Registration

SOR/2008-257 September 4, 2008

EMPLOYMENT INSURANCE ACT

Regulations Amending the Employment Insurance Regulations

RESOLUTION

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

Ottawa, September 4, 2008

P.C. 2008-1600 September 4, 2008

Her Excellency the Governor General in Council, on the recommendation of the Minister of Human Resources and Skills Development and the Treasury Board, pursuant to paragraph 54(x) and section 109 of the Employment Insurance Act^a, 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. (1) The portion of subsection 17.1(6) of the Employment Insurance Regulations (see footnote 1) before paragraph (a) is replaced by the following:

(6) For the purposes of sections 7, 7.1, 12 and 14 and Part VIII of the Act, in respect of the period beginning on October 13, 2002 and ending on April 10, 2010, and in the case of a claimant who, during the week referred to in subsection 10(1) of the Act, was ordinarily resident in Madawaska—Charlotte, the applicable regional rate of unemployment is the greater of

(2) The portion of subsection 17.1(7) of the Regulations before paragraph (a) is replaced by the following:

(7) For the purposes of sections 7, 7.1 and 14 and Part VIII of the Act, in respect of the period beginning on October 13, 2002 and ending on April 10, 2010, and in the case of a claimant who, during the week referred to in subsection 10(1) of the Act, was ordinarily resident outside Canada and who was last employed in insurable employment in Canada in Madawaska—Charlotte, the applicable regional rate of unemployment is the greater of

(3) The portion of subsection 17.1(12) of the Regulations before paragraph (a) is replaced by the following:

(12) For the purposes of sections 7, 7.1, 12 and 14 and Part VIII of the Act, in respect of the period beginning on October 13, 2002 and ending on April 10, 2010, and in the case of a claimant who, during the week referred to in subsection 10(1) of the Act, was ordinarily resident in Lower St. Lawrence and North Shore, the applicable regional rate of unemployment is the greater of

(4) The portion of subsection 17.1(13) of the Regulations before paragraph (a) is replaced by the following:

(13) For the purposes of sections 7, 7.1 and 14 and Part VIII of the Act, in respect of the period beginning on October 13, 2002 and ending on April 10, 2010, and in the case of a claimant who, during the week referred to in subsection 10(1) of the Act, was ordinarily resident outside Canada and who was last employed in insurable employment in Canada in Lower St. Lawrence and North Shore, the applicable regional rate of unemployment is the greater of

2. The Regulations are amended by adding the following after section 77.6:

PILOT PROJECT FOR CALCULATING BENEFIT RATE BASED ON CLAIMANT’S 14 HIGHEST WEEKS OF INSURABLE EARNINGS (2)

77.7 (1) Pilot Project No. 11 is established for the purpose of testing whether paying benefits based on calculating the rate of weekly benefits 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. 11 applies in respect of every claimant whose benefit period is established in the period beginning on October 26, 2008 and ending on October 23, 2010 and who is ordinarily resident in a region described in Schedule I that is set out in Schedule II.8, other than a claimant in respect of whom the Employment Insurance (Fishing) Regulations apply.

(3) For the purposes of Pilot Project No. 11,

(a) subsections 14(2), (4) and (4.1) of the Act do not apply;

(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”;

(c) the references in section 24.1 of these Regulations to “the rate calculation period” shall be read as references to “the qualifying period”;

(d) section 24.2 of these Regulations does not apply;

(e) the insurable earnings in a claimant’s qualifying period shall be the aggregate of

(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

(ii) any insurable earnings paid or payable to the claimant in the qualifying period under section 24.1; and

(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

(a) allocate the amount of insurable earnings proportionately over the pay period; or

(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.

PILOT PROJECT INCREASING ALLOWABLE EARNINGS FROM EMPLOYMENT WHILE CLAIMANT IS RECEIVING BENEFITS (2)

77.8 (1) Pilot Project No. 12 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. 12 applies in respect of every claimant whose benefit period is established or ends in the period beginning on December 7, 2008 and ending on December 4, 2010, and who is ordinarily resident in a region described in Schedule I.

(3) For the purpose of Pilot Project No. 12, subsection 19(2) of the Act is adapted such that the maximum allowable earnings shall be

(a) $75, if the claimant’s rate of weekly benefits is less than $188; and

(b) 40% of the claimant’s rate of weekly benefits, if that rate is $188 or more.

(4) For greater certainty, this section ceases to have effect on December 4, 2010.

PILOT PROJECT PROVIDING INCREASED ACCESS TO EMPLOYMENT AND UNEMPLOYMENT BENEFITS FOR NEW ENTRANTS AND RE-ENTRANTS (2)

77.9 (1) Pilot Project No. 13 is established for the purpose of testing the labour market impact of decreasing, for new entrants and re-entrants to the labour force who have access to employment programs established under Part II of the Act, the number of hours of insurable employment required for them to qualify for benefits.

(2) Pilot Project No. 13 applies in respect of every claimant who is a new entrant or a re-entrant to the labour force, whose benefit period is established in the period beginning on December 7, 2008 and ending on December 4, 2010 and who is ordinarily resident in a region described in Schedule I that is set out in Schedule II.9, other than a claimant in respect of whom the Employment Insurance (Fishing) Regulations apply.

(3) For the purposes of Pilot Project No. 13,

(a) the reference in paragraph 7(3)(b) of the Act to “910 or more hours of insurable employment” shall be read as a reference to “not less than 840 and not more than 909 hours of insurable employment”;

(b) the reference in paragraph 7.1(2)(a) of the Act to “1,138 hours” shall be read as a reference to “1,050 hours”;

(c) the reference in paragraph 7.1(2)(b) of the Act to “1,365 hours” shall be read as a reference to “1,260 hours”;

(d) the reference in paragraph 7.1(2)(c) of the Act to “1,400 hours” shall be read as a reference to “1,294 hours”; and

(e) subsection 27(1) of the Act does not apply in respect of a referral made by the Commission under subsection (4).

(4) The Commission shall refer every claimant who meets the requirements of subsection (2) and has had the number of hours of insurable employment required by subsection 7(3) or 7.1(2) of the Act, as applicable and as adapted by subsection (3), to an appropriate agency to have their employment needs assessed and to determine whether skills training or other employment assistance would be of benefit to them in their search for suitable employment.

3. (1) Schedule I to the Regulations is amended by replacing “ (Subsections 18(1), 77.2(2), 77.3(2), 77.4(2), 77.5(2) and 77.6(2)) ” after the heading “SCHEDULE I” with “( Subsections 18(1), 77.2(2), 77.3(2), 77.4(2), 77.5(2), 77.6(2) and 77.7(2)) ”.

(2) Schedule I to the Regulations is amended by replacing “ (Subsections 18(1), 77.2(2), 77.3(2), 77.4(2), 77.5(2), 77.6(2) and 77.7(2)) ” after the heading “SCHEDULE I” with “( Subsections 18(1), 77.2(2), 77.3(2), 77.4(2), 77.5(2), 77.6(2), 77.7(2), 77.8(2) and 77.9(2)) ”

4. The Regulations are amended by adding, after Schedule II.7, the Schedules II.8 and II.9 set out in the schedule to these Regulations.

COMING INTO FORCE

5. (1) Subject to subsections (2) and (3), these Regulations come into force on the day on which they are registered.

(2) Section 77.7 of the Regulations and the heading before it, as enacted by section 2, subsection 3(1) of these Regulations and Schedule II.8 to the Regulations as enacted by section 4, come into force on October 26, 2008.

(3) The heading before section 77.8 and sections 77.8 and 77.9, as enacted by section 2, subsection 3(2) of these Regulations and Schedule II.9 to the Regulations as enacted by section 4, come into force on December 7, 2008.

SCHEDULE
(Section 4)

SCHEDULE II.8
(Subsection 77.7(2))

REGIONS INCLUDED IN PILOT PROJECT NO. 11

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

SCHEDULE II.9
(Subsection 77.9(2))

REGIONS INCLUDED IN PILOT PROJECT NO. 13

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

Three Employment Insurance (EI) pilot projects (“Best 14 Weeks,” “Working While on Claim,” and “New Entrant/Re-Entrant”) operating in EI regions of relatively high unemployment are scheduled to conclude in the fall of 2008. These Pilot Projects are intended to test income supports for workers who face employment challenges, as well as to provide evidence and data on Canada’s labour market. As there has been limited evidence to date, regulations will reintroduce, with modifications, three pilot projects to examine potential changes to the program and provide important information on labour market effects and costs of such changes.

The transitional measures for two EI economic regions (Madawaska—Charlotte in New Brunswick and Lower St. Lawrence and North Shore in Quebec) are scheduled to conclude on October 4, 2008. The regulatory amendment is intended to extend the transitional measures to April 10, 2010.

Objectives

The Government has recognized that not all regions are seeing the same growth, and that individuals employed in traditional, seasonal work face challenges. These pilots are consistent with the objective of helping all Canadians participate in Canada’s labour market. Reintroduction of the pilot projects, based on the previous pilot projects but with modifications, will allow additional data from the current pilots to become available and to provide new data to identify trends and assess the role of other factors such as changes in labour market conditions. In addition, it will allow the Department of Human Resources and Social Development (HRSD) to examine potential changes to make the EI program more responsive to the labour market situation. They will also provide important information on labour market effects and costs of such changes.

The objective of the transitional measures is to ensure workers in the affected regions have time to adjust to the actual EI regional boundaries.

Description

Pilot projects

In accordance with the EI Act, three pilot projects were introduced in 2005 to test the labour market effects of changes to various EI parameters in 23 EI economic regions of relatively high unemployment. These were introduced to address the circumstances facing workers in those regions.

Given the complexity of issues surrounding the Canadian labour market, pilot projects allow the Government time to test proposed improvements to the EI Act’s current provisions prior to considering a legislative change and a national application of the measure.

Best 14 Weeks

The current “Best 14 Weeks” pilot calculates EI benefits based on a claimant’s 14 highest weeks of insurable earnings over the 52 weeks preceding a claim to test whether paying benefits using this approach encourages claimants to accept all available work.

With the addition of section 77.7 to the EI Regulations, the modified pilot project reintroduces the Best 14 Weeks pilot project for two years, from October 26, 2008 until October 23, 2010, in EI economic regions where the unemployment rate is currently 8% or above (Schedule II.8 of the EI Regulations).

Under the modified pilot, claimants in EI regions where the unemployment rate is 8% and above will have their weekly benefits calculated based on the best 14 weeks approach.

The modified pilot project will continue to test whether paying benefits using this approach provides an incentive for individuals to accept work that would have previously lowered their benefits, and whether employers facing labour shortages will have access to additional workers.

As a result of the pilot project being continued only in EI economic regions where the unemployment rate is currently 8% or above, two EI regions will no longer be included in the pilot project (Southern Coastal British Columbia and Sudbury) and four EI regions will be added to the pilot (Oshawa, Windsor, Huron and Niagara).

Example

Samantha, a seasonal worker in Charlevoix, worked 18 weeks prior to being laid off from her job. The unemployment rate in Charlevoix was over 10% at the time. Because work tends not to be full time at the beginning and end of the season, Samantha had different levels of earnings during these periods, though her normal full-time weekly earnings are $900.

Before the Best 14 Weeks pilot project, her earnings would have been averaged over the number of weeks of work and Samantha’s average weekly earnings for calculating her EI benefits would have been $695, resulting in a weekly benefit of $382.

Under the Best 14 Weeks pilot project, Samantha is able to use her best 14 weeks of earnings ($900 per week) to determine the EI benefit rate, which will result in a weekly EI benefit at the $435 maximum.

Working While on Claim

The current “Working While on Claim” pilot increases allowable earnings from employment while a claimant is receiving benefits from the current threshold of the greater of $50 or 25% of weekly benefits to the greater of $75 or 40% to test whether this increased threshold will provide a greater incentive for individuals to accept all available work while receiving EI benefits.

With the addition of section 77.8 to the EI Regulations, the modified pilot project reintroduces the Working While on Claim pilot project under the same parameters for two years, from December 7, 2008 until December 4, 2010, expanding its application to all 58 EI economic regions across Canada.

The modified pilot project will continue to test whether this increased threshold will provide a greater incentive for individuals to accept all available work while receiving EI benefits.

Example

Tom, a fisherman in New Brunswick, receives $400 per week in EI benefits. To help maintain his standard of living and increase his earnings, Tom works while on claim and earns the maximum allowable. Before the Working While on Claim pilot project, Tom was allowed to earn $100 per week. This meant that his maximum combined earnings from EI benefits and income from employment was $500.

Under the pilot project measures, Tom is able to earn a maximum of $160 per week while on claim, meaning that his combined weekly earnings from EI benefits and employment income can be as much as $560 — an increase of $60.

New Entrant/Re-Entrant

The current “New Entrant/Re-Entrant” pilot allows individuals who are new to the labour market or returning after a significant absence to qualify for EI benefits with between 840 and 909 insurable hours of employment instead of 910 hours and informs them of the availability of EI Part II employment programming to test whether this will improve their employability and help reduce future reliance on EI benefits.

With the addition of section 77.9 to the EI Regulations, the modified pilot project reintroduces the New Entrant/Re-Entrant pilot project under the same parameters for two years, from December 7, 2008 until December 4, 2010, in EI economic regions where the unemployment rate is currently 8% or above (Schedule II.9 of the EI Regulations).

Under the modified pilot, individuals who are new to the labour market or returning after a significant absence would be allowed to qualify for EI benefits with 840 insurable hours of employment instead of 910 hours, and they would be informed of the availability of EI Part II employment programming.

The modified pilot project will continue to test whether this will improve their employability and help reduce future reliance on EI benefits.

As a result of the pilot project being continued only in EI economic regions where the unemployment rate is currently 8% or above, two EI regions will no longer be included in the pilot project (Southern Coastal British Columbia and Sudbury) and four EI regions will be added to the pilot (Oshawa, Windsor, Huron and Niagara).

Example

Alice is a worker in Northern Ontario who is new to the labour market and has accumulated 875 hours of insured employment, or employment where EI premiums have been paid. Without the New-Entrant/Re-Entrant pilot project, Alice would not be eligible for EI benefits until she had worked 910 insured hours.

With the pilot project, Alice will qualify for 28 weeks of EI income benefits. In addition, Alice would be informed of EI employment programming that could enhance her skills and increase her chances of securing employment.

Transitional measures

Under the EI Program, the EI economic regions ensure that people residing in areas of similar unemployment levels face comparable EI rules in terms of eligibility and length of benefit entitlement. Subsection 18(2) of the EI Regulations requires that EI regional boundaries be reviewed every five years to ensure that they reflect current labour market conditions and geographic representation of communities across Canada.

The current 58 EI economic regions were established on July 9, 2000 (SOR/2000-268). The boundaries were based on Statistics Canada data and other labour market information. However, the introduction of the current economic regions had an impact that was greater than expected in two specific areas of the country: the regions of Madawaska—Charlotte in New Brunswick and Lower St. Lawrence and North Shore in Quebec. It was found that people in the two affected areas, particularly seasonal workers, were adversely impacted by the increase in the number of hours needed to qualify for EI that accorded with actual unemployment rates in the regions.

In response to the negative impact experienced by many workers in these areas, transitional measures were adopted to provide an adjustment period. As described in section 17.1 of the EI Regulations, the approach used was to blend unemployment rates from the new regions and the adjacent regions to which they belonged before the July 9, 2000 changes and use the higher of the blended unemployment rates in the new regions or the actual rate of unemployment in the economic region as published by Statistics Canada to determine benefit entitlement. The effect of these measures is to apply a higher unemployment rate than would normally be the case. As a result, claimants in the two regions require fewer hours to qualify for EI, and receive benefits for a longer period, than would be the case without the transitional measures.

The transitional measures, with extensions, have been in place since September 2000 (SOR/2000-355), and were most recently extended to October 4, 2008. This extension was intended to ensure that the expiry of the transitional measures corresponded with the conclusion of the EI boundaries review in 2008.

A review of geographical and labour-force data from Statistics Canada demonstrated that the current EI regional boundaries were working well overall, and a decision was made that the boundaries did not need to be changed. The purpose of the extension of the transitional measures in Madawaska—Charlotte and the Lower St. Lawrence and North Shore EI economic regions for 18 months is to complete the adjustment to the actual EI regional boundaries and ensure that the conclusion of the transitional measures does not occur when the work season is ending for many workers in these regions.

For Madawaska—Charlotte in New Brunswick, during the period of August 10, 2008 to September 6, 2008, if the actual unemployment rate of 9.7% was used, a claimant would need 560 hours of insurable employment to be able to establish a claim. The minimum number of weeks payable would be 25 and the maximum number of weeks payable would be 45 weeks, depending on the number of hours worked. With the transitional rules, the unemployment rate was 11.0%. As such, the number of hours required to qualify was lowered to 525, the minimum number of weeks payable was increased to 26 and the maximum number of weeks payable remained at 45.

For Lower St. Lawrence and North Shore in Quebec, for the same period, if the actual unemployment rate of 9.4% was used, a claimant would need 560 hours of insurable employment to be able to establish a claim. The minimum number of weeks payable would be 25 and the maximum number of weeks payable would be 45 weeks, depending on the number of hours worked. With the transitional rules, the unemployment rate was 11.6%. The number of hours required to qualify was therefore lowered to 490, the minimum number of weeks payable was increased to 28 and the maximum number of weeks payable remained at 45.

Regulatory and non-regulatory options considered

The only non-regulatory alternative is to put in place a legislative amendment to the EI Act — a process which requires a Government bill to be enacted by Parliament. As there is insufficient evidence to date regarding the labour market impacts of the three pilot projects, there is a need for further time and data to determine the effectiveness of these measures prior to proposing amendments to the legislation.

Benefits and costs

The pilot projects will enable HRSD to test whether changes to EI parameters will address employment issues faced by seasonal and non-standard workers. In addition, HRSD will be able to assess whether the measures achieve the objectives, and will be able to evaluate these impacts without putting in place a legislative change.

Best 14 Weeks

It is estimated that approximately 307 000 claimants per year will benefit from this pilot project, at an estimated cost of $259 million per year.

Working While on Claim

It is estimated that approximately 520 000 claimants per year will benefit from the pilot project, at an estimated cost of $98 million per year.

New Entrant/Re-Entrant

It is estimated that approximately 9 000 claimants per year will benefit from the pilot project, at an estimated of cost of $49 million per year.

Transitional measures

It is estimated that approximately 19 000 claimants per year will benefit from the provisions at an estimated cost of $25 million per year.

Consultation

The new pilot projects replace their previous equivalents with modifications to enhance the data and to reflect current labour market conditions. Reactions to the previous pilots were generally positive.

Regarding the transitional measures, in 2000, HRSD regional staff engaged in extensive consultations through local committees in both affected regions over an extended period of time following the implementation of the new boundaries. Since then, community representatives and individuals continue to engage HRSD on this issue.

These amendments to the EI Regulations have been approved by the Canada Employment Insurance Commission, which includes representatives for workers and employers.

Selected option and cooperation

Pilot projects

As a whole, results to date for the three pilots provide no conclusive evidence on labour market impacts as a result of changes in claimants’ behaviour. Given that only one year of data was available for analysis, additional cycles of data would be required to identify and confirm any potential trends and the effects of the various pilots on work incentives, and to assess the role of other factors such as changes in labour market conditions.

Under this option, reintroduction of the pilot projects, with modifications, will allow additional data from the current pilots to become available and to provide new data to identify trends and assess the role of other factors such as changes in labour market conditions. In addition, it will allow the HRSD to examine potential changes to make the EI program more responsive to the labour market situation. They will also provide important information on labour market effects and costs of such changes.

Transitional measures

Extending transitional measures for Madawaska—Charlotte and the Lower St. Lawrence and North Shore EI economic regions for 18 months will complete the adjustment period to the actual EI regional boundaries and ensure that the conclusion of the transitional measures does not occur when the work season is ending for many workers in these regions.

Implementation, enforcement and service standards

As the new pilot projects and extension of the transitional measures are based on the current ones, implementation will require the same type of payroll information as was required for the previous pilots and transitional measures.

The Government of Canada will continue to monitor the effects of the provisions, which will be reported in the Employment Insurance Monitoring and Assessment Report, tabled in Parliament.

Performance measurement and evaluation

A formal evaluation of the pilot projects will be undertaken to determine the impact and the effectiveness of the pilots on the EI program and the labour market. Findings will be reported annually in the EI Monitoring and Assessment Report.

HRSD’s existing compliance mechanisms will ensure that these provisions are properly implemented.

Contact

Michael Duffy
Director
Legislative and Regulatory Policy Design
Skills and Employment Branch
Human Resources and Social Development
140 Promenade du Portage, 3rd Floor
Gatineau, Quebec
K1A 0J9
Telephone: 819-997-5034
Fax: 819-934-6631

Footnote a
S.C. 1996, c. 23

Footnote 1
SOR/96-332

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