Changes to Employment Insurance (EI) Coverage and Rates

Starting January 1, 2017, the waiting period for Employment Insurance (EI) benefits will be reduced from two weeks to one week. The actual number of weeks the benefit is paid is not changing. Currently the payment period is 17 weeks, including a two week waiting period (no paid benefit is issued) and 15 weeks of a paid benefit. The changes will still see a 17 week period starting with a 1 week waiting period (no paid benefit issued), 15 weeks of paid benefit and 1 week with no benefit.

The Canada Employment Insurance Commission (CEIC) has published the 2017 EI rates and confirmed they are decreasing to $1.63 from $1.88 per $100 of insurable earnings. The maximum insurable earnings for 2017 will increase to $51,300 from $50,800. The maximum employee contribution will fall to $836 from the current $955 while the maximum contribution for an employer will drop to $1,170 from the current $1,337 representing a decrease of over 12%.

The change in plan design will require plan sponsors who have registered their Short Term Disability/Weekly Indemnity (STD?WI) benefit under the EI Premium Reduction Program to reduce the waiting period from 2 weeks to 1 week accordingly. As well, plans that integrate STD/WI with a Long Term Disability benefit will also be affected.

Changes to Canada Pension Plan (CPP)

The Canada Revenue Agency will increase maximum pensionable earnings under the Canada Pension Plan (CPP) from the current $54,900 to $55,300 in 2017.

The employee and employer contribution rates will remain unchanged at 4.95% and the self-employed contribution rate will remain at 9.9%. The maximum employee and employer contribution to the CPP will increase to $2,564.10 each for 2017 while the maximum for self-employed contribution also increases to $5,128.20.

For Canadians applying for CPP disability due to terminal illness or grave medical conditions, new standards are being introduced to improve the urgency in processing applications including turnaround time, as measured in days, and a reference to the percentage of applications that must be done within the new timelines.

Salary Increases for 2017

A recent survey that polled companies across industry sectors predicts average raises will be 2.6% across all employee groups.

There is disparity between industry and geographical locations with starting pay for professionals expected to rise by 3.1% while, in Alberta, 40% of energy organizations surveyed intend to freeze salaries in 2017.

The average adjustment for top performers (the top 7% of workers) is expected to be 4.3%.

Court Ruling Highlights Need For Effective Communication

In May, the Alberta Court of Queen’s Bench ruled in favour of a teacher who sought Long Term Disability (LTD) benefits following her diagnosis with a brain tumour three days into her contract and despite an exclusion for pre-existing conditions.

Even more recently, the British Columbia Superior Court (Feldstein vs. 364 Northern Development Corp.) issued an award of $93,000 to an employee who claims his employer had not adequately communicated the terms of the LTD benefit. The employee, Cary Feldstein, suffered from cystic fibrosis and knew he would eventually require a double lung transplant and was very diligent about his health care.

Similar to the Alberta case, the company did not adequately communicate the clauses dealing with pre-existing conditions as outlined in the benefit plan’s Master Contract and, at the time of the claim, which was two years later, the bulk of Feldstein’s claim was denied because the insurer stated he had not completed a medical questionnaire when he initially enrolled. By the way, this came as a surprise to the employer as well as to Feldstein.

The court’s decision was influenced by the fact the employer has stated there was only a “proof of good health” required when he enrolled in the plan and that Feldstein would satisfy that requirement if he worked for three months without illness. Due to Feldstein’s demonstrated diligence about his health, the court concluded the plaintiff would likely not have accepted employment with the company had he not been completely happy with the coverage.

An employer needs to ensure the terms regarding pre-existing conditions are clearly stated in the Master Contract and a standard clause is included that will address any conditions that are being treated prior to employment (this period can vary but often is 60 to 90 days) and is not treated for a period after employment (this period often is one to two years).

Compassionate Care Leave Changes

Compassionate Care Leave is available to employees who provide care for a family member who has a life-threatening illness.

Effective January 3, 2016, the federal government made changes that extended the time period of compassionate care leave. These changes have been reflected in both the Employment Insurance Act and the Canada labour Code.

Employment Insurance Act

Employment Insurance will provide eligible employees with compassionate care benefits for a maximum of 26 weeks (increased from six) following a two week waiting period. This change also allows multiple family members to share the increased maximum number of weeks.

Employment Insurance Act

Employees subject to the Canada Labour Code are now entitled to a maximum of 28 weeks of compassionate care leave.

Employers can grant more leave than is legislated at their discretion. The application of these changes is different by location. For example, when multiple employees request compassionate care leave for the same person, their combined periods of leave may not exceed the maximum compassionate care leave period in:

• New Brunswick
• Newfoundland and Labrador
• Nunavut
• Prince Edward Island
• Ontario
• Yukon

However, eligible employees in Manitoba and Nova Scotia are entitled to a maximum of 28 weeks of leave, even if another person is also taking compassionate care leave for the same family member.

Most insured benefit contracts allow coverage to continue during a leave of absence for a limited period of time with one exception being for disability benefits.

Please contact us for more details on the differences in this legislation by jurisdiction.

HST Changes in Prince Edward Island

The Government of Prince Edward Island increased the Harmonized Sales Tax (HST) by 1% effective October 1, 2016 changing the rate from 14% to 15%. For clients based in PEI, they may be eligible for an input tax credit so this increase may not increase costs.

For organizations that have employees in PEI, costs will increase on services like ASO plans (without any pooling or stop loss coverage), early referral services for disability and employee & family assistance plans.