Employment insurance

Question 1

Briefly discuss Employment Insurance objectives

Answer 1

• Provide temporary income replacement as a result of employment interruptions due to work shortages, sicknesses, non-occupational accidents, maternity leave, parental leave and adoption leave
• Promotes ‘active’ re-employment assistance to help unemployed workers to find and create jobs

Question 2

Briefly discuss the EI regular benefits

Answer 2

• Payable to individuals who become unemployed
• Must stand ready to work and actively look for job
• Exclusions:
- Leaving a job without good cause
- Losing a job because of misconduct
- Out of work because of a strike/lockout
- Exceptions: Workers who agree to leave job to preserve co-worker job

***2012, tighter rules for payouts: Frequent workers (seasonal) must be willing to take any job in their region even if taking the job means substantially lower wages

Question 3

What are the qualify period criteria to receive Employment Insurance due to loss of work?

Answer 3

• 52 week period before start date of a claim
• Period since start of previous claim
• Most people will need between 420 and 700 insurable hours of work in their qualifying period to qualify, depending on the unemployment rate in their region at the time of filing their claim for benefits
• New entrants and those re-entering the work force after 2 years will need to work 910 hours

Question 4

Briefly discuss the EI special benefits

Answer 4

• Maternity (15 weeks)
• Parental (35 weeks)
• Sickness (15 weeks)
• Compassionate care (6 weeks) – individual must show a decrease of more than 40% of earnings
• Eligibility: 600 hours in last 52 weeks

Question 5

Give some stipulations behind the benefits for EI

Answer 5

• Duration of benefits: Max 45 weeks
• Waiting time: 2 weeks
• Benefit amount
a) 55% * Total wage / max(# of week worked; Divisor (based on unemployment rate))
b) 55% average weekly earnings over prior 26-week period
c) Can earn money while receiving benefits (25% of benefit or $50/week)

Question 6

How can a employer reduce their EI premiums?

Answer 6

If cie has a short-term disability plan that is eligible:
• Payment of benefits with no reduction for EI benefits
• Benefits of at least 55% of insurable earnings
• Benefits must begin no later than the 15th day of the disability
• Minimum of 15 weeks of benefits
• 24-hour coverage

Question 7

How are EI premiums paid by the employer taxed?

Answer 7

• Premium deductible for an employer, but not a taxable income to the employee
• Premiums paid by an employee produces a 15% tax credit
• Benefits are taxable income for the recipient
• Benefits repayments are possible under “clawback” measure:
i. If net income > $57,375 must repay 30% * Min[ Regular benefits; Excess income]
ii. Not applicable to first-time claimant and to special benefits

Question 8

What is the contribution ration between employee and employer for EI?

Answer 8

• Employer contribution rate is 1.4 times the employee’s rate
• Certain special programs and benefits funded by fed govt

Question 9

Reasons why EI is an insurance plan and not social welfare

Answer 9

• Funded by premium contribution, not general tax revenues

* Benefits are generally based on contributions, not need

Question 10

Types of other income that would reduce EI benefits

Answer 10

• Nonqualified severance payments
• Earnings above the highest of 20% of the benefit or $50 per week
• Benefit from an employer-sponsored short-term disability plans
• Net income above $48,750

Question 11

Sources of financial assistance if unable to work because of illness or injury

Answer 11

• CPP/QPP: Disability income for severe and prolonged disabilities
• WC: Health care, ST disability, LT disability and rehabilitation for work-related injuries or disease
• EI: Special benefits for those not working because of non-work-related injuries or sickness
• Employer-sponsored short-term disability plans