In March 2016 the federal government announced changes to Employment Insurance (EI) rules in Canada.  Effective January 1, 2017, the EI waiting period has been reduced from two (2) weeks to one (1) week by way of amendments to s. 208 of the Employment Insurance Act, SC 1996, c 23.  The EI waiting period change will only impact benefit periods starting on or after January 1, 2017. The reduction of the waiting period applies to all types of EI benefits – regular, sickness, maternity, parental, compassionate care, parents of critically ill children, and special benefits for self-employed individuals.

While claimants are still entitled to the same maximum number of weeks of EI benefits, the waiting period may have indirect implications for employees and employers who have top-up arrangements that supplement EI. Reducing the waiting period shifts forward the period during which EI benefits are payable. In some cases, employer payments that supplement EI maternity and parental benefits may be aligned to the two-week waiting period and the reduction of the waiting period may have impacts for employees or employers.

The federal government has taken steps to mitigate the potential impact on employers’ and employees’ plans.  On October 15, 2016, draft amendments to the Employment Insurance Regulations, SOR 96-332 (EI Reg), were published addressing how the shorter EI period will impact supplement unemployment benefit (SUB) plans and maternity/parental leave top-up plans.  Also, how the shorter waiting period will impact sick leave or short-term disability (STD) plans that qualify for the EI Premium Reduction Program (PRP).  These amendments are not, as of yet, in force, and do not address the immediate impact on employers that must administer such benefits to employees in light of the reduced waiting period.

Until the amendments to the EI Reg come into force, an employer should be aware of and consider the following key implications to its business as a result of the reduced waiting period.

Key implications and considerations for employers:

  • SUB and Top-Up Plans – Employers offering of SUB type plans (including EI top-up, maternity leave, leave for care of a child, and compassionate care leave) may see a reduction in plan costs as employees will be able to access EI benefits earlier in their leave period. SUB plan designs may need to be modified to ensure that plan recipients are provided with the intended level of income support during the benefits period.
  • Long term disability (LTD) plans – Employers may consider adjusting its LTD elimination period to coordinate with changes to other programs.
  • EI PRP –  The EI PRP permits employers to use a lower EI premium rate when the employer provides a STD or sick leave plan that meets specific requirements set out in the EI Reg.  Currently, a STD or sick leave plan that qualifies for the EI PRP can include an elimination period of up to 14 days before STD or sick leave benefits become payable. This 14-day elimination period corresponded with the two-week waiting period. The EI Reg will be amended to provide that the maximum elimination period is seven (7) days, in order to align with the new one (1) week waiting period for EI benefits. As a result, employers with STD or sick leave plans that have an elimination period of more than seven (7) days will no longer qualify for the PRP rebate.   However, the proposed amendments to the EI Reg include a transitional provision to provide existing plans participating in the PRP with a four year period to update their plans while continuing to qualify for participation in the PRP. This transitional provision will apply to plans that are in place before the reduction of the waiting period, and expires on January 3, 2021.  However, going forward, employers with plans currently registered with the EI PRP will have to reduce the waiting period from two (2) weeks’ to one (1) week in order to preserve any EI premium reduction it receives.

Overall, employers should begin steps to review its plans and programs to assess the impact of the reduced EI waiting period, and to determine how to administer such plans during the transitional period.

Written with the assistance of Rebecca Silverberg, articling student.

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