August 8

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What Do The Federal Government’s EI Reforms Mean For You?

Employment Insurance (EI) is a lifeline for those who need a leg up in hard times. It serves are myriad of purposes. It can keep people above the poverty line in lean times like during a job loss or disability. On a macro level, it can also help the economy, and, by extension, the job market bounces back. 

Many advisors are talking about EI as of late. The reason why is simple. The federal government is looking to reform parts of Canada’s social safety net. The pandemic has also wrought a toll on the workforce, and Parliament Hill acknowledges these new realities in its relationship with the public. 

“The COVID-19 pandemic highlighted significant gaps in the EI program,” reads the Government of Canada’s backgrounder on their push to reform. “Millions of Canadians lost their jobs because of rapidly emerging business reductions and closures, but many workers were not eligible for EI.”

This included the self-employed and gig workers who needed to self-isolate or whose work was impacted by COVID-19 or workers who had to take leave from work to care for children or family members when schools or facilities closed due to COVID-19.

Enter Bill C-30, a new law that would make much-needed changes to a large part of Canada’s social welfare system. But what does this mean for the average person, and how will this affect startups? 

What is Bill C-30?

The new is titled An Act to implement certain budget provisions tabled in Parliament on April 19, 2021, and other measures. In simple terms, the government is making amendments to their 2022 budget, one that was left neglected for two years due to the pandemic. 

The keywords in the title are “implement certain provisions.” The EI reforms are part of those certain provisions. The specific provisions are:

(a) facilitate access to unemployment benefits for one year by:

  • (i) reducing the number of hours of insurable employment required to qualify for unemployment benefits to a national threshold of 420 hours.
  • (ii) reducing the number of earnings from self-employment that a self-employed person must have to be eligible to access special unemployment benefits.
  • (iii) providing that only a claimant’s most recent separation from employment will be considered in determining whether they qualify for unemployment benefits.
  • (iv) ensuring that earnings paid to a person because of the complete severance of their relationship with their former employer do not extend the person’s benefit period, and
  • (v) providing for an increase in the maximum number of weeks for which regular unemployment benefits may be paid to a seasonal worker if certain conditions are met; and
  • (b) extend the maximum number of weeks for which benefits may be paid because of a prescribed illness, injury, or quarantine from 15 to 26.

What does this mean for startups?

Newer businesses will need to adapt to the new reality regarding disability compensation. Some of the most vulnerable workers are the ones who have been through great suffering at work, whether through illness or injury. In the new framework, short-term disability benefits will last longer, from 17 weeks to 26. 

This means that employers would have to adjust their policies to meet the new reality under this framework. For example, employers will need to allow up to 26 weeks of short-term disability-related time off so that the employee will have time to recover, and plan sponsors will have to adjust accordingly. However, plan sponsors are under no legal obligation to change their plans to align with Bill C-30. 

There is some breathing room for employers, though. Premiums for the new policy have been frozen at the 2020 level, at $2.21 per $100 of insurable earnings. Additionally, employers can also apply to the premium reduction program to receive further respite.

How will this affect employees?

There will be a reduction in how much is received for disability. Workers will get 55 percent of their pre-disability income, meaning that the employee will get less, but the benefits will last longer.

What is doled out to the recipient is capped at $638 per week or over $2500 per month. Employees will need to adjust their daily lives to meet this new policy in the middle because this will ultimately shift some costs to the employee. Just like in the case of the employers, the workers’ premium will not change from the 2020 amount, meaning it will stay at $1.58 per $100 of insurable earnings. 

It’s important to note that there is no official green light date for this – but it is a perfect time to be prepared by updating your disability plans to align with EI when this goes into effect. 

About the author 

Chris Gory

Chris Gory is the founder of Orchard Benefits (formerly Insurance Portfolio Financial Services Inc.), a brokerage launched in 1999 that helps companies build the best benefits programs for their employees. Chris is passionate about helping entrepreneurs, and works with over 80 startup companies. He is an advisor at the Ryerson DMZ and he's led talks about employee benefits and insurance at several startup accelerators including Extreme Startups, OneEleven, and Ryerson's Startup School. Chris has also been featured in the Toronto Star and The Globe & Mail, and was a member of the Board of Directors of the Applied Client Network, an international association of independent insurance professionals, from 2012-2018.


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