EI changes: Bargaining implications for maternity, parental and STD plans

Janet Dassinger​ | CUPE Research

Changes are coming to Canada’s Employment Insurance program, and this means CUPE locals will need to get ready to bargain changes to maternity, parental and short-term disability (STD) plans.

The Liberal government has reduced the wait time for applicants to receive EI benefits, from two weeks to one week. This change applies to all benefits including regular, special (maternity, parental and sickness), as well as workers in the fishing industry.

CUPE members whose collective agreements provide supplemental unemployment benefit (SUB) plans and top-ups to maternity, parental, sick leave and short-term disability may be affected. Unlike most other employer payments that are clawed back from EI, claimants covered by SUB and top-up plans can earn a maximum of 95 per cent of normal weekly earnings. For maternity and other top-up plans, the amount is 100 per cent. Maternity and parental benefits in Quebec, which are provincially administered, are not affected.

To avoid claw-backs to negotiated SUBS and top-ups, the federal government has allowed a four-year “transition period” that will end on January 3, 2021. The transition period will give unions and the employers an opportunity to amend negotiated SUBs and top-ups to avoid claw-backs when income exceeds the allowable limits.

For example, a negotiated payment to cover the second week of the waiting period might exceed the 100 per cent threshold, as it combines normal weekly earnings as well as the first EI payment. In such a case, the employer and union could agree to move the payment to the end of the EI claim, or spread the payment over the duration of the benefit period, to avoid a claw-back.

The transition period also allows the union and employer to work with third-party insurance providers to amend their plans. For example, EI-approved short-term disability and other sick plans give employers a break by lowering their EI premiums until the plan begins. In 2021, the reduced premium rate will be reduced from 14 to seven days. The added cost may prompt some employers to ask for changes to their plans.

During the transition period, the usual maximum of 95 to 100 per cent of normal weekly earnings may be exceeded without penalty. After January 3, 2021, all plans must comply to continue to qualify for special treatment under the EI Act.

Local unions with negotiated SUBs, STD, sick leave plans and top-ups should take immediate steps to assess the impact of the new rules on their members and identify what type of changes require discussion with the employer.

The reduced waiting period is part of a wider basket of reforms to the EI program, but much more is needed. CUPE members, especially those who are precariously and seasonally employed, depend on EI to stabilize their income. CUPE supports the Canadian Labour Congress’s call to extend benefit coverage and reduce the qualifying period to 360 hours especially in regions with high unemployment. (Qualifying hours depends on your region’s unemployment rate, and ranges from 420 to 700 hours worked per 52 weeks.) Maternity, paternity and parental benefits also need major improvements. The Quebec Parental Insurance Plan provides greater flexibility to parents along with higher benefit rates and extended coverage. Similar improvements in the federal program are long overdue.

Finally, we encourage the federal government to improve service by hiring more front-line staff to assist claimants to access their benefits in a timely way.