Canadian Payroll Reporter

2 News seven-year break-even rate. That rate is one that the EI chief actuary forecasts will raise enough premium revenue to result in a balance of $0 in the EI operating account in seven years, including the elimination of any cumulative surplus or deficit. With the exception of the 2017 rate, the CEIC will not be able to increase or decrease the premium rate by more than five cents when making annual ad- justments. While the 2017 rate change brings the first drop in EI pre- mium rates since 2008, it does not go far enough for some in the business community. In this year's federal pre-budget consul- tations, the Canadian Chamber of Commerce suggested called for an EI rate of $1.47 for 2017, as the previous government fore- cast in its 2014 budget. EMPLOYER RATES Beyond lowering the employee EI rate, some business groups have called on the government to change the way it sets employ- er rates. Both the Chamber and the Canadian Federation of In- dependent Business (CFIB) say they want the government to re- duce the employer EI premium rate so that it is equal to the rate that employees pay. "There is no reason for em- ployers to pay more for (EI) ben- efits than employees do," says the Chamber in a policy reso- lution that it passed this year. "The federal government should gradually (i.e., over a five-year period) reduce the employer EI premium rate to equal that paid by employees." In a 2016 research paper on EI, the CFIB states that, "Hav- ing employees and employers equally contribute to the EI sys- tem would help reduce the tax burden on small business own- ers and allow them to hire more staff, improve wages and contin- ue to grow their business." The organization also wants the government to consider im- plementing a permanent, lower EI premium rate for small busi- nesses. It suggests a rate of 1.2 times the employee rate. The CFIB says another way to bring about a lower rate for em- ployers would be through a per- manent tax credit similar to the Small Business Job Credit that the previous federal government implemented for 2015 and 2016. The current government has not extended the tax credit beyond those years. "As a result of the elimination of this job credit, small business owners are facing a slight in- crease in EI premiums in 2017," the CFIB says. So far, the government has not said whether it will accept any of the Chamber or CFIB recom- mendations. WAITS REDUCED Another EI change for 2017 that will affect some employers is the government's plan to reduce the waiting period for EI benefits from two weeks to one week as of Jan. 1. The two-week waiting period has been in place since 1971. Employers who take part in the EI PRP will have to revise their plan if it includes a waiting period (also called an "elimina- tion period") of more than seven consecutive days or the plan will no longer qualify them for a re- duced premium rate. The PRP allows qualifying employers to pay EI premiums at rates that are less than the standard rate (i.e., 1.4 times the employee rate). To qualify, an employer must provide em- ployees with a short-term dis- ability plan that meets specified criteria, including a require- ment that the plan must not make employees wait more than 14 consecutive days before starting to pay benefits. ESDC is proposing to reduce the maximum waiting period re- quirement from 14 days to seven days for the plans to ensure that eligibility rules under the PRP align with the new one-week waiting period for EI benefits. To give employers affected by the change time to adjust their plans if they want to continue to qualify for the program, ESDC says it will allow existing plans that have a waiting period of more than seven consecutive days to continue to qualify for a premium reduction until Jan. 3, 2021. ESDC statistics show that about 15 per cent (or 4,700) of employers taking part in the pro- gram have plans with a waiting period of more than seven days. ESDC is proposing a similar transition period for employers who provide benefits to employ- ees under plans that top up EI benefits, such as supplementary unemployment benefit (SUB) plans or plans that pay benefits to employees receiving EI benefits while taking a maternity, child care or compassionate care leave. If an employer has a plan that tops up EI benefits for employ- ees on maternity, child care or compassionate care leave, ESDC does not consider benefits paid from the plan to be earnings to be deducted from an individual's EI benefits as long as the top-up payments combined with the employee's weekly EI benefits do not exceed the individual's nor- mal weekly earnings from that employment. ESDC states that the change to a one-week waiting period could result in some individuals having a combined payment that exceeds the maximum amounts allowed for SUB or other top-up plans in the week after the wait- ing period. To give employers time to change their plans to reflect the new one-week waiting period, ESDC proposes to provide a temporary exception to the rules for maximum combined pay- ments for employers with exist- ing plans. They would have until Jan. 3, 2021 to update their plans to incorporate the new one- week waiting period. ROE REVIEWS Another EI area where em- ployers could see changes in coming years is the ROE. Over the summer, ESDC held con- sultations on EI service quality. The review focused on stream- lining applications, reducing wait times for service delivery and reducing the administrative burden for employers. Organizations such as The Canadian Payroll Association and the CFIB have called on the government to replace the ROE with a system that uses current payroll data to administer the EI program. The government is expected to release a summary report on the consultations soon. ESDC has not said when the government may act on any recommendations put forward in the report. ESDC is also considering oth- er EI and EI-related changes that could impact employers next year or in coming years. During October and November, it asked for feedback on possible amend- ments to the Employment Insur- ance Act and Canada Labour Code that would provide more flexibility for individuals taking time off work for maternity, pa- rental and care giving leaves. While the EI Act provides benefits for eligible employees taking time off work, the Code gives federally-regulated em- ployees the right to take the time off. When the federal govern- ment makes EI changes affect- ing leaves, provincial/territorial governments often amend their labour standards laws to harmo- nize them with the new require- ments. PARENTAL LEAVES One proposal ESDC is consider- ing would allow an eligible par- ent or parents to take a longer combined leave of absence from work and receive reduced EI parental benefits over a longer period (e.g., up to a maximum of 18 months when combined with maternity benefits and maternity leave allowed under the Code). With this option, em- ployees would have more time off work, but would receive less money per month from EI. Another option would allow for the current amount of pa- rental benefits and unpaid leave, but let employees take the leave in smaller blocks of time over a period of up to 18 months rather than over 12 months as is now the case. For example, an individual could receive maternity and pa- rental benefits for six months, go back to work for six months, and then go back on parental leave and receive benefits for another six months. The duration of EI maternity benefits and the amount of leave allowed under the Code would not change with either option. Canadian HR Reporter, a Thomson Reuters business 2016 December 2016 | CPR Waiting period for claims will be reduced to 1 week from EI on page 1

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