Employment insurance sweeping reforms
Diane Finley, Minister of Human Resources and Skills Development recently announced that the ministry is making significant changes to the employment insurance system to ensure its efficiency. At the same time as these changes were announced, the Canadian Press learned that the government has stopped providing Statistics Canada “key and current information about how much federal money is flowing to each of the provinces for EI claimants.”
According to the government, the current legislation lacks clarity with respect to what constitutes suitable employment and a reasonable job search. The Employment Insurance Act states that claimants are obligated to search for and accept suitable employment but does not define the term. The Act only defines what “not suitable employment” is.
Labour groups, the press and others have been abuzz over the news and offered their opinions on what the changes may mean in practical terms.
According to the National Union of Public and General Employees (NUPGE):
Depending on the category, unemployed workers may have to broaden their geographic search area, accept lower wages and accept different work outside their area of expertise… The changes will have a dramatic affect on those regularly laid off from seasonal jobs or who are facing downsizing due to austerity measures…
According to CBC News:
Proposed changes to employment insurance could have a big impact in New Brunswick. New Brunswick has a large seasonal workforce, including those in the fishing industry, forestry, tourism and construction. The federal government plans to tighten the rules for frequent users in seasonal industries—making them take jobs in their region that are available off-season, rather than collect EI and wait for their old job to restart.
So what are these infamous changes?
The changes will clarify what suitable employment is by meeting the following factors:
- Personal circumstances of a Canadian receiving EI benefits. A person receiving EI will not have to accept work if:
- They have a health problem that prevents them from taking a particular job
- They have family obligations that prevent them from working at certain times of the day
- They have limited transportation options in terms of commuting to and from work
- They are not physically capable of performing the work
- Working conditions (i.e., position offered is not vacant due directly to a strike, lockout or other labour dispute)
- Hours of work (i.e., all available hours of work, including hours per day and available outside the previous work schedule, are deemed to be suitable for employment)
- Commuting time (i.e., workplace is within a one hour commute, could be higher taking into account previous commuting history and community’s average commuting time)
There are two additional criteria that will determine the definition for suitable employment. These will vary based on the claimant’s EI history and the duration of the claim. They are:
- Type of work (responsibilities, tasks, qualifications, experience)
As the duration of an EI claim increases, claimants would be required to expand what is considered suitable employment in terms of type of work and hourly wage. As is already the case, Canadians would not be required to take jobs with unsafe working conditions. The time intervals for when this would happen would vary for each category of EI claimant.
The hourly wage could not be lower than the minimum wage effective in the province or territory where employment is being sought.
In determining these criteria, EI claimants will be placed in one of three categories:
- Long-tenured workers would be those who have paid into the EI system for the past 7 of 10 years and who, over the last 5 years, have collected EI regular or fishing benefits for 35 weeks or less or are individuals who have worked and paid EI premiums for a significant period of time and have previously made limited use of EI regular benefit. Long-tenured workers would be required to expand the scope of their job search the longer they receive EI benefits. However, long-tenured workers would be provided with significantly more time to search for a job within their usual occupation and at a similar wage (starting at 90 percent of previous hourly wage). After 18 weeks on EI benefits, long-tenured workers would be required to expand their job search to jobs similar to the job they normal perform and to accept wages starting at 80 percent of their previous hourly wage.
- Frequent claimants would be those who have had three or more claims for regular or fishing benefits and collected benefits for a total of more than 60 weeks in the past five years. Frequent claimants would be required to expand their job search to jobs similar to the job they normal perform at the onset of their EI claim (1–6 weeks) and accept wages starting at 80 percent of their previous hourly wage. After receiving benefits for seven weeks, they would be required to accept any work they are qualified to perform (with on-the-job training, if required) and to accept wages starting at 70 percent of their previous hourly wage.
- Occasional claimants would be all other claimants. Occasional claimants would be allowed to limit their job search to their usual occupation and wage (at least 90 percent of previous hourly wage) for the first 6 weeks of their claim. After receiving benefits for 7 weeks, they would be required to expand their job search to jobs similar to the job they normally perform with wages at 80 percent of previous earnings. After 18 weeks, they would be required to further expand their job search to include any work that they are qualified to perform (with on the job training, if required) and to accept wages starting at 70 percent of their previous earnings but not lower than the prevailing minimum wage.
Reasonable job search
EI claimants’ job search efforts would be assessed based on the following criteria:
- Job search and employability activities — Canadians receiving EI benefits will be required to complete the following job search activities while collecting benefits:
- Researching and assessing job prospects
- Preparing for job application (preparing resume)
- Searching for job vacancies
- Applying for positions
- Attending interviews
- Other efforts to improve employability (workshops, employment agencies, job fairs, networking, etc.)
- Canadians receiving EI benefits will be required to look for a job every day they receive benefits. The frequency of their job search and the diversity of the search should be consistent with the opportunities available.
- When looking for work, the work being sought by a Canadian receiving EI benefits will have to align with the definition of suitable employment.
- Canadians receiving EI benefits would be required to keep a record of their job search activities and submit, when requested, evidence supporting all job search activities undertaken.
EI claimants who do not comply with job search requirements risk losing their benefits until such time as they comply.
According to the government, through Job Alerts, people on EI receive up to three job postings when they apply and complete their online report every two weeks. However, many claimants do not receive any listings because the Job Bank is the only source of postings being used and carries approximately one in five jobs advertised online in Canada. This is not as efficient or effective as it could be
The government intends to improve the system and send job postings twice a day to Canadians receiving EI benefits for their chosen occupation. These job postings will come from a broader range of sources, including from private-sector job boards.
This new Job Alert system will send job postings to Canadians receiving EI benefits from their chosen occupation as well as related occupational sectors.
While Canadians receiving EI benefits would not be required to accept available work outside a reasonable commuting distance, job postings from different regions will be sent to them each day so they were aware of all available work in their chosen (or related) occupation across Canada.
The new system will also include labour market information on the demands and current wage rates of selected occupations and related jobs. Having access to this type of information will allow Canadians receiving EI benefits to make informed decisions about how best to conduct or expand their job search.
Hiring Canadians first before foreign workers
According to the government, there is significant evidence to suggest that some employers are hiring temporary foreign workers (TFWs) while Canadians/permanent residents are making claims for employment insurance in the same occupation and province.
The federal government will introduce coordination between the Temporary Foreign Worker Program and the EI program to better connect unemployed Canadians with available jobs, in their local area.
Creating a link between the EI and TFW programs will help make local and qualified Canadian workers better aware of job opportunities through the Job Alert system, while ensuring temporary foreign workers are employed where they are most needed. Canadians should have the opportunity to access these jobs before employers turn to temporary foreign workers.
- In January 2012, Albertan employers received positive confirmation for 1,261 TFW positions for food counter attendants. At the same time, nearly 350 people made a claim for EI who had cited significant experience in the same occupation and province.
- Furthermore, over 2,200 general farm workers in Ontario submitted claims for EI in the same month, while employers received approval to hire over 1,500 foreign nationals for the same occupation.
- Finally, on the east coast, in January 2012, Prince Edward Island collected 294 claims for EI from out-of-work fish plant workers, while 60 TFWs were approved to enter the province to work in the same occupation.
Other EI changes coming down the pipe
The federal government’s Economic Action Plan 2012 announced a new national EI pilot project that will ensure claimants benefit from accepting more work while on EI. Effective August 5, 2012, the new Working While on Claim pilot project will cut the current EI clawback rate in half (to 50 percent of earnings) and apply it to all earnings while on claim. As claimants search for permanent employment, this new pilot will increase the benefit from accepting all available work by allowing them to keep more of what they earn while on EI. Previously, only a portion of earnings were exempt from the clawback; once this exemption was passed, EI benefits were clawed back dollar for dollar. The practical result of this policy was that claimants reduced their labour force attachment by turning down work that exceeded this exemption.
The Economic Action Plan is introducing a new, permanent national approach to better align the calculation of the weekly amount an EI claimant receives with their regional labour market conditions. The amount of a claimant’s weekly benefits will be determined using an average of their “best weeks” of employment. In higher unemployment regions fewer best weeks will be used in this calculation, making it more beneficial for workers to accept all available work in slower seasons of employment. By replacing a selective pilot in 25 regions with a national program, we will ensure fairness and flexibility so that those living in regions with similar labour market conditions will receive similar benefits. EI rules currently in effect will continue to apply until the new measure is implemented on April 7, 2013, subject to approval by Parliament. As a result, the Best 14 Weeks pilot project will be extended to April 6, 2013, in the current 25 participating EI regions.
So now you know what these changes are. You decide what potential impact these changes will have on workers, the labour market and your workforce.
First Reference Human Resources and Compliance Managing Editor