One criticism often levelled at the Employment Insurance system is that it discourages claimants from accepting part-time or short-term work, while on benefit. Such work can often be a path back to full-time employment. For that reason, the amount that claimants can earn while receiving benefits has been increased over time.
The most recent of these increases takes effect for benefits payable as of the week starting Sunday, August 5, 2012. Although this is nominally a temporary measure, the implication is that this change will not be undone when it is set to expire in August 2015.
Under this change, it will be a little more complex for claimants to calculate how earnings will affect EI benefits. This is because clawback rates will be based on claimant weekly insurable earnings. While this number can be calculated from the earnings reported on the ROE, the simplest way to determine weekly insurable earnings is to divide the weekly EI benefit rate by 55%. In other words, if a claimant is paid $300 a week on EI, the weekly insurable earnings are $545.45 (300 / 0.55). The clawback rates are based on 90% of these earnings, $490.91, in this example. The clawback rate for earnings below this threshold is 50% and above it 100%. Keeping with this example, the following amounts would be deducted from any benefits otherwise payable:
- 50% of the first $490.91 in earnings; plus
- 100% of any weekly earnings over that amount.
Given these rules, if the weekly amount earned in our example was $400, the clawback would be $200, 50% of $400, leaving $100 in EI benefits payable. Without taking this work, the person would have received $300 in benefits; with it, the weekly income rises to $500 ($400 earned, plus $100 in EI).
Given these new rules, no EI is payable when a claimant earns in a week as much as the weekly insurable earnings described above. Note, these earnings are not the same as the normal weekly earnings used to allocate separation payments to benefit weeks in the first place. This is another reason why claimant’s might have trouble following what is happening to their claims. One earnings number is used to allocated earnings to weeks and a potentially much different number is used to clawback benefits otherwise payable for those weeks.
Note, that the rules above do not apply to earnings in the initial two week waiting period. Whatever else might have changed, earnings during the waiting period have always been deducted dollar for dollar. Since by definition, no EI benefits are payable during the waiting period, the deduction for earnings in the waiting period is applied to the first 3 weeks benefits are otherwise payable. This is on top of any clawback described above. If under these new rules, the claimant in the example above had $400 in earnings, during both the last week of the waiting period and the first week that benefits were otherwise payable, the deduction in that first week would be:
- $133.33 ($400 / 3), for the earnings during the waiting period; and
- $200, as described above.
Since the sum of these is greater than the weekly benefit rate, $300, no EI would be payable for that first week.