Vol. 139, No. 19 — September 21, 2005

Registration
SOR/2005-274 August 31, 2005

EMPLOYMENT INSURANCE ACT

Regulations Amending the Employment Insurance Regulations

RESOLUTION

The Canada Employment Insurance Commission, pursuant to subsection 55(1) of the Employment Insurance Act (see footnote a), hereby makes the annexed Regulations Amending the Employment Insurance Regulations.

July 15, 2005

P.C. 2005-1522 August 31, 2005

Her Excellency the Governor General in Council, on the recommendation of the Minister of State styled Minister of Human Resources and Skills Development, pursuant to subsection 55(1) 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

AMENDMENT

1. The Employment Insurance Regulations (see footnote 1) are amended by adding the following after section 10.1:

10.11 For the purpose of section 10.1, the amounts that are excluded from an insured person's earnings from insurable employment by subsection 2(3) of the Insurable Earnings and Collection of Premiums Regulations shall not be taken into account in determining the person's hours of insurable employment.

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.)

Description

A Tax Court of Canada Ruling (Mulvenna) has necessitated the Government clarify the policy intent underlying the current regulations addressing the calculation of hours of insurable employment.

The Tax Court ruled in June 2003, that under the current Employment Insurance Regulations (EI), the remuneration received from an employer as a "top-up" to EI maternity and parental benefits constitutes "paid leave" and the period spent on leave must be considered as insurable hours for EI purposes even though these payments were specifically excluded from the definition of insurable earnings. This means that claimants in circumstances similar to those presented in the Mulvenna case, can accumulate additional hours of insurable employment while on maternity and parental leave, which can be then used to qualify for a new claim and/or increase their EI benefit entitlement. The Tax Court decision could also have implications in respect of any other paid leave payment which are excluded from the definition of insurable eanrings.

A new section ("10.11") will be added to ensure that people receiving "uninsured" payments such as top-up benefits from their employer while on claim for EI maternity and parental benefits cannot use this leave period to accumulate additional hours of insurable employment. It is a "housekeeping" amendment that will maintain the long standing policy intent that insurable employment be linked to hours worked and that benefits from Supplemental Unemployment Benefit Plans are excluded from insured earnings. If this amendment is not put in place, people who receive top-up benefits while on EI maternity and parental leave could count this leave period as hours worked even though they do not pay EI premiums on those amounts.

Alternatives

The technical amendment is necessary in order to ensure the Regulations reflect the government's intent and clarify the concept of hours of insurable employment. The government did consider the possibility of clarifying the court decision through further legal appeal but felt the most effective recourse was to amend the Regulations. Consequently, no alternatives have been proposed.

Benefits and Costs

Since this change only clarifies the existing rules, there is no financial impact, either in the case of administrative costs or program costs. If this amendment is not made, there is a risk that costs could increase due to additional claims and longer entitlement periods without additional work investments.

Consultation

The proposed amendment was pre-published in the Canada Gazette, Part I for 30 days (Volume 139, No. 13, March 26, 2005). During the consultation period, no comments were received.

The Employment Insurance Commission has approved the regulatory amendment.

Compliance and Enforcement

Existing compliance mechanisms contained in Human Resources and Skills Development Canada adjudication and control procedures will ensure that this change is properly implemented.

Contact

Judith Richardson
Senior Policy Officer
Employment Insurance Policy
Employment Programs and Policy Design Branch
Human Resources and Skills Development
140 Promenade du Portage, 3rd Floor
Gatineau, Quebec
K1A 0J9
Telephone: (819) 994-4455
FAX: (819) 994-1662

Footnote a

S.C. 1996, c. 23

Footnote b

S.C. 1996, c. 23

Footnote 1

SOR/96-332

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