Proposed Amendments to Employment Insurance (EI)

September 29, 2000

In 1996, we created a new Employment Insurance system - re-designed and re-focused to meet the needs of the labour market of the 21^st century by shifting the focus from passive income support measures to active re-employment measures.

Our continuous monitoring of the impact of the EI reforms shows that they have achieved our objectives - the program is fairer and is helping people find work.

But some measures have proven to be ineffective and in some cases punitive - especially for seasonal workers and women.

Accordingly, the government yesterday tabled amendment to the EI Act that will remedy these problems, as well as provide additional support for families and children.

Highlights of the Amendments:

Effective for claims beginning October 1, 2000, the Intensity Rule will be eliminated. The benefit rate would be reinstated to 55% for all claims.

• The rule has not achieved its objective of reducing dependency and discouraging the use of EI as a regular income supplement. It has had the unintended effect of being punitive.

Effective in the 2000 tax year, the Benefit Repayment (Clawback) Provision will be adjusted.

• To ensure that the EI program is there for Canadians who seek temporary income support for the first time, all first-time claimants will be exempted from the Clawback.
• To ensure that the Clawback applies only to workers with higher incomes - not middle income Canadians -- the benefit repayment threshold is being set one level ($48,750 net income) with the maximum repayment at 30% of a person’s net income in excess of $48,750; and,
• To ensure that parents who stay at home with their newborn children or workers who are too sick to work are not penalized, they will not have to repay any EI special benefits for sickness, maternity or parental leave.

Effective for claims beginning October 1, 2000, the rules for parents who are re-entering the labour force will be adjusted.

• Currently, re-entrants who have significant previous work experience but who have been out of the workforce for a year or more to raise a family are treated as if they have no labour force attachment when they apply for regular benefits.
• This has unintentionally penalized parents – approximately 95% of them women – who have left the workforce for an extended period to raise young children.
• For this reason, and in keeping with the government’s other initiatives to support families with children, such as the extension of parental leave, the rules governing re-entry are being adjusted for those who have claimed maternity or parental benefits within the past 6 years.

EI Premiums

For the seventh straight year, we are reducing EI Premiums - to $2.25 from the current $2.40.

This will result in premiums relief to employers and employees of $1.2 billion -- bringing to $6.4 billion the amount that our overall reduction in EI premiums is saving workers and employers each and every year.

Responding to the recommendation of the Standing Committee on Finance, a review EI premium rate setting process will be undertaken and completed before 2003 .

Monitoring and Assessment

The Canada Employment Insurance Commission will continue, until 2006, to monitor and assess the impact of the EI program on people, communities and the economy.

Continued monitoring of the impact of EI Reform will help to ensure it continues to achieve its objectives of supporting Canadians who are temporarily between jobs while ensuring that they do not become reliant on the program.