A. Eligibility Requirements for Regular Benefits

As mentioned previously, to be eligible for regular benefits, unemployed individuals must be covered by the EI plan, which means they must have contributed to the EI program within the previous 12 months – in other words, they must have had insurable employment. They must also have a valid job separation (that is, they were not responsible for their job termination) and have accumulated enough insurable hours in the last year, or since their last benefits period.[20] Claimants must also be available for work, unless they are engaged in jury service or are sick or injured, and they must also make reasonable and customary efforts to obtain suitable employment.[21] All these eligibility requirements inevitably impact accessibility to EI for unemployed Canadians.

1. Insurable Employment

Employment is insurable when it is performed for one or more employers, including provincial, territorial and federal governments, and the Canadian Armed Forces. Some employment is not insurable, such as self-employed work, casual employment in agriculture or employment as a member of a religious order where the person has taken a vow of poverty. The requirements for insurable employment also apply to special benefits, as described later in this report. The only exception is that, since 2010, special benefits have been available to self-employed workers who register in the program.[22]

2. Valid Reason for Job Separation

Claimants are ineligible for regular EI benefits if their reasons for job separation are deemed invalid, including quitting the job without just cause (such as leaving a job to go to school, dissatisfaction with the job, or retirement) or dismissal with cause.[23]

Marie-Hélène Arruda was one of the few witnesses who addressed issues related to this eligibility requirement. She told the Committee that the Mouvement autonome et solidaire des sans-emploi du Québec believes a maximum disqualification period of six weeks would be a better way to penalize non-compliant conduct, such as refusing suitable employment, voluntary departure, or misconduct.[24]

Hans Marotte, a lawyer working with Mouvement Action-Chômage de Montréal and a representative of the Inter-Provincial EI Working Group, suggested that “the legislation currently deters those who know and penalizes those who try.”[25] He raised an issue that arises when someone loses their job and then, while they are receiving EI benefits, finds another job. If the individual quits that job, even for valid reasons, they are no longer eligible for benefits due to the valid job separation requirement. According to Mr. Marotte, people who are familiar with the EI program may be aware of the disincentives to try new jobs while they are receiving benefits, while those who are not familiar with the EI system may try out alternate employment and be penalized afterward, should it not work out.[26]

The Committee believes that EI claimants must be encouraged to try new jobs during their benefits period, and should not be discouraged from doing so by eligibility rules that are too restrictive. For that reason, the Committee provides the following recommendation:

RECOMMENDATION 1

The Committee recommends that the federal government review the eligibility requirement for “valid job separation” to allow employment insurance claimants who find a new job during the benefits period to retain their EI benefits should the employment not be suitable.

3. Required Number of Hours of Insurable Employment

a. Persons Other than Those who are New Entrants or Re-Entrants

With the exception of people who are new entrants or re-entrants to the labour market, the number of hours of insurable employment required to be eligible for regular benefits varies by region, ranging from 420 hours to 700 hours[27] during the qualifying period,[28] depending on the regional unemployment rate. Areas with higher unemployment rates require fewer hours to be eligible for benefits, as it is more difficult to find work and accumulate a good number of work hours in those circumstances. For example, unemployed individuals must have accumulated 700 hours when the regional unemployment rate is 6% and under, or 420 hours when the rate is more than 13%.[29] This EI eligibility requirement is commonly known as the “variable entrance requirement”.

Throughout the study, several witnesses, many of whom were labour stakeholders, called for a single EI eligibility standard. A document submitted by the CEIC’s Commissioner for Workers mentioned that, “for many years now, Labour stakeholders have supported the elimination of the […] variable entrance requirement.”[30]

According to David Gray, a professor of economics at the University of Ottawa, “most economists are opposed to regionally based benefits, because they discourage regional geographic labour mobility and undermine the efficiency of the labour market.”[31] He added that “we’re just about the only country on this planet that has these variable entry requirements and extended benefits on a regional basis.”[32]

Many of the witnesses who support a single EI entrance requirement were also in favour of reducing the number of hours required to qualify for benefits so as to increase access for the most vulnerable workers, such as part-time workers. For example, according to Mr. Marotte, the Mouvement Action-Chômage de Montréal recommends establishing a single entrance requirement of 350 hours of work,[33] while the International Alliance of Theatrical Stage Employees,[34] the Fédération des travailleurs et travailleuses du Québec[35] and Unifor were all in favour of a 360‑hour threshold.[36] The CEIC’s Commissioner for Workers, Mary-Lou Donnelly, also said that many of the stakeholders she represents support the 360‑hour threshold.[37]

Colin Busby, from the C.D. Howe Institute, was also in favour of a single entrance requirement, but advised that it would be difficult to determine the optimal number of hours at which to establish this threshold and to reach a consensus in this respect.

I think there’s probably some broad consensus on a harmonized rate, but you can do all the econometrics studies you want and I don’t think you’ll ever come to a reasonably good conclusion as to what it should be, because there’s always going to be some kind of worker who will be affected in a negative way as a consequence of it. What’s nice about the 360-hour proposal is that it refers to part-time workers. It would be a nice thing to capture part-time workers, but if we go that low, then the problem is that you get an extreme risk of creating a large level of dependency and encouragement of seasonal work.[38]

On the other hand, Daniel Kelly, President and Chief Executive Officer, Canadian Federation of Independent Business (CFIB), expressed concerns with reducing the number of hours required to be eligible for EI benefits. He stated that “any thought to go in that direction, making it easier to get on or stay on EI, is at odds with the employer’s interest. Many small firms feel they are competing for workers against the employment insurance system, and that’s something that shouldn’t be allowed.”[39]

According to the data collected by the CFIB and shared with the Committee by Mr. Kelly, many small and medium-sized enterprises (SMEs) have had employees ask them to be laid off so they could receive EI benefits. While employers are in favour of a good, well-funded EI system available to those who lose a job through no fault of their own, the CFIB said more needs to be done to ensure that EI “doesn’t encourage people to go and sit on the sidelines of the labour market as opposed to being actively employed.”[40]

Echoing this concern, Judith Andrew, CEIC’s Commissioner for Employers, observed that employers generally do not support reducing the number of hours to 360 hours, or even 420 hours. Rather, they believe employees must have a strong attachment to the labour market.[41]

b. New Entrants or Re-Entrants to the Labour Market

Currently, in order to be eligible for EI regular benefits, new entrants and re-entrants to the labour market must accumulate at least 910 hours of insurable employment. Budget 2016 would eliminate the higher eligibility requirement of 910 hours for new entrants or re-entrants to the labour market by July 2016, thus providing the same eligibility requirements as other claimants in the region.[42]

The measure to expand access to EI benefits to new entrants and re-entrants was widely supported by witnesses appearing before the Committee. In their written submission, for example, the CEIC’s Commissioner for Workers stated that, “for many years now, Labour stakeholders have supported the elimination of the 910 hour eligibility requirement.”[43] Similarly, John Lewis of the Alliance of Theatrical Stage Employees stated that:

We are generally pleased with the changes to the EI program that were announced in the federal 2016 budget, in particular the reduction from 920 hours [sic: 910 hours] for new entrants and re-entrants. As well, we are pleased with the reduction of the waiting period to one week and the elimination of requirements for claimants to accept lower pay and longer commuting times in finding suitable employment. We think that these are all important steps towards re-establishing the integrity of the system. […] the broader labour community is seeking quick implementation of these changes announced in the budget.[44]

David Gray told the Committee that he, too, had “long been in favour of abolishing the NERE [new entrants and re-entrants] requirement.”[45] However, he added that he would like to see “safeguards so that we don’t take new entrants into the Canadian labour force and have these new entrants or re-entrants develop dependency patterns on the EI regime.”[46]

Having considered the testimony placed before it, the Committee agrees that eliminating the distinct eligibility requirement for new entrants and re-entrants, as announced in Budget 2016, is a positive step toward improving access to EI. Therefore, the Committee puts forward the following recommendation:

RECOMMENDATION 2

The Committee recommends that the federal government take immediate action to eliminate the eligibility requirement of 910 hours of insurable employment for new entrants and re-entrants to the labour market.

4. “Reasonable and Customary Efforts” to Obtain Employment and “Suitable Employment”

In 2012, as part of the federal government’s “Connecting Canadians with Available Jobs” initiative, the terms “reasonable and customary efforts” to obtain employment and “suitable employment” were redefined. “Since 6 January 2013, reasonable and customary efforts have been defined by regulation and include attending interviews, networking and preparing a resumé.”[47]

A new definition for suitable employment was also introduced creating three categories of claimants based on the number of times the claimant had used EI in the past, and establishing stricter job search requirements, especially for frequent claimants. The government anticipated that, as a result of this measure, regular claimants would increase their job search efforts and return to work more quickly in regions where suitable employment opportunities were available.[48] Budget 2016 proposes repealing these new definitions.[49]

The CFIB advised the Committee that of the SMEs consulted, most were in favour of the 2012 changes implemented, including SMEs from the Atlantic Provinces and Quebec. While witnesses acknowledge that, in practice, few individuals lost their EI benefits due to these new definitions, many nevertheless supported reversing these changes.

A number of reasons were given in favour of reversing the definitional changes, in particular because they were seen as:

• punitive for workers;[50]
• a contributing factor to some staffing shortages;[51]
• a violation of “fundamental rights, including the right to freedom of choice of employment, the right to unemployment protection, and the right to social security;”[52] and
• making the administration of the system much more complex and cumbersome.[53]

John Lewis of the Alliance of Theatrical Stage Employees advised the Committee that, while he was in favour of amending these definitions, he was uncertain of the effect this would have on the rules governing union hiring halls.[54] As these union hiring halls are used to train, recruit and provide benefits to workers in the theatre industry, Mr. Lewis recommended that the rules governing union hiring halls also be returned to what they were prior to 2012.[55]

A number of submissions to the Committee noted that it was unclear whether the government’s recent commitment to repeal the new definitions of “reasonable and customary efforts” and “suitable employment” actually meant “reversing the regulation that divides workers into three new classes on the basis of past claims”[56] and recommended that it be done immediately.[57]

Judith Andrew, CEIC’s Commissioner for Employers cautioned that should the new definitions be reversed and if the new EI system was more generous, it would be important “to take care not to send claimants the wrong message about the need to look for work while unemployed on EI.” [58] She added that “it is important for the department to continue holding meetings with new claimants to highlight their responsibilities in the system as well as conduct continuing eligibility interviews where warranted.”[59]

The Committee believes in the necessity of having an accountability framework in place for EI claimants so that they have an incentive to return to the labour market as soon as possible. However, the evidence placed before the Committee suggests that the definitions for “reasonable and customary efforts” and “suitable employment” introduced in 2012 were not effective in achieving this objective. Accordingly, the Committee makes the following recommendations:

RECOMMENDATION 3

The Committee recommends that the federal government take immediate steps to reinstate the job search responsibilities requirements and the obligation to accept suitable employment that were in effect prior to 2013.

RECOMMENDATION 4

The Committee recommends that Employment and Social Development Canada increase its efforts to promote the responsibilities claimants have to look for a job and to accept suitable employment, as appropriate.

a. Improving the System that Connects Employment Insurance Claimants with Available Jobs

The “Connecting Canadians to Available Jobs” initiative also included provisions to provide job seekers with enhanced information about available jobs and the labour market through tools and services such as Job Alerts. The initiative also included provisions to ensure qualified Canadians are considered before temporary foreign workers to fill job vacancies, where possible.[60]

Those witnesses who spoke of the Job Alerts system, or the fact that the government had announced in 2012 that EI claimants would have access to an improved job alerts system that would send daily alerts with new job postings, were generally in favour of these measures.

According to the written presentation shared by the CFIB, more than 90% of the SMEs it surveyed were in favour of the change introduced in 2012, which consisted of “pushing more job info to EI claimants by better using information from employers about open positions.”[61] More than 80% of its members were in favour of encouraging employers to hire local people rather than temporary foreign workers.

Colin Busby from the C.D. Howe Institute said that the reforms introduced in 2012, “which intend to improve labour market information and job matching with employers, and ensure that temporary foreign workers are not replacing Canadian workers, are reasonably admirable aspects of the policy, and I think they have reasonably broad support.”[62]

However, Judith Andrew, CEIC’s Commissioner for Employers, was more critical of the Job Alerts system, stating that:

Employers remain puzzled as to why it is optional for claimants to register their search parameters with the job bank so that job seekers have the benefit of electronic notification of possibly interesting job matches with the positions on offer.

To employers who are facing shortages of qualified labour now, as well as worsening challenges owing to demographic trends, it’s inexplicable that the use of the EI ratepayer-funded national employment service—a.k.a. job bank—is not boosted in this way.[63]

Despite some of these concerns, the Committee finds that the benefits of the Job Alerts job search system are widely recognized and supported, and therefore makes the following recommendation:

RECOMMENDATION 5

The Committee recommends that Employment and Social Development Canada strongly encourage EI claimants to sign up for the Job Alerts of Job Bank; and that the department explore the possibility of making the sign up automatic for EI claimants.

B. Benefit Rate

During this study, some witnesses spoke about the EI benefit rate and the manner in which it is calculated. Currently, the EI benefit rate is set at 55% of the claimant’s average weekly insurable earnings. In 2016, the maximum annual insurable amount is $50,800, which means a claimant could receive up to $537 a week.[64]

Prior to 2013, the weekly benefit rate was calculated by dividing total insurable earnings during the 26-week period preceding the establishment of the claim by the greater of the number of weeks of work in this period or by the “minimum divisor,” which varied between 14 and 22, depending on the regional unemployment rate.[65] In October 2005, a pilot project referred to as the “best 14 weeks” was launched in 25 of the 58 EI economic regions to test “whether making EI benefits more reflective of full-time work earnings for people with sporadic work patterns encourages claimants to accept all available work.”[66] In April 2013, the measure was extended to all of Canada and was modified slightly so that benefits were calculated not on the “14 best weeks,” as tested during the pilot project, but on the “14 to 22 best weeks,” based on the regional unemployment rate. This new approach means that areas with higher rates of unemployment use a calculation with fewer weeks, and vice versa. The calculation method is the same for both regular and special EI benefits.

 Alison Hale from Statistics Canada shared a graph with the Committee that showed average EI benefits have been on the rise since the implementation of this new calculation method.[67] Similarly, Paul Thompson from ESDC, added that his department has observed a convergence in the levels of benefits.[68]

 However, organizations such as the Income Security Advocacy Centre stated that, in their view, “EI regular benefit rates are too low, and are calculated in a manner that perpetuates disadvantage for women and the precariously employed.”[69]

Others, including the Mouvement autonome et solidaire des sans-emploi,[70] the Fédération des travailleurs et travailleuses du Québec[71] and the Waterloo Regional Labour Council,[72] indicated to the Committee that they recommended the calculation be standardized by region and based on the worker’s best 12 or 13 weeks of earnings. These same organizations also recommended increasing benefits to 60% of insurable earnings.

The Committee recognizes that establishing the rate of the benefit at a higher percentage of the claimant’s insurable earnings, such as 60% or 70%, and basing the calculation on a standardized and lower number of working weeks, such as 12 or 13 weeks, could give EI claimants better income protection. However, the Committee believes that the costs associated with these types of measures could be very high, and outweigh their positive effects.

C. Regular Benefits Period

1. Number of Weeks during which Benefits Are Paid Out

The maximum number of weeks in which a claimant can receive benefits varies based on the regional unemployment rate and the number of hours of insurable employment. The number of weeks ranges from 14 weeks to 45 weeks. The 14 to 45 weeks of benefits are paid out during the benefit period, which generally lasts for 52 weeks beginning on the Sunday of the week in which the claim for benefits is made. Appendix A shows, for each of the 62 EI economic regions, the minimum number of hours of insurable employment currently required to be eligible for EI benefits, the number of weeks the benefits calculation is based on, and the minimum and maximum numbers of weeks of regular benefits payable.

According to David Gray, the federal government should not only establish a single entrance requirement for the entire country, but also a uniform benefits period, with an exception made during recessionary times, such as in 2008 and 2009.

We should make it easily accessible for everyone across the country. Under normal conditions the benefit period should be the same for everyone as well, with the exception of what they do in the United States. […] Even the United States, generally very stingy when it comes to unemployment insurance, greatly extended the benefits when there was a terrible, negative shock to the entire labour market. I think we can have extended benefits in those situations.[73]

Marie-Hélène Arruda[74] and Hans Marotte advised the Committee that the organizations they represent propose a minimum of 35 weeks of benefits for everyone.[75] According to Mr. Marotte:

That way, people would have enough to make it through the year. Whether a person loses their job in Edmonton, Saskatoon, Montreal, or Halifax, they still have to pay their rent, their electric bill and all their other monthly expenses. We no longer think the regional EI system is the right approach. It’s not something that should remain in the legislation.[76]

While the Fédération des travailleurs et travailleuses du Québec is also in favour of a single, universal eligibility criterion, it supports having the duration of benefits tied to the regional unemployment rate.[77]

In addition to the testimony concerning the eligibility requirements, the benefits rate and duration, which all vary depending on the regional unemployment rate, some witnesses suggested it was also necessary to review the EI economic regions across the country. The CEIC’s Commissioner for Workers, Mary-Lou Donnelly, explained that people have had a very hard time with the changes made to the economic regions in 2014, specifically in northern Canada and in Prince Edward Island.[78]

Ms. Donnelly provided the Committee with a concrete example of the consequence this type of change can have for workers. She explained that because Prince Edward Island was split into two economic regions two people working at the same plant could have different levels of access to EI and have a different benefits period, simply because one employee lives in Charlottetown, in an urban area, and the other person lives outside of the city, in the rural area.[79]

Echoing these concerns, Laurell Ritchie from the Inter-Provincial EI Working Group indicated that creating new economic regions in Prince Edward Island and northern Canada left workers at a disadvantage.[80]

The PEI Coalition for Fair EI views the reversal of the two PEI economic zones as its top priority. In its brief, the Coalition said that “the establishment of two zones has the capacity to create negative divisions among communities and pit Islander against Islander.”[81]

The Committee recognizes that the recent division of Prince Edward Island and each of the territories into two distinct EI economic regions has had negative consequences on the well-being of these communities, and for that reason, the Committee makes the following recommendation:

RECOMMENDATION 6

The Committee recommends that the federal government reconsider the new employment insurance economic regions created in 2014, and that previous boundaries be restored.

2. Waiting Period

There is a two-week waiting period at the beginning of a benefit period. This waiting period does not affect the total of 14 to 45 weeks of benefits, but rather the date on which they start to be paid.[82]

Budget 2016 “proposes to make legislative changes to reduce the EI waiting period from two weeks to one week, effective 1 January 2017.”[83]

Many witnesses spoke in favour of the one-week reduction in the waiting period. However, the CEIC’s commissioners for Workers and for Employers cautioned that the proposed reduction could have an impact on both employers and claimants:

However, one caution would be for the change in waiting period not to negatively affect claimants who are receiving a company top-up during the waiting period, as well as take away one week of time on claim. Specifically, I am thinking of claimants of Special Benefits.[84]

Among the measures that may cause employers extra payroll and administrative challenges are the waiting period reduction, meaning having to rejig top-ups, and the employee flexibilities that are signalled around special benefits.[85]