variety of reasons.

In total, accounting for the increase in EI benefits for some claimants as well as the reduced EI benefits for those that do not revert, the estimated net program costs for the 2-year WWC pilot project is $156.4 million from 2016–2017 to 2018–2019 (from August 7, 2016 to August 11, 2018). This funding would be sourced from the fiscal framework and charged to the EI operating account.

This estimate of the number of claimants who would revert is based upon claimant reverting behavior observed since the ability to revert was introduced in 2013. A sensitivity analysis was performed to determine how overestimating or underestimating the number of reverters would impact program costs. This analysis found that the variance in total cost was small: between $19.2 million and $58.8 million over 2 years, compared to the estimate of $36.4 million.

Claimant impacts are based on a simulation model of recreated weekly estimates that estimate overall impacts to claimants. Because the legislated threshold made it easier to defer weeks, this analysis is biased towards those who defer weeks under the legislated provisions, which does not fully reconcile to the percentage of people who exhaust benefits overall. Furthermore, these benefits and costs are also estimated versus the legislated WWC rules and based on work patterns which existed before the 50% rule was implemented. These estimates do not take into account the increase in work effort which occurred in response to the 50% approach and therefore may underestimate the number of individuals who would receive more in combined EI benefits and income.

Recent analysis comparing the 50% approach to the $75/40% approach which existed under Pilot Project No. 17 and capturing recent changes in work patterns has shown that besides increasing work effort, the 50% approach has also led to increased EI benefits for most claimants. During Pilot Project No. 18, it is estimated that of EI claimants who worked while on claim, around 70% of them would receive more in EI benefits under the 50% approach with an average increase in benefits of $250 over the duration of a claim or $13 per week of claim versus the same work pattern under the $75/40% rule.

Administrative costs to Government

A new WWC pilot project is expected to create additional administrative cost pressures for the Government of Canada. The additional costs, largely due to manually processing the claims of WWC reverters, will result in approximately $5.9M in administrative costs over the course of the pilot project. No additional administrative costs are expected as a result of changes made to the regulations respecting suitable employment and job search.

Summary

The amendments are expected to result in a net cost of $5.6 million (present value) because of the additional administrative costs for Government. However, overall, the impacts of the amendments are expected to be positive by reducing confusion and introducing more flexibility regarding job search requirements, and encouraging a greater number of claimants to work while on claim and maintain their attachment to the labour force.

Cost-benefit statement: Working While on Claim Pilot Project (see note a)

		First Year 2016–2017	Second Year 2017–2018	Third Year 2018–2019	Total	Total (PV) (see note b)	Annualized Average (see note c)
A. Quantified impacts (in millions of dollars, 2015 constant dollars )
	EI claimants: more EI benefits due to WWC regulatory amendments	$108.8	$186.8	$78.0	$373.6	$351.2	$133.9
	EI claimants who revert to the $75/40% approach: more EI benefits due to WWC regulatory amendments	$10.6	$18.2	$7.6	$36.4	$34.2	$13.1
Costs	El claimants: fewer EI benefits due to regulatory amendments	$73.8	$126.8	$53.0	$253.6	$238.6	$90.9
	EI administrative costs (Government)	$2.3	$2.7	$0.9	$5.9	$5.6	$2.1
	EI operating account (WWC)	$45.6	$78.2	$32.6	$156.4	$147.2	$56.1
Net benefits					$–5.9	$–5.6	$–2.1
B. Quantified impacts in non-dollars (number of individuals per year)
Positive impacts		Estimated EI claimants: Claimants who receive more EI benefits due to WWC regulatory amendments than under the legislative approach			419 000
		Estimated EI claimants who revert to the rules that existed under Pilot Project No. 17: claimants who receive more benefits due to WWC regulatory amendments			18 600 (see note d)
Negative impacts (see note e)		El claimants: EI claimants who receive fewer EI benefits due to WWC regulatory amendments			283 500 (see note f)
C. Qualitative impacts
EI claimants		The regulatory amendments may encourage a greater number of EI claimants to work while on claim and maintain their attachment to the labour force.
Employers		The regulatory amendments may make it easier for employers to find workers to fill temporary labour shortages
Government of Canada (ESDC)		The regulatory amendments will allow the Government to collect additional information on work behaviour while on claim to provide further insight towards a permanent approach to working while on claim.

• Note a
  The table presents the benefits and costs over time period in which the regulatory amendments will be in effect: from August 6, 2016, (FY 2016–2017) to August 11, 2018, (FY 2018–2019). 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 b
  Amounts presented are discounted at a rate of 7% as per Treasury Board guidelines.
• Note c
  Amounts presented are discounted at a rate of 7% as per Treasury Board guidelines.
• Note d
  This estimate is based on claimant reverting behaviour observed from 2013 to the present.
• Note e
  This estimate is based on 2010 work patterns which existed before the current 50% approach was implemented. It does not take into account the increase work effort observed in the 2013–2014 data and, therefore, may overestimate the number of individuals who would receive less in combined EI benefits and income. All claimants have the opportunity to revert to the $75/40% approach. If a claimant does not revert, even if it would result in them receiving more EI benefits, they should not be considered negatively impacted.
• Note f
  This estimate is based on 2010 work patterns which existed before the current 50% approach was implemented. It does not take into account the increase work effort observed in the 2013–2014 data and, therefore, may overestimate the number of individuals who would receive less in combined EI benefits and income. All claimants have the opportunity to revert to the $75/40% approach. If a claimant does not revert, even if it would result in them receiving more EI benefits, they should not be considered negatively impacted.

“One-for-One” Rule

These changes affect individuals only and, therefore, do not impose any new administrative or compliance burdens on businesses. Consequentially, the “One-for-One” Rule does not apply.

Small business lens

These changes affect individuals only and, therefore, do not impose any new administrative or compliance burdens on businesses. Consequentially, the small business lens does not apply.

Consultation

The responsibility for conducting consultations with external stakeholders rests with the Canada Employment Insurance Commission (CEIC). 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 Employment and Social Development Canada (the Department) programs and services, such as the EI program.

In addition, as part of the evaluation cycle of the EI program, the Department regularly seeks out the opinions of Canadians on aspects of the EI program by conducting focus group studies. Academics have also been consulted in the evaluation of the EI program.

Simplifying job search responsibilities for EI claimants

As a result of the 2012 amendments, some claimants and stakeholders expressed concerns that these changes would require claimants to accept jobs outside their communities and at lower wages. Of particular interest, some provincial governments undertook studies and held consultations on the EI program.

The Government of Quebec established the Commission nationale d’examen sur l’assurance-emploi to study the impacts of the 2012 amendments on workers, businesses and the economy in Quebec. The Commission released its report on November 27, 2013. The report recommended that the EI program take into consideration the specificity of seasonal work and that support be provided to allow seasonal workers to expand their working season and to better use their particular skills.

The Council of Atlantic Premiers also undertook their own regional consultation and research initiative on 2012 changes to the EI program. In June 2014, the Pan-Atlantic Commission released its report recommending consultation and improved communications prior to the implementation of new measures, such as the Connecting Canadians with Available Jobs initiative, as well as a clear directive regarding the treatment of those who have previously worked out of province or at a location beyond the one-hour commute rule under the initiative.

Working while on claim

The parameters of the new WWC pilot project reflects views expressed publicly by stakeholders including provinces and territories, members of Parliament, the CEIC and labour groups. Specifically, following the implementation of Pilot Project No. 18, stakeholders expressed concerns that claimants unable to find more than one day a week of work in their communities would be worse off under the pilot project. This prompted the Government of Canada to respond and provide certain claimants with the option of reverting to the rules that existed under Pilot Project No. 17. This option is now being extended to all claimants (except self-employed).

Stakeholders have commented to a limited degree on the WWC pilot project, with the Canadian Centre for Policy Alternatives calling for a return to the earnings exemption which existed under Pilot Project No. 17.

Rationale

Simplifying job search responsibilities for EI claimants

The EI program contains long-standing provisions that claimants must search for and accept suitable employment while on claim. The 2012 amendments formally define obligations of claimants to search for and accept “suitable employment.” Claimant categories were also created, each with its own different definition of “suitable employment.” These have put pressure on some unemployed workers to accept lower paying jobs away from their immediate communities, but not others. In order to simplify the job search responsibilities of claimants, the criteria for determining what constitutes suitable employment that a claimant is expected to search for and obtain will be amended (1) by removing specific criteria for claimant categories and those related to daily commuting times; and (2) by easing the criteria related to the offered earnings and type of work which claimants must accept.

Ongoing integrity activities will continue to be conducted to ensure compliance of claimants with the Act for the purpose of protecting the integrity of the EI program.

Working while on claim

The default rules of the current WWC pilot project, which reduces benefits by 50 cents for every dollar of earned income, has been shown to lessen disincentives to accept available work while on claim in a given week compared to prior rules ($75/40% rule). However, under the 50% approach, some individuals may have limited opportunity to work while on claim. Specifically, the proportion of EI regular claims involving at least one week worked while on claim has declined from 55% in 2011–2012 to 51% in 2013–2014 with lower income claimants over-represented in those not working in later periods. The new pilot project parameters would test how providing both options for treating income earned while on claim will encourage people to accept work particularly for low income claimants.

Implementation, enforcement and service standards

Existing implementation and enforcement mechanisms contained in the Department’s adjudication and controls procedures will ensure that these regulatory amendments are implemented properly. Regarding service standards, the Department’s continuing objective is to reach a decision on 80% of all EI claims within 28 days (4 weeks) of the receipt of all pertinent information.

Simplifying job search responsibilities for EI claimants

The amendments to the Regulations, which would apply equally to all claimants, will come into force on July 3, 2016, and redefine the criteria of what constitutes a suitable employment.

EI claimants will still be required to search for and accept suitable employment, and provide evidence, when requested, that they are undertaking such activities.

Ongoing integrity activities will continue and will be conducted to ensure compliance of claimants with the Act, including the revised definition of suitable employment, for the purpose of protecting the integrity of the EI program.

Working while on claim

The amendments to the EI Regulations will come into force on August 7, 2016, and will be in effect until August 11, 2018. Claimants who work while on claim are required to declare their total earnings before deductions on their bi-weekly 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 WWC pilot project has similar parameters to the previous WWC pilot project, Service Canada officers have largely completed training, and communications products will be updated to provide claimants with information regarding the parameters of the new pilot project, including the option of reverting to the rules that existed under Pilot Project No. 17. Service Canada will encourage claimants to revert at the end of the claim to ensure that rules are applied in the claimant’s financial interest.

Claimants will continue to be encouraged to make a decision regarding reversion late in their benefit period so they can examine their complete work pattern, with the assistance of a Service Canada officer. 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. In the case where a claimant would have received more EI benefits under the Pilot Project No. 17 rules, Service Canada would process a payment to the claimant to make up the difference.

Performance measurement and evaluation

A performance and measurement evaluation plan has been developed and is available upon request. The WWC pilot projects will be assessed as part of a summative evaluation planned to be completed in 2017–2018. The evaluation will focus on assessing whether the pilot projects met their objective of encouraging claimants to work more while receiving EI benefits. Key indicators will be examined such as the share of EI regular claims involving at least a week worked while on claim and the average number of weeks worked while on claim. Also measured is the average duration of benefits for claims where there is work while on claim.

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. This report uses many sources of evidence including EI administrative data, integrity databases, and survey data. Findings on WWC pilot projects nos. 19 and 20 will be presented in the report when available.

The Monitoring and Assessment Report will also report on disqualification and disentitlement data related to claimants’ obligation to search for and accept available work.

Contact

Janique Venne
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. 2012, c. 27, s. 19
• Footnote b
  S.C. 1996, c. 23
• Footnote c
  S.C. 2012, c. 27, s. 19
• Footnote d
  S.C. 1996, c. 23
• Footnote 1
  SOR/96-332
• Footnote 2
  Employment and Social Development Canada (ESDC), Who are EI Claimants Working for While on Claim (Ottawa: ESDC, Evaluation Directorate, 2016).
• Footnote 3
  Under the EI legislation, a claimant’s weekly benefits are reduced to $0 when they earn 125% of their benefit rate while on claim. These weeks are not considered as entitlement weeks so the claimant could use these weeks should they need them later in their claim. Since Pilot Project No. 17 uses the same logic, but has an increased earnings threshold, the point at which EI benefits are reduced to $0 is when they have earned 140% of their benefit rate. Therefore, if a claimant works between 125% and 140% on average over their claim, they would receive more deferred weeks that could potentially be used later to receive a full benefit rate instead of a reduced benefit rate due to working while on claim.