Regulations Amending the Employment Insurance Regulations: SOR/2020-111

Canada Gazette, Part II, Volume 154, Number 12

Registration

SOR/2020-111 May 20, 2020

EMPLOYMENT INSURANCE ACT

P.C. 2020-335 May 18, 2020

RESOLUTION

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

April 26, 2020

Graham Flack
Chairperson
Canada Employment Insurance Commission

Pierre Laliberté
Commissioner (Workers)
Canada Employment Insurance Commission

Judith Andrew
Commissioner (Employers)
Canada Employment Insurance Commission

Her 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 footnote a, approves the annexed Regulations Amending the Employment Insurance Regulations, made by the Canada Employment Insurance Commission.

Regulations Amending the Employment Insurance Regulations

Amendment

1 Paragraph 77.992(2)(a) of the Employment Insurance Regulations footnote 1 is replaced by the following:

Coming into Force

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

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

In areas with higher proportions of seasonal work, there are more unemployed workers looking for fewer available jobs during the off-season, making it especially difficult to find work after being laid off from a seasonal job. Many seasonal workers rely on the Employment Insurance (EI) Program to help them get through recurring periods of unemployment. If the number of weeks of EI benefits that a seasonal claimant qualifies for is not sufficient to bridge the period between the seasonal lay-off and the return to their seasonal work, and the seasonal claimant is unable to find other work, they are said to be experiencing an income gap or “trou noir.”

The frequency and duration of income gaps can be impacted by the cyclical nature of seasonal jobs and weather patterns as well as by the EI economic region’s rate of unemployment, which affects the duration of EI benefits.

Seasonal income gaps are not a new phenomenon. There have been consistent calls for reforms to the EI Program to better respond to the needs of workers in seasonal employment.

Background

EI regular benefits under Part I of the Employment Insurance Act (EI Act) provide temporary income replacement to eligible unemployed workers while they look for employment. The EI Program is designed to respond automatically to changes in economic conditions that affect local labour markets. The EI Program currently divides the country into 62 economic regions. Eligible individuals are entitled to between 14 and 45 weeks of EI regular benefits, depending on the regional rate of unemployment and the number of hours worked in the qualifying period. Subsection 12(2) and Schedule I of the EI Act establish the maximum number of weeks of EI benefits that claimants are entitled to receive.

Pilot projects under the EI Act

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

A number of past pilot projects (pilot projects Nos. 6, 10, and 15) were aimed at supporting workers facing an income gap. These provided up to five additional weeks of EI regular benefits to all EI claimants in 21 to 24 EI economic regions of relatively higher unemployment to test the costs and impact of extending the number of weeks of benefits.

Evaluations of these EI pilot projects have shown that providing up to an additional five weeks of benefits to all regular benefits claimants in eligible EI regions does decrease the frequency and length of income gaps amongst EI claimants whose claim history demonstrates a seasonal pattern of establishing EI regular benefits claims (“seasonal claimants”). An evaluation of Pilot Project No. 15 found that providing up to five additional weeks did reduce the incidence and duration of the income gap experienced by these seasonal claimants. It also found that the measure was not well targeted in that only 3.2% of the total $558 million of additional EI benefits paid during the pilot project were used by these seasonal claimants.

Current pilot project

Pilot Project No. 21 tests a targeting mechanism that provides up to five additional weeks of EI regular benefits to claimants who meet “seasonal criteria,” and who reside in thirteen EI regions identified as having higher proportions of EI claims meeting the “seasonal criteria” within the local labour force and higher average EI unemployment rates in 2017.

To meet the “seasonal criteria” claimants must have had in the previous five years at least three claims in which they received regular or fishing benefits in the five years prior to the start of the current claim; and for those claims at least two must have started in a window considered to be “around the same time of year” in the past five years. “Around the same time of year” is defined as the eight weeks preceding and following the week in which the current claim starts.

The thirteen EI regions included in Pilot Project No. 21 are those identified as having had higher average EI unemployment rates in 2017, and higher proportions of “seasonal claimants” within the local labour force:

Under the pilot project, the additional five weeks of benefits are available to eligible seasonal claimants who start a benefit period between August 5, 2018, and May 30, 2020.

The Government announced in late 2019 its intention to develop a permanent program that provides consistent and reliable benefits for seasonal workers.

Objective

The objective of the proposed amendment is to expand the time period in which the extra weeks are made available to eligible seasonal claimants, to enable the Commission to collect more data on the targeting mechanism.

The Commission will measure the usage of extra weeks of EI entitlement for the targeted population and compare the outcomes with claimant populations that are not eligible under the pilot project, and with narrower seasonal criteria.

Description

The EI Regulations are amended to replace the date of May 30, 2020, in subsection 77.992(2) with the date of October 30, 2021. This expands the time period in which the extra weeks are made available to eligible seasonal claimants under the pilot project. Other parameters of Pilot Project No. 21 remain unchanged.

Regulatory development

Consultation

Employment and Social Development (ESD) receives context and background information from provincial and territorial partners regarding seasonal workers on an ongoing basis. The Commission is mandated to administer the EI Program and approve all changes to the EI Regulations prior to presenting them to the Governor in Council. The Commissioner for Employers and the Commissioner for Workers establish and maintain working relationships with a wide range of organizations and individuals that are clients of or affected by ESD programs and services such as EI. These relationships enable the Commissioners to convey the concerns and positions of stakeholders regarding the administration of EI legislation, policy development and implementation, and program delivery.

The EI Commissioners for Workers and Employers held a stakeholder session on the pilot project in Essipit, Quebec on April 17, 2019. The EI Commissioner for Workers held two additional stakeholder sessions focused on Pilot Project No. 21. The sessions were in Moncton, New Brunswick on March 4, 2020, and in Rimouski, Quebec on March 6, 2020. Participants shared views on the seasonal claimant criteria, as well as on general aspects of the EI Program, such as entry requirements, the weekly benefit rate calculation, and the duration of benefits. Stakeholders were broadly supportive of expanding the period in which additional weeks are available under Pilot Project No. 21 while the Government considers its approach to a permanent measure.

Over the last few years, media coverage on seasonal workers and the “trou noir” was extensive, including more than 4 000 media articles on the topic, with much of the coverage focusing on the phenomenon of the “trou noir.” During the winter of 2017–2018, protests were held at local offices of Members of Parliament by seasonal workers advocating for supports that address the “trou noir.”

In August 2018, as part of the Budget 2018 commitment to provide $230 million to assist workers in seasonal industries, the Government of Canada announced two new supports for seasonal workers. The first was an investment of approximately $189 million to implement Pilot Project No. 21, and the second was making available up to $41 million over two years to all provinces and territories through Labour Market Development Agreements to provide skills training, wage subsidies and employment supports for workers in seasonal industries.

The August 2018 announcement received positive media coverage and was met with broad stakeholder support. The few negative media articles centred on the eligibility criteria, specifically arguing that more regions should have been considered or that the additional weeks should be extended to fishing benefits.

Provinces most impacted by the “trou noir” reacted positively to the extra weeks of benefits and additional targeted funding made available through the Labour Market Development Agreements to support workers in seasonal industries. Provinces and territories less impacted by the “trou noir” were neutral to the announcement.

The impending expiry of the pilot project has resulted in an increase in coverage and information requests related to the Government’s forward plan in recent months.

Business-oriented think tanks and some regional newspapers have continued to argue that seasonal workers over-rely on EI and that the Government is disproportionately helping seasonal industries over year-round ones. They argue that the Government should look to get people off EI by encouraging them to work.

The current pilot project has been in place since November 2018. Since the proposed amendments only extend eligibility under an existing pilot project and do not result in additional burden on businesses, the amendments were exempted from prepublication in Part I of the Canada Gazette.

Modern treaty obligations and Indigenous engagement and consultation

An assessment of modern treaty implications on the measure was conducted in support of the Memorandum to Cabinet prepared in 2018. There are no implications for modern treaty obligations or Indigenous engagement in these regulations.

Instrument choice

The EI Act provides the authority to make regulations respecting the establishment of pilot projects. Pilot Project No. 21 was established by the EI Regulations; therefore, an adjustment of the time period in which the extra weeks are made available to eligible seasonal claimants under Pilot Project No. 21 is only possible through regulatory amendments.

Regulatory analysis

Benefits and costs

Past EI pilot projects that provided additional weeks of benefits to all regular benefits claimants in eligible EI regions were found to be effective at decreasing the frequency and length of income gaps amongst seasonal claimants but not well targeted to seasonal workers. As such, Pilot Project No. 21 is aimed at building on lessons learned to date by testing the effectiveness of a new targeting mechanism.

The incremental benefit of the extension of the period of eligibility is the difference in outcomes between a permanent program that is based on the information collected from eligible claims in the period of August 5, 2018, to May 30, 2020, and one that is based on additional information collected from claims in the period of May 31, 2020, to October 30, 2021. Extending the period of eligibility under the pilot project will allow the Commission to gather additional information to more fully assess the effectiveness of Pilot Project No. 21’s targeting mechanism under different economic conditions, including the historically low unemployment rates seen in 2018 and 2019, and the COVID-19 pandemic in 2020. The latter may affect a seasonal worker’s EI claim history, which is considered as part of the targeting mechanism.

The Commission will collect information on EI entitlement, EI benefit exhaustion rates and other performance metrics among eligible claimants, under the different economic contexts. These will be compared with the outcomes of claimant populations that are not eligible under the pilot project, including those who meet some but not all aspects of the claims history criteria, and those who meet the claims history criteria but reside outside of the targeted EI regions. The additional value of the information gathered under this pilot project is more evidence to inform longer-term approaches to helping EI claimants in seasonal employment, and a better targeting mechanism that is effective under different economic circumstances.

This extension of the period of eligibility under Pilot Project No. 21 will result in a transfer from workers and employers who pay EI premiums to eligible seasonal claimants, through the payment of EI benefits. The total transfer, discounted at a 7% rate over three years, amounts to an estimated $122.2 million in present value terms, spread over fiscal years 2020–2021, 2021–2022 and 2022–2023, for an annualized amount of an estimated $46.6 million. It is estimated that more than 77 000 additional seasonal claimants in Atlantic Canada, Quebec and Yukon, where the thirteen targeted EI regions are located, would benefit from reduced incidence and duration of income gaps as a result of the extension of the period in which the extra weeks are applied to claims. The thirteen EI regions will likely benefit economically as well from the additional weeks of EI benefits as a result of recipients spending money locally.

The incremental cost to workers and employers who pay EI premiums is the cost to administer the pilot project. The total incremental cost of extending the period of eligibility under Pilot Project No. 21 amounts to an estimated $3.1 million in present value terms, spread over fiscal years 2020–2021, 2021–2022 and 2022–2023, for an annualized cost of an estimated $1.2 million.

Separate from cost-benefit considerations, an analysis based on the 2020 Actuarial Report on the Employment Insurance Premium Rate to determine the increase in premium that will be needed to ensure a balance in the EI operating account over a seven-year period, taking into account inflation, concluded that an increase of 0.12 cents per $100 of insurable earnings should be sufficient to achieve such a balance.

Small business lens

The small business lens does not apply. Unemployed workers are targeted, not small businesses.

One-for-one rule

The one-for-one rule does not apply to this amendment, as there is no change expected in administrative costs to businesses or Canadians.

The extension does not add any new burden on employers on top of the standard processes currently in place for businesses to support EI benefits. Businesses continue to be required to provide a Record of Employment when they release an employee. Claimants who are eligible automatically receive their extra weeks of entitlement when their claim is established. Claimants continue to be required to report their job search activities to Service Canada for each week they claim EI benefits. No additional action is required on behalf of the employer.

Regulatory cooperation and alignment

The proposal will extend the period of eligibility under an existing regulatory pilot project, which was already subject to a regulatory cooperation and alignment assessment, which concluded that Pilot Project No. 21 does not have any regulatory coordination and cooperation implications. It does not have implications for international agreements (trade, environmental, human rights, etc.), obligations, or voluntary standards. It is not aimed at minimizing or reducing regulatory differences, nor at increasing regulatory compatibility with another jurisdiction. It does not introduce specific Canadian requirements that differ from existing regulations in other jurisdictions for an international program. It does not seek to enable regulatory alignment with the United States as committed to under the Joint Action Plan for the Canada-United States Regulatory Cooperation Council.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus (GBA+)

This analysis uses data from the Employment Insurance Monitoring and Assessment Report and Employment Insurance Administrative Data. The Employment Insurance program does not collect data on education levels, people with disabilities, aboriginal people, and visible minorities.

In determining who would benefit from a measure providing additional weeks of benefits, the exhaustion rates of EI claimants is the relevant measure. When EI claimants use all of their EI entitlement (weeks of benefits) they are said to exhaust. It is only claimants who exhaust their benefits that are able to benefit from a measure that provides claimants with additional weeks of benefits.

In the regions identified for the EI pilot project, moderately more men than women would likely benefit from the additional weeks of benefits based on historical data captured before the establishment of the pilot project. In these regions, approximately 31 950 seasonal claims made by men (62%) and 19 580 (38%) by women are expected to exhaust their original EI entitlement and would therefore benefit from the additional weeks (on an annual basis).

This measure is not expected to result in

Implementation and service standards

Implementation

Existing implementation and enforcement mechanisms contained in Employment and Social Development’s adjudication and controls procedures will ensure that these regulatory amendments are implemented properly.

A summative evaluation of the pilot project is expected to be completed. The annual EI Monitoring and Assessment Report (the Report) is tabled in Parliament to ensure that workers, businesses and other stakeholders are aware of results of EI measures. The Report identifies annually the EI claims meeting the “seasonal criteria” in Canada, with indicators that include EI exhaustion and average duration of benefits, in addition to gender and regional breakdown.

Service standards

Service Canada provides Canadians with a single point of access to a wide range of government services and benefits, including the processing and payment of EI claims. Regarding service standards, Employment and Social Development’s 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.

Contact

Cara Scales
Director
Employment Insurance Policy
Employment and Social Development Canada
140 Promenade du Portage, Phase IV, 7th Floor
Gatineau, Quebec
K1A 0J9
Email: cara.scales@hrsdc-rhdcc.gc.ca