Changes to Employment Insurance (EI)
The changes to employment insurance announced by the Government of Canada took effect on January 1, 2017. The most talked about change is the shortening of the waiting period for employment insurance benefits (including sickness benefits) from two weeks to one week.
While claimants are still entitled to the same maximum number of weeks of EI benefits, the waiting period may have indirect implications for workers and employers who have top-up arrangements that supplement EI. Reducing the waiting period shifts forward the period during which EI benefits are payable. In some cases, employer payments that supplement EI maternity and parental benefits may be aligned to the two-week waiting period and the reduction of the waiting period may have impacts for workers or employers.
The Government of Canada has taken steps to mitigate the potential impact on employers' and workers' sickness plans by providing a four-year transitional period for employers to adjust these plans and providing measures to minimize the impacts on workers' EI benefits.
EI Premium Reduction Program - The Premium Reduction Program (PRP) provides a reduction of the employer's premium rate when an employer provides a plan in respect of illness or injury to their employees that meets the standards established in the EI Regulations. The premium reduction recognizes the savings to the EI Operating Account resulting from workers using employer benefits before accessing EI sickness benefits. The waiting period for disability insurance is a condition for applying to the premium reduction program, where employers providing short term disability (whose plan meets certain requirements) may be entitled to pay lowered EI premiums. Now to be eligible for EI premium reduction, employer plans cannot have a waiting period longer than one week. Here is the website all about the program and how to apply: CLICK HERE
Consideration for LTD - Employers whose plans include long-term disability (LTD) will need to know since employment insurance benefits will now end one week earlier, they may wish to consider having their LTD commence sooner. Take for example an employer who only offers LTD, relying on EI to cover the short term. By starting earlier, EI will end earlier as well. The employer may wish LTD to commence sooner to avoid hardship on the part of the employee.
Please let us know any questions you have and how we can help with your Short Term and/or Long Term Disability Plan.
References: Benefits By Design; Communications January 2017
Government of Canada; EI Premium Reduction Program - for employers October 2016