Federal Government Announces Extension of EI Sickness Benefits to 26 weeks

Federal Government Announces Extension of EI Sickness Benefits to 26 weeks

Many employers and employees are not aware that our Employment Insurance system offers a form of short-term disability benefit for EI covered employees, other than those with access to a comparable private Short Term Disability insurance coverage with their employer. The Federal Government has surprised employers by announcing that it is permanently extending the number of weeks of sickness benefits from 15 weeks to 26 weeks. The extra weeks will be available for new EI sick (disability) claims established on or after December 18, 2022.

To be eligible for EI sickness benefits, claimants must show that:

  • They are unable to work for medical reasons. They must have a medical certificate signed by a medical practitioner when they apply;
  • Their regular weekly earnings from work have decreased by more than 40% for at least one week (known as the “waiting” or “qualifying” period);
  • They have accumulated at least 600 insured hours of work in the 52 weeks before the start of their claim or since the start of their last claim, whichever is shorter; and
  • If it were not for their medical condition, they would otherwise be available for work.

EI sickness benefits are paid at the same rate as regular unemployment benefits: 55% of the claimant’s average weekly insurable earnings up to a maximum entitlement amount, which is $638 per week for 2022.

Employers who offer a 15 week Short Term Disability (STD) plan comparable or better than EI enjoy a modest reduction in their EI premiums to reflect the fact that their employees do not claim EI sick benefit. This is known as the Premium Reduction Program (PRP). No immediate changes to the PRP have been announced but employers should expect that changes will be coming to the PRP regime in the future given the extension of EI sick benefits.

The cost of the existing 15 week EI sickness benefit has formed a growing portion of the total cost of EI benefits, which is shared between employers and employees. Adding another 11 weeks will likely drive up those costs by 30% or more, thus affecting EI premiums paid by both employees and employers. This will also create an incentive for the majority of employers with no STD coverage to either cancel any Long Term Disability coverage they currently pay for altogether or change the waiting period from the traditional 16 weeks to 27 weeks to dovetail with the extension of EI benefits. The situation is further complicated by the reality that many employers have set up their LTD plans so that employees pay all LTD premiums and thus are able to receive LTD premiums tax free. In this common scenario, employers are not directly financially motivated to review the LTD coverage they have arranged.

For employers offering STD coverage, they will likely need to review the duration of such benefits and consider aligning them to the new 26 weeks of EI sick benefit.

There will almost certainly be reactions to this announcement from the disability insurance industry, employers and employee groups, including unions. Expect to see the following changes in terms of coverage offered by disability insurers:

  1. extensions in waiting or qualifying periods for LTD;
  2. extensions in the duration of STD benefits to match EI; and
  3. new clauses making the extra 11 weeks of EI sick benefit deductible from any LTD benefits which continue to start at 16 weeks of disability.

The Federal Government also extended the maximum length of unpaid medical leave available to federally regulated private-sector workers is also being extended from 17 to 27 weeks, starting on the same date. This extension ensures that those employees will be able to claim for the full entitlement of sickness benefits, if they meet the requirements.

If you want more information on this topic, you can contact us at:

Geoffrey Howard:       ghoward@howardlaw.ca

604 424-9686

Sebastian Chern:         schern@howardlaw.ca

604 424-9688

 

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