Will payroll’s future include ROEs?

There may come a day when payroll departments no longer have to complete and submit Records of Employment (ROEs). Instead, Service Canada would use real-time information from employers’ payroll systems to determine if an Employment Insurance (EI) claimant was eligible for benefits.

That vision may become a reality if the federal government adopts a recommendation made last month in a report by a Parliamentary panel reviewing the quality of service that the EI program provides. The government launched the review last year to find out how EI could better serve Canadians.

In the Employment Insurance Service Quality Review panel’s report, called Making Citizens Central, the panel recommends that Service Canada work with key stakeholders to co-create a real-time payroll information-sharing solution.

“The Panel heard during their consultations with stakeholders that EI reporting requirements, particularly the ROE, are one of the top burdens for employers, and wondered if there is a better solution to capture the information needed,” the report says.

“If Service Canada found a new way to capture the needed payroll information and discontinued the need for employers to produce the ROE, the reporting burden for employers will be lessened, meaning that they will be able to spend more time devoted to their business and less time filling out forms to satisfy the administrative requirements of the program,” it adds.

By law, employers must complete and submit an ROE to Service Canada when an employee who is receiving insurable earnings stops working and has an interruption of earnings. Employers must also provide an ROE whenever Service Canada requests it.

Employment and Social Development Canada (ESDC), the department responsible for administering the ROE through Service Canada, says the form is the most important document in the EI program. “Each year, more than 1 million Canadian employers fill out more than nine million ROE forms for their employees,” it states.

On the form, employers report the employee’s insurable earnings and hours, using pay period information, as well as the reason for the interruption of earnings. Service Canada uses the data to determine whether a claimant qualifies for EI benefits, how much he or she will receive, and the length of time the benefits will last.

During the consultations, the Canadian Payroll Association (CPA) told the panel that the reporting requirements, which are based on weekly Sunday to Saturday insurable earnings, are complicated and time consuming.

“Much of the data required for the EI program must be allocated and/or estimated from payroll data to conform to weekly requirements,” it said in its submission.

“This requires significant manual data accumulation, manipulation, preparation, reconciliation, reporting, and consultations by both employers and government representatives since only 18 per cent of payrolls are produced on a weekly basis and three per cent or less are produced on a Sunday to Saturday basis,” it added.

The panel says one reason for complex reporting is that the EI system itself is complicated. “Unfortunately, changes to policy and program requirements have resulted in a complex program with a difficult-to-navigate process (e.g. complicated applications, forms, and reporting processes) and difficult-to-understand nuances such as severance pay or reasons for separation,” the report says. It notes that even the Service Canada guide explaining how to complete the one-page ROE is 60 pages long.

Another complaint about the ROE that the panel heard was that employers have to complete the form regardless of whether an individual plans to apply for EI benefits.

“The Canadian Payroll Association points out that 6.2 million (70 per cent) of the nine million ROEs produced annually, each of which contains 53 detailed data elements, are never used for actual EI claims and that it is unreasonable for the Government to require employers to spend staff resources completing and submitting them. This burden has an impact on their economic performance,” states the report.

A lack of resources on the federal government’s end also makes the employer reporting system challenging, the report notes. “This complexity has been compounded by insufficient resources to keep up with processing demands and an out-of-date technology platform that is over 40 years old,” it says. This is despite the fact that employers can submit paper ROEs or use an electronic version.

“The result is a processing system that often requires a high degree of human intervention, resulting in delays in processing and delays in citizens receiving EI benefits,” the report adds.

Switching to real-time payroll information would help resolve these issues, the report states. “For Canadians, a real-time payroll information-sharing solution will allow for accurate, high-quality information to be shared between employers and Service Canada. This will simplify the application process for applicants, improve the timeliness of benefits, and decrease financial hardship on Canadians who rely on their EI benefits,” it says.

“It will also increase the accuracy of EI processing, resulting in fewer mistakes and reconsiderations. There will also be decreased burden on Canadians as many program requirements, such as having to self-report while on claim, will be done automatically. The overall result will be better and faster service to Canadians,” it adds.

The CPA says it is pleased with the report. “We’re looking at this as a once-in-a-generation opportunity to bring forth true EI reform,” says Rachel De Grâce, manager of advocacy and legislative content at the association.

“We see this as an opportunity not only for employers to benefit from decreased administrative and regulatory requirements and burden, but the EI claimant will benefit by having more accurate and timely information to enable Service Canada staff to process their claims, adjudicate the claims and calculate any eligible benefits on a more accurate and timely basis,” she adds.

“We also believe that a well-constructed real-time payroll solution will eliminate most if not all of the requests for payroll information,” De Grâce says.

Service Canada may send a Request for Payroll Information form to employers when it is reviewing an individual’s EI claim. It requires employers to report weekly earnings on a Sunday to Saturday basis regardless of whether they have a weekly payroll.

De Grâce says the report often asks for information that is months or even years old, requiring employers to undertake the time-consuming task of hunting down the data for individuals who may no longer work there and manipulating it to fit into the required weekly Sunday to Saturday format.

The CPA is not the only association that has called for the ROE to be replaced. During the consultations, the Canadian Federation of Independent Business recommended eliminating the ROE in favour of a system that uses current payroll data.

The Retail Council of Canada also told the panel, “Canada needs a modernized system comparable to the United States and the U.K. where data is collected via employer payroll systems on an ‘as required’ basis.”

In working towards a real-time payroll information solution, the report points out the need to be cautious. “(B)efore moving forward with such an electronic payroll information service, all perspectives would have to be considered, as it may place an undue technological burden on small and medium-sized enterprises, which would need to be fully understood and addressed.”

It suggests that the government work with employer and employee associations, payroll service providers, payroll software vendors, and bargaining units to create the new system and then pilot test it with both large and small employers within the next three years.

The panel also heard from other associations, labour organizations, citizens, EI clients, and Service Canada staff during the consultations.

In addition to raising the need for technological improvements, they raised concerns about a number of other issues affecting the quality of EI services, including the accessibility of services, wait times for services and benefits, and difficulty communicating with Service Canada and understanding EI program requirements.

Other recommendations in the report include:

• Service Canada should adopt a “citizen-centric approach” to EI including seeking feedback from Canadians and revising service standards based on their priorities and expectations.

• Service Canada should ensure that its employees and managers have the proper training, tools, and expertise to provide service excellence.

• Service Canada should adopt a volume-based funding model for the EI program so that it can better handle fluctuations in the volume of claims it receives.

• Service Canada should examine its EI appeals process to determine why a large number of initial decisions are overturned. In addition, the government should review the efficiency, fairness, and transparency of its Social Security Tribunal.

• Service Canada should replace its outdated technology systems with modern processing technology and updated systems at its call centres.

While not commenting on specific recommendations, Jean-Yves Duclos, Minister of Families, Children and Social Development, said he has asked ESDC to “produce an action plan for a revised strategy that reflects new initiatives and actions” in response to the report.