EXTRA Vol. 144, No. 1

Canada Gazette

Part II

OTTAWA, FRIDAY, JANUARY 22, 2010

Registration
SOR/2010-10 January 13, 2010

EMPLOYMENT INSURANCE ACT

Regulations Amending the Employment Insurance Regulations

RESOLUTION

The Canada Employment Insurance Commission, pursuant to sections 54 (see footnote a), 69 (see footnote b), 143 and 152.33 (see footnote c) of the Employment Insurance Act (see footnote d), hereby makes the annexed Regulations Amending the Employment Insurance Regulations.

January 7, 2010

JANICE CHARETTE
Chairperson
Employment Insurance Commission

PATRICIA BLACKSTAFFE
Commissioner (Workers)
Employment Insurance Commission

ANDRÉ PICHÉ
Commissioner (Employers)
Employment Insurance Commission

P.C. 2010-22 January 13, 2010

Her Excellency the Governor General in Council, on the recommendation of the Minister of Human Resources and Skills Development, pursuant to sections 54 (see footnote e), 69 (see footnote f), 143 and 152.33 (see footnote g) of the Employment Insurance Act (see footnote h), hereby approves the annexed Regulations Amending the Employment Insurance Regulations, made by the Canada Employment Insurance Commission.

REGULATIONS AMENDING THE EMPLOYMENT INSURANCE REGULATIONS

AMENDMENTS

1. Subsection 1(1) of the Employment Insurance Regulations (see footnote 1) is amended by adding the following in alphabetical order:

“self-employed person”, other than in sections 30 and 35, has the same meaning as in subsection 152.01(1) of the Act. (travailleur indépendant)

2. The Regulations are amended by adding the following after section 9:

AGREEMENT — SELF-EMPLOYED PERSON

TERMINATION OF AGREEMENT — NOTICE

9.01 The notice referred to in subsection 152.02(4) of the Act that the individual gives to the Commission to terminate the agreement shall be given in writing.

WITHDRAWAL OF NOTICE

9.02 The withdrawal of the notice referred to in paragraph 152.02(6)(b) of the Act shall be given to the Commission in writing.

3. The heading “UNEMPLOYMENT BENEFITS” before section 9.1 of the Regulations is replaced by the following:

BENEFITS

4. The Regulations are amended by adding the following after section 11:

ADJUSTMENT OF AMOUNT OF SELF-EMPLOYED EARNINGS

11.1 (1) The amount of self-employed earnings referred to in subparagraph 152.07(1)(d)(i) of the Act shall be adjusted annually on a compound basis, beginning on January 1, 2012, by the ratio referred to in paragraph 4(2)(b) of the Act.

(2) If the ratio referred to in subsection (1) is less than 1.0 and would result in an adjusted amount of less than $6,000, the ratio is deemed to be 1.0.

(3) If the adjusted amount calculated in accordance with subsections (1) and (2) is not a multiple of one dollar, that amount shall be rounded down to the nearest dollar.

5. The heading before section 13 of the Regulations is replaced by the following:

AVERAGE NUMBER OF WEEKS FOR THE PURPOSES OF PARAGRAPHS 7.1(6)(b) AND 152.07(3)(b) OF THE ACT

6. Section 13 of the Regulations is renumbered as subsection 13(1) and is amended by adding the following:

(2) For the purposes of paragraph 152.07(3)(b) of the Act, a self-employed person’s average number of weeks of benefits is the maximum number of weeks for which benefits may be paid to them under subsection 152.14(1) of the Act, less the number of weeks of benefits paid to them, including the weeks of benefits used to establish the overpayment referred to in paragraph 152.07(3)(a) of the Act, with the result divided by two.

7. The Regulations are amended by adding the following after section 14:

14.01 An interruption of earnings of a self-employed person referred to in paragraph 152.07(1)(c) of the Act occurs at the beginning of the week in which the person declares having reduced the time devoted to their business activities by more than 40% of the normal level because the person ceases to work by reason of illness, injury, quarantine, pregnancy, the need to care for a child or children referred to in subsection 152.05(1) of the Act or the need to provide care or support to a family member referred to in subsection 152.06(1) of the Act.

8. The Regulations are amended by adding the following after section 24.2:

EXCLUSION OF CERTAIN INSURABLE EARNINGS IN THE CALCULATION OF THE RATE OF WEEKLY BENEFITS OF A SELF-EMPLOYED PERSON

24.3 For the purposes of paragraph 152.16(1)(b) of the Act, the following insurable earnings are not taken into account in the calculation of the rate of weekly benefits of a self-employed person:

(a) insurable earnings from any employment that they lost because of their misconduct or that they voluntarily left without just cause within the meaning of paragraphs 29(b.1) and (c) of the Act; and

(b) insurable earnings in the qualifying period earned before the beginning of a prior benefit period established under Part I of the Act or regulations made under Part VIII of the Act for the self-employed person as an insured person.

9. The Regulations are amended by adding the following after section 25:

ELECTION TO RECEIVE BENEFITS PAYABLE UNDER PART I OR VII.1 OF THE ACT

25.1 The election referred to in subsection 152.09(1) of the Act shall be made to the Commission in writing.

10. Subsections 27(1) and (2) of the Regulations are replaced by the following:

27. (1) If an initial claim for benefits or a claim for benefits for a week of unemployment is made to the Commission on behalf of a person with mental disabilities or an incapacitated person, the Commission shall authorize payment of the benefits to any person acting on behalf of the person if the person on whose behalf the claim is made meets the requirements of Part I, VII.1 or VIII of the Act.

(2) If an initial claim for benefits or a claim for benefits for a week of unemployment is made to the Commission by the legal representative of a deceased person, the Commission shall authorize payment of the benefits to the legal representative if the deceased person, at the time of death, met the requirements of Part I, VII.1 or VIII of the Act.

11. Section 30 of the Regulations is amended by adding the following after subsection (4):

(5) For the purposes of this section, “self-employed person” means an individual who

(a) is or was engaged in a business; or

(b) is employed but does not have insurable employment by reason of paragraph 5(2)(b) of the Act.

12. The Regulations are amended by adding the following after section 30:

WEEK OF UNEMPLOYMENT — SELF-EMPLOYED PERSON

30.1 For the purposes of Part VII.1 of the Act, a week of unemployment for a self-employed person is, despite section 30, a week in which the person reduces the time devoted to their business activities by more than 40% of the normal level.

30.2 For the purposes of subsection 152.03(4) of the Act, a self-employed person is deemed to be not working if they are not engaged in

(a) the normal activities of their business; and

(b) the normal activities for the continuation of their business.

13. Section 32 of the Regulations is replaced by the following:

32. For the purposes of sections 18 and 152.19 of the Act, a working day is any day of the week except Saturday and Sunday.

14. Subsection 34(3) of the Regulations is replaced by the following:

(3) If a claimant establishes, in the manner directed by the Commission under section 16 or 152.17 of the Act, that the claimant or the claimant’s cohabiting spouse or common-law partner is in receipt of a child tax benefit for the month preceding the Sunday of the week in respect of which the claimant makes a claim for benefits, the claimant’s rate of weekly benefits for that week shall be increased by the amount of a family supplement determined in accordance with this section.

15. (1) Subsection 35(1) of the Regulations is amended by adding the following in alphabetical order:

“self-employed person” has the same meaning as in subsection 30(5). (travailleur indépendant)

(2) The portion of subsection 35(2) of the Regulations before paragraph (a) is replaced by the following:

(2) Subject to the other provisions of this section, the earnings to be taken into account for the purpose of determining whether an interruption of earnings under section 14 has occurred and the amount to be deducted from benefits payable under section 19, subsection 21(3), 22(5), 152.03(3) or 152.04(4) or section 152.18 of the Act, and to be taken into account for the purposes of sections 45 and 46 of the Act, are the entire income of a claimant arising out of any employment, including

(3) Subparagraphs 35(2)(c)(iii) and (iv) of the Regulations are replaced by the following:

(iii) a leave plan providing payment in respect of the care of a child or children referred to in subsection 23(1) or 152.05(1) of the Act, or

(iv) a leave plan providing payment in respect of the care or support of a family member referred to in subsection 23.1(2) or 152.06(1) of the Act;

(4) Paragraph 35(2)(d) of the Regulations is replaced by the following:

(d) notwithstanding paragraph (7)(b) but subject to subsections (3) and (3.1), the payments a claimant has received or, on application, is entitled to receive from a motor vehicle accident insurance plan provided under a provincial law in respect of the actual or presumed loss of income from employment due to injury, if the benefits paid or payable under the Act are not taken into account in determining the amount that the claimant receives or is entitled to receive from the plan;

(5) Section 35 of the Regulations is amended by adding the following after subsection (3):

(3.1) If a self-employed person has sustained an injury referred to in paragraph (2)(d) before the beginning of the period referred to in section 152.08 of the Act, the payments referred to in that paragraph shall not be taken into account as earnings.

(6) Paragraph 35(7)(e) of the Regulations is replaced by the following:

(e) the moneys referred to in paragraph (2)(e) if

(i) in the case of a self-employed person, the moneys became payable before the beginning of the period referred to in section 152.08 of the Act, and

(ii) in the case of other claimants, the number of hours of insurable employment required by section 7 or 7.1 of the Act for the establishment of their benefit period was accumulated after the date on which those moneys became payable and during the period in respect of which they received those moneys; and

(7) Paragraph 35(10)(b) of the Regulations is replaced by the following:

(b) in the case of a claimant who is self-employed in farming, the gross income from that self-employment, including any farming subsidies the claimant receives under any federal or provincial program, remaining after deducting the operating expenses, other than capital expenditures, incurred in that self-employment;

16. (1) Subsection 36(6) of the Regulations is replaced by the following:

(6) The earnings of a claimant who is self-employed, or the earnings of a claimant that are from participation in profits or commissions, that arise from the performance of services shall be allocated to the weeks in which those services are performed.

(6.1) The earnings of a claimant who is self-employed, or the earnings of a claimant that are from participation in profits or commissions, that arise from a transaction shall be allocated

(a) if the aggregate amount of earnings that arise from a transaction occurring in a week is greater than the maximum yearly insurable earnings referred to in section 4 of the Act divided by 52, to the weeks in which the work that gave rise to the transaction was performed, in a manner that is proportional to the amount of work that was performed during each of those weeks or, if no such work was performed, to the week in which the transaction occurred; or

(b) if the aggregate amount of earnings that arise from a transaction occurring in a week is less than or equal to the maximum yearly insurable earnings referred to in section 4 of the Act divided by 52, to the week in which the transaction occurred or, if the claimant demonstrates that the work that gave rise to the transaction occurred in more than one week, to the weeks in which the earnings were earned, in a manner that is proportional to the amount of work that was performed during each of those weeks.

(6.2) The earnings of a claimant who is self-employed, or the earnings of a claimant that are from participation in profits or commissions, that do not arise from the performance of services or from a transaction shall be allocated equally to each week falling within the period in which the earnings were earned.

(2) Paragraph 36(7)(a) of the Regulations is replaced by the following:

(a) if they arose from a transaction, in accordance with subsection (6.1); and

(3) Paragraph 36(12)(a) of the Regulations is replaced by the following:

(a) payments in respect of sick leave, maternity leave or adoption leave or leave for the care of a child or children referred to in subsection 23(1) or 152.05(1) of the Act;

(4) Paragraph 36(12)(e) of the Regulations is replaced by the following:

(e) payments in respect of the care or support of a family member referred to in subsection 23.1(2) or 152.06(1) of the Act.

17. Subsection 37(1) of the Regulations is replaced by the following:

37. (1) Subject to the other provisions of this section, payments received by a claimant as an insured person under a supplemental unemployment benefit plan are not earnings for the purposes of section 19, subsection 21(3), section 45 or 46, subsection 152.03(3) or section 152.18 of the Act.

18. The portion of section 38 of the Regulations before paragraph (a) is replaced by the following:

38. The following portion of any payments that are paid to a claimant as an insured person because of pregnancy, for the care of a child or children referred to in subsection 23(1) or 152.05(1) of the Act, or for the care or support of a family member referred to in subsection 23.1(2) or 152.06(1) of the Act, or because of any combination of those reasons, is excluded as earnings for the purposes of section 35, namely, the portion that

19. (1) Subsection 39(1) of the Regulations is replaced by the following:

39. (1) If a claimant has earnings in respect of a period that falls in the claimant’s waiting period, an amount equal to those earnings or, if paragraph 19(3)(a) or 152.18(3)(a) of the Act applies in respect of those earnings, the amount required by that paragraph to be deducted, shall be deducted from the benefits payable for the first three weeks for which benefits are otherwise payable.

(2) Paragraph 39(3)(a) of the Regulations is replaced by the following:

(a) under a wage-loss indemnity plan by reason of illness, injury, quarantine, pregnancy, the care of a child or children referred to in subsection 23(1) or 152.05(1) of the Act or the care or support of a family member referred to in subsection 23.1(2) or 152.06(1) of the Act, or under a workers’ compensation plan; or

(3) Paragraph 39(3)(b) of the Regulations is replaced by the following:

(b) by an employer in respect of sick leave, maternity leave or adoption leave, leave for the care of a child or children referred to in subsection 23(1) or 152.05(1) of the Act or leave for the care or support of a family member referred to in subsection 23.1(2) or 152.06(1) of the Act.

20. (1) Subsection 40(1) of the Regulations is replaced by the following:

40. (1) The information and evidence to be provided to the Commission by a claimant in order to prove inability to work because of illness, injury or quarantine under paragraph 18(b) or subsection 152.03(1) of the Act, is a medical certificate completed by a medical doctor or other medical professional attesting to the claimant’s inability to work and stating the probable duration of the illness, injury or quarantine.

(2) Subsections 40(4) and (5) of the Regulations are replaced by the following:

(4) For the purposes of paragraphs 8(2)(a) and 18(b) and subsections 28(7) and 152.03(1) of the Act, illness, injury or quarantine is any illness, injury or quarantine that renders a claimant incapable of performing the duties of their regular or usual employment or of other suitable employment.

(5) A pregnancy that is terminated within the first 19 weeks is an illness for the purposes of paragraph 18(b) and subsection 152.03(1) of the Act.

(3) Paragraph 40(6)(a) of the Regulations is replaced by the following:

(a) the claimant qualifies to receive benefits in that benefit period by reason of an interruption of earnings as described in subsection 14(2) or section 14.01; and

(4) Paragraph 40(7)(a) of the Regulations is replaced by the following:

(a) the claimant qualifies to receive benefits in that benefit period by reason of an interruption of earnings as described in subsection 14(2) or section 14.01; and

21. The portion of subsection 41(1) of the Regulations before paragraph (a) is replaced by the following:

41. (1) For the purposes of sections 22 and 152.04 of the Act, the information and evidence to be provided to the Commission by a claimant to prove pregnancy and the expected date of confinement is

22. The portion of subsection 41.11(2) of the Regulations before paragraph (a) is replaced by the following:

(2) The following classes of persons, in relation to an individual, are prescribed for the purposes of paragraph 23.1(1)(d) of the Act and paragraph (d) of the definition “family member” in subsection 152.01(1) of the Act:

23. The portion of section 41.2 of the Regulations before paragraph (a) is replaced by the following:

41.2 For the purposes of subsections 23.1(3) and 152.06(2) of the Act, the medical certificate referred to in subsections 23.1(2) and 152.06(1) of the Act may be issued by the following persons:

24. The portion of section 41.3 of the Regulations before paragraph (a) is replaced by the following:

41.3 For the purposes of subsections 23.1(9) and 152.06(7) of the Act, the remaining weeks of unpaid benefits shall be divided as follows:

25. Section 54 of the Regulations is replaced by the following:

54. (1) A claimant who is not a self-employed person, who is an inmate of a prison or similar institution and who has been granted parole, day parole, temporary absence or a certificate of availability, for the purpose of seeking and accepting employment in the community, is not disentitled from receiving benefits by reason only of section 37 of the Act.

(2) A self-employed person who is an inmate of a prison or similar institution and who has been granted parole, day parole or a temporary absence is not disentitled from receiving benefits by reason only of section 152.2 of the Act.

26. (1) The portion of subsection 55(1) of the Regulations before paragraph (a) is replaced by the following:

55. (1) Subject to section 18 of the Act, a claimant who is not a self-employed person is not disentitled from receiving benefits for the reason that the claimant is outside Canada

(2) Subsection 55(4) of the Regulations is replaced by the following:

(4) A claimant who is not a self-employed person is not disentitled from receiving benefits in respect of pregnancy, the care of a child or children referred to in subsection 23(1) of the Act, the care or support of a family member referred to in subsection 23.1(2) of the Act or while attending a course or program of instruction or training referred to in paragraph 25(1)(a) of the Act, for the sole reason that the claimant is outside Canada.

(3) The portion of subsection 55(5) of the Regulations before paragraph (a) is replaced by the following:

(5) A major attachment claimant who is not a self-employed person and whose most recent interruption of earnings before making a claim for benefits is from insurable employment outside Canada is not disentitled from receiving benefits for the sole reason that the claimant is outside Canada if

(4) The portion of subsection 55(6) of the Regulations before paragraph (a) is replaced by the following:

(6) Subject to subsection (7), a claimant who is not a self-employed person and who resides outside Canada, other than a major attachment claimant referred to in subsection (5), is not disentitled from receiving benefits for the sole reason of their residence outside Canada if

(5) Subsection 55(11) of the Regulations is replaced by the following:

(11) A claimant who is not a self-employed person is not disentitled from receiving benefits for the sole reason that the claimant is outside Canada if the claimant is outside Canada, with the approval of the Commission, in the course of the claimant’s employment under the Self-employment employment benefit established by the Commission under section 59 of the Act or under a similar benefit that is provided by a provincial government or other organization and is the subject of an agreement under section 63 of the Act.

27. The Regulations are amended by adding the following after section 55:

55.01 (1) A self-employed person is not disentitled from receiving benefits for the reason that the self-employed person is outside Canada

(a) for the purpose of undergoing, at a hospital, medical clinic or similar facility outside Canada, medical treatment that is not readily or immediately available in the self-employed person’s area of residence in Canada, if the hospital, clinic or facility is accredited to provide the medical treatment by the appropriate governmental authority outside Canada;

(b) for a period of not more than seven consecutive days to attend the funeral of a member of the self-employed person’s immediate family or of one of the following persons, namely,

(i) a grandparent of the self-employed person or of the self-employed person’s spouse or common-law partner,

(ii) a grandchild of the self-employed person or of the self-employed person’s spouse or common-law partner,

(iii) the spouse or common-law partner of the self-employed person’s son or daughter or of the son or daughter of the self-employed person’s spouse or common-law partner,

(iv) the spouse or common-law partner of a child of the self-employed person’s father or mother or of a child of the spouse or common-law partner of the self-employed person’s father or mother,

(v) a child of the father or mother of the self-employed person’s spouse or common-law partner or a child of the spouse or common-law partner of the father or mother of the self-employed person’s spouse or common-law partner,

(vi) an uncle or aunt of the self-employed person or of the self-employed person’s spouse or common-law partner, and

(vii) a nephew or niece of the self-employed person or of the self-employed person’s spouse or common-law partner;

(c) for a period of not more than seven consecutive days to accompany a member of the self-employed person’s immediate family to a hospital, medical clinic or similar facility outside Canada for medical treatment that is not readily or immediately available in the family member’s area of residence in Canada, if the hospital, clinic or facility is accredited to provide the medical treatment by the appropriate governmental authority outside Canada; or

(d) for a period of not more than seven consecutive days to visit a member of the self-employed person’s immediate family who is seriously ill or injured.

(2) For the purpose of subsection (1), the following persons are considered to be members of the self-employed person’s immediate family:

(a) the father and mother of the self-employed person or of the self-employed person’s spouse or common-law partner;

(b) the spouse or common-law partner of the father or mother of the self-employed person or of the self-employed person’s spouse or common-law partner;

(c) the foster parent of the self-employed person or of the self-employed person’s spouse or common-law partner;

(d) a child of the self-employed person’s father or mother or a child of the spouse or common-law partner of the self-employed person’s father or mother;

(e) the self-employed person’s spouse or common-law partner;

(f) a child of the self-employed person or of the self-employed person’s spouse or common-law partner;

(g) a ward of the self-employed person or of the self-employed person’s spouse or common-law partner; and

(h) a dependant or relative residing in the self-employed person’s household or a relative with whom the self-employed person permanently resides.

(3) A self-employed person is not disentitled from receiving benefits in respect of pregnancy, the care of a child or children referred to in subsection 152.05(1) of the Act or the care or support of a family member referred to in subsection 152.06(1) of the Act for the sole reason that the self-employed person is outside Canada.

28. The Regulations are amended by adding the following after section 76.04:

76.041 The self-employed person’s premium payable under section 152.21 of the Act shall be reduced in the year 2010 as provided by sections 76.05 and 76.06 if the payment of provincial benefits to self-employed persons under a provincial law would have the effect referred to in subsection 69(2) of the Act in respect of benefits payable to those persons under section 152.04 or 152.05 of the Act.

29. Paragraph 91(1)(a) of the Regulations is replaced by the following:

(a) to have expressed an intention to make a claim for benefits and to have made such a claim for the purposes of section 48, 49 or 152.1 of the Act, as the case may be; and

COMING INTO FORCE

30. (1) Sections 1, 2 and 28 of these Regulations come into force on the day on which they are registered.

(2) Sections 3 to 27 and 29 come into force on January 1, 2011.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue

Self-employment is a vital and critical segment of the labour market, making up about 15% of the labour force in 2008. Self-employed persons make significant contributions to the Canadian economy and are an important engine of growth as they help spur ideas and innovations. By providing work for other Canadians, self-employed persons are also a significant driver of job creation and economic wealth.

Many self-employed Canadians are currently asked to make difficult choices as they seek to balance business responsibilities (including responsibilities to their paid employees) with family obligations and life-transition events. Although select groups of self-employed persons have access to maternity, parental and adoption benefits through professional associations or, in the case of Quebec, through QPIP, the majority of them do not have access to similar benefits. Short-term sickness and compassionate care benefits are available on a very limited basis to self-employed persons through professional associations or private insurance plans at relatively high premium rates. These individuals could benefit from financial support to help them balance work and family responsibilities.

In the November 19, 2008, Speech from the Throne, the Government of Canada committed to taking measures to increase access to maternity and parental benefits available under the EIA. Consequently, the Government of Canada, through the provisions of the EIA as amended by the Fairness for the Self-Employed Act and the amendments to the EIR, has extended access to EI maternity, parental, sickness and compassionate care benefits to self-employed persons who voluntarily opt into the program. With this measure, the Government is exceeding its prior commitments of increasing access to maternity and parental benefits.

Objectives

The provision of maternity, parental, sickness and compassionate care benefits to self-employed persons who choose to opt into the program under the EIA, reflects the core principle of providing choice to a group of Canadians whose interest in these benefits is based on the nature of their business, their family situations and aversion to risk. These benefits are the same as those provided to salaried workers currently covered under the EIA:

• Up to six weeks of compassionate care benefits for the care of a seriously ill family member;
• Up to 15 weeks of sickness benefits;
• Up to 15 weeks of maternity benefits for the birth mother; and
• Up to 35 weeks of parental benefits for taking care of newly born or adopted children.

Access to these benefits allows self-employed persons to better balance work and family responsibilities by providing benefits to those who are sick, pregnant or caring for a newborn or adopted child, as well as those caring for a family member who is gravely ill with a significant risk of death, as is already the case for Canadian salaried workers. The measure thereby promotes individual and family well-being as well as labour force attachment and stability. The measure could also remove barriers to selfemployment for Canadians who could have been concerned about how to cope with possible life-transition events. It is expected that maternity and parental benefits will be of the highest interest to self-employed persons of child-bearing years, while sickness and compassionate care benefits will be attractive to self-employed persons of all ages, but particularly for those aged 40 and over.

Self-employed persons in Quebec will continue to access maternity and parental benefits offered through the province’s mandatory QPIP and could, on a voluntary basis under the EIA, opt in to insure their earnings for sickness and compassionate care benefits.

Description

To extend the provision of maternity, parental, sickness and compassionate care benefits to self-employed persons, a number of regulations currently in the EIR have been amended to include self-employed persons in existing definitions and sections of the EIR. These provisions include

• Extending the authority to determine the value of a violation;
• Including self-employed persons in the definitions;
• Including self-employed persons in the existing provisions which allow a third party to act on their behalf where the person has mental disabilities, incapacities or is deceased;
• Extending the application of what is considered a working day to self-employed persons;
• Including self-employed persons in the family supplement provisions increasing the rate of weekly benefits;
• Extending to self-employed persons the required proof to be provided for sickness and pregnancy;
• Extending circumstances in which the Canada Employment Insurance Commission (the Commission) may waive the waiting period in the event of sickness to the self-employed;
• Extending the existing definition of “family member” to self-employed persons;
• Extending the application of who can issue medical certificates for compassionate care benefits and the division of compassionate care benefits to self-employed persons;
• Including self-employed persons in the provisions for claimants not in Canada or who are inmates in an institution;
• Ensuring that payments from a motor vehicle accident insurance plan provided under a provincial law or pension payments will not affect EI benefits payable if the injury occurred or the pension moneys became payable prior to the commencement of the qualifying period;
• Ensuring that self-employed persons with both insurable earnings and self-employed income can receive a top-up from their insured employment by reason of a Supplementary Unemployment Benefit Plan covering temporary stoppage of work, training, illness, injury, quarantine, or any combination of such, or by reason of a plan covering maternity leave, parental/adoption leave and compassionate care leave; and
• Extending the application of the provisions governing the use of electronic systems to self-employed persons in order to make a claim for benefits.

A number of new regulations pertaining solely to self-employed persons were necessary in order to support Part VII.1 of the EIA as amended by the Fairness for the Self-Employed Act. Key regulatory amendments include

• The notice to terminate the agreement and the withdrawal of this notice must be provided to the Commission in writing;
• The entrance requirements and repeat violations thresholds are to increase (rounded to the nearest dollar), starting in 2012, proportionately with the growth in the Maximum Insurable Earnings (MIE);
• The interruption of earnings for the purposes of self-employed persons qualifying for benefits, occurs when the self-employed person experiences a reduction of more than 40% in the time devoted to their business, as a result of: injury, illness or quarantine, pregnancy, the need to care for a newly born or adopted child or children, or the need to provide care or support to a gravely ill family member. A week of unemployment for the self-employed is defined as a week in which the person reduces the time devoted to their business activities by more than 40% of the normal level;
• The exclusion of certain insurable earnings that a self-employed person may have when calculating the rate of weekly benefits under Part VII.1;
• For the purposes of stipulating when a self-employed person can be eligible for sickness benefits, a self-employed person is deemed to be not working, and therefore will be disentitled from receiving sickness benefits if the person is not engaged in the normal activities of their business and the person is not engaged in the normal activities for the continuation of their business;
• Where a self-employed person may also be entitled to special benefits as an insured person under the EIA, the Regulations require that their election for which type of benefits they wish to receive be made in writing to the Commission;
• With respect to the self-employed earnings received while on claim, the EIR is amended to ensure that treatment be similar for those collecting benefits as an employee under Part I and those as a self-employed person under Part VII.1 of the EIA. The allocation rules will vary depending on whether the earnings arise out of the performance of services, transactions or neither, generally taking into consideration the amount of earnings in relation to the maximum yearly insurable earnings, when the work was performed and the period in which the earnings were earned or received;
• Moreover, in the case of a claimant who is self-employed in farming, the gross income from that self-employment remaining after deducting the operating expenses, other than capital expenditures, incurred therein, will be treated as earnings for benefit purposes;
• The EIR is also amended for the purpose of providing a premium reduction to those self-employed persons who choose to opt into the program under the EIA but are covered by a provincial plan. This reduction ensures that these self-employed persons will not be paying a premium for certain benefits covered under the provincial plan (e.g. self-employed persons in Quebec already pay premiums under QPIP for maternity and parental benefits).

Regulatory and non-regulatory options considered

As some of the regulations are based on existing provisions of EIR, there is little change in the extent to which Regulatory authority is used. For example, provisions governing premium reductions for provincial plans are kept in the Regulations so as to allow responsiveness to changes to provincial plans. New regulations such as defining an interruption of earnings and weeks of unemployment, and the indexation of the eligibility and violations thresholds with respect to the MIE are new provisions that are set in the regulations as is the case for similar regulations defined in the EIR for salaried workers.

Benefits and costs

Table 1 presents the expected take-up of the measure over the first five years, based on a self-employed person’s primary purpose for opting in, and adjusted for attrition resulting through withdrawal from the program or labour market, the transition to paid employment, death, and emigration. In total, it is expected that between 300 000 and 500 000 of self-employed persons will opt in by in year five.

Table 1. Estimated Number of Self-employed Contributors

description	2010	2011	2012	2013	2014
New Contributors
Maternity and Parental	15 000	17 500	20 000	20 000	20 000
Sickness/ Compassionate Care	100 000	100 000	100 000	100 000	34 400
Cumulative Number of Contributors, adjusted for attrition	115 000	221 000	318 900	407 000	420 700

In 2010, it is expected that 15 000 individuals will opt into the EI program for the primary purpose of receiving maternity and parental benefits, with new participants increasing to 20 000 by 2012 as individuals become increasingly aware of the program. These projections were derived primarily by examining maternity and parental claims of self-employed persons in Quebec (7 300) under QPIP, adjusting them upwards to reflect the number of self-employed persons in the rest of Canada, and making downward revisions to reflect the fact that not all self-employed persons have income above the $6,000 threshold or opt into the program. It was estimated that, at maturity, close to one in every four self-employed persons earning more than $6,000 a year would sign up for the primary purpose of receiving sickness and compassionate care benefits, such that roughly 435 000 will have opted in by year five. While these numbers are estimates, the actual rate of participation of self-employed persons joining for the purpose of receiving sickness and compassionate care benefits should not significantly impact net program costs as the premiums collected for additional self-employed persons opting in should roughly offset the associated increase in the benefit payments for a smaller group of claimants.

Table 2 presents the estimated number of claims for benefits over the next five years. This number is expected to rise from 19 000 in 2011, the first year benefits are payable, to over 55 000 by 2014. It is projected that about 20 000 of the 55 000 claims in 2014 will be maternity and parental claims.

Table 2. Estimated Number of Claims

total	2010	2011	2012	2013	2014
Total		19 000	33 000	46 000	55 000

The projections on the number of maternity and parental claims were derived by assigning probabilities of having or adopting children within six years of opting in, adjusted for attrition rates, consistent with the QPIP results. The estimated number of sickness claims is based on a number of assumptions. First, given the voluntary nature of the measure, it is expected that those who will opt into the program will have a higher probability of claiming benefits than that currently being observed for the existing EI program. Second, self-employed persons are less likely to be covered by alternative insurance plans (e.g. private insurance plan) and as a result, will be more likely to make a claim for EI benefits if they fall ill or are injured. On average, it is assumed that one in ten self-employed persons who have signed up will make a sickness benefit claim, roughly five times as high as is currently being observed for employees covered under the existing program. Calculations were adjusted upward to reflect the compassionate benefit claims, based on claim ratios of employees currently covered under the existing program.

Table 3 below provides projections of the expected accrual financial impact on the EI Account of providing these benefits to self-employed persons on a voluntary basis. It is expected that projections for 2014 closely resemble the steady state impacts. The estimated cost of benefit claims and premiums collected is based on an estimated annual self-employment income of $25,000. It is assumed that when they apply for benefits, self-employed persons will receive on average 40 weeks of combined maternity and parental benefits, ten weeks of sickness benefits, and five weeks of compassionate care.

Table 3. Premiums Less Benefits

total	2010	2011	2012	2013	2014
Total ($ million)	48	-24	-39	-56	-78

The financial impact will be different in Quebec, where maternity and parental benefits are already provided to self-employed persons through the QPIP. In Quebec, where only sickness and compassionate care will be provided through the EIA, it is projected that premiums collected will fully offset costs based on a claim rate of one in ten. For the rest of Canada, it is projected that premiums levied on self-employed persons will not fully cover costs because costs associated with maternity and parental claims will exceed premiums by those primarily interested in maternity and parental benefits.

Based on these estimates, premiums collected from those opting in may not fully cover costs, and general EI premiums rates will need to increase by one cent. Stress testing indicates that the potential range of ongoing premium impacts will be between zero and two cents. Given that Quebec already provides maternity and parental benefits, any potential general rate increase resulting from the provision of maternity and parental benefits to the rest of Canada will not apply to Quebec.

Consultation

Between October 2008 and January 2009, the Government consulted widely via its pre-budget consultations on potential measures that could be included in the economic stimulus package. Providing self-employed persons with access to maternity, parental, sickness and compassionate care benefits was welcomed among the self-employed. Recent surveys have indicated that self-employed persons are highly interested in acquiring assistance to deal with various types of life transition events. For example, in the 2009 EI Tracking Survey, self-employed respondents supported access to maternity (62% of self-employed women), parental (64% of self-employed), compassionate care (84% of self-employed), and sickness benefits (86% of self-employed).

In addition, the Government took into account previous consultations with provinces and territories as well as representations and correspondence from concerned individuals, stakeholders groups and businesses. This measure was designed to respond to some of the issues raised during these consultations.

Various businesses (e.g. Canadian Federation of Independent Business) and professional groups (e.g. Canadian Real Estate Association, Independent Contractors and Businesses Association, Canadian Association of Women Executives and Entrepreneurs, and the Grain Growers of Canada) reacted favourably to the introduction of these benefits, highlighting among other things that this measure will benefit business owners, especially women. Labour groups, such as the Canadian Labour Congress, also supported the measure, while continuing to push for a higher benefit rate and wider reform.

On the other hand, the British Columbia Yukon Territory Building Construction Trades expressed its discontent, arguing that EI should be for workers as opposed to business people.

Implementation, enforcement and service standards

Self-employed persons are able to opt into the EI program using an application procedure through Service Canada’s secure, Web-based “My Service Canada Account” application. The Commission is responsible for the administration of maternity, parental, sickness and compassionate care benefits for self-employed persons. By opting in, self-employed persons agree to make premium payments based on their self-employed earnings in each tax year. For self-employed persons who opt in 2010, premiums will be paid on the 2010 tax year through their tax return filed in the spring of 2011. In future years, these self-employed persons will be required to make contributions using CRA’s installment process, modeled on existing Canada Pension Plan procedures.

Regular auditing and integrity functions under the EI program apply. Additional verification measures, such as post-claim audits or reconciliations, will be developed as required to determine the veracity of the information provided on claims. The Commission and CRA have the legislative authority to seek client information and impose penalties in cases of fraud.

Existing implementation and enforcement mechanisms contained in the adjudication and controls procedures ensure that these regulatory amendments are implemented properly. The continuing objective is to reach a decision on 80% of all EI claims within 28 days (four weeks) of the receipt of all pertinent information.

Performance measurement and evaluation

An evaluation framework will be prepared to assess, over the next four years, both the implementation and results of this measure, in particular in terms of its relevance and performance. The evaluation will determine whether providing maternity, parental, sickness and compassionate care benefits to self-employed persons on a voluntary basis helps mitigate the risks associated with life events, such as the birth or adoption of a child, sickness, or the need to provide compassionate care to a gravely ill family member.

A formal evaluation of this measure will be undertaken after year five, as required by the EIA, as amended by the Fairness for the Self-Employed Act to determine the impact and effectiveness of this component of the program on the EI program and labour market. The evaluation may include the assessment of the take-up rate, eligibility rate, average weekly benefits and duration of benefits in order to determine the impact and effectiveness of the new measure, with a focus on whether the benefits meet the needs of the self-employed and whether the current parameters support the program’s long-term integrity.

Findings will be reported in the Employment Insurance Monitoring and Assessment Report, tabled in Parliament, upon completion of evaluations, to ensure that Canadian workers, businesses and other stakeholders are aware of the results of the measure.

Contact

Mariève Poliquin
Program Consultant
Legislative and Regulatory Policy Design
Skills and Employment Branch
Human Resources and Skills Development Canada
140 Promenade du Portage, 5th Floor
Gatineau, Quebec
K1A 0A9
Telephone: 819-953-0135
Fax: 819-934-6631

Footnote a
 S.C. 2009, c. 33, s. 9

Footnote b
 S.C. 2009, c. 33, s. 10

Footnote c
 S.C. 2009, c. 33, s. 16

Footnote d
 S.C. 1996, c. 23

Footnote e
 S.C. 2009, c. 33, s. 9

Footnote f
 S.C. 2009, c. 33, s. 10

Footnote g
 S.C. 2009, c. 33, s. 16

Footnote h
 S.C. 1996, c. 23

Footnote 1
 SOR/96-332

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