Employment Insurance threshold being raised from $150 to $225 in an effort to encourage workers to accept lower-paying jobs without jeopardizing their EI benefits
The federal government is increasing the “small week” Employment Insurance threshold from $150 to $225 to encourage individuals to accept weeks of work with lower than average earnings.
This means workers will be able to accept part-time work without lowering the benefit rate on a future claim. The change will be implemented nationally on Sept. 7, 2003.
“This adjustment is a direct result of the Government of Canada’s commitment to monitor and assess the EI program so that it continues to adapt to changing labour market realities and is responsive to the needs of Canadians,” said Jane Stewart, Minister of Human Resources Development. “We are making EI more responsive to Canadians with irregular work patterns by introducing an amendment to align work incentives in EI.”
How it works
The federal government is increasing the small weeks threshold to $225 from $150. When calculating EI benefits, all weeks of work in the 26 weeks preceding the last paid employment day are taken into consideration. These weeks can be regular weeks (earning above the threshold now at $225) or small weeks (earning less than $225.)
A combination of regular weeks and small weeks can lower the benefit rate on the next claim. As a consequence, workers may be reluctant to accept small weeks of work. Increasing the threshold to $225 gives more flexibility in calculating EI benefits without lowering the benefit rate on future claims, a press release issued by Human Resources Development Canada stated.
History of small weeks
The small-weeks initiative was first introduced as a pilot project in 1997 and made into a permanent feature of EI in 2001 in response to employer and worker concerns that accepting weeks with lower earnings acted as a disincentive to accepting part-time or short-term work. It is designed to encourage workers to accept all available work.
By raising the threshold, HRDC said its recognizing that average wages have increased. The new rate of $225 per week aligns with the current earnings and hours profile of the employment that workers are encouraged to accept. According to HRDC, the average part-time wage is currently $12.40 per hour and the average part-time workweek is 18 hours, or almost $225.
This means workers will be able to accept part-time work without lowering the benefit rate on a future claim. The change will be implemented nationally on Sept. 7, 2003.
“This adjustment is a direct result of the Government of Canada’s commitment to monitor and assess the EI program so that it continues to adapt to changing labour market realities and is responsive to the needs of Canadians,” said Jane Stewart, Minister of Human Resources Development. “We are making EI more responsive to Canadians with irregular work patterns by introducing an amendment to align work incentives in EI.”
How it works
The federal government is increasing the small weeks threshold to $225 from $150. When calculating EI benefits, all weeks of work in the 26 weeks preceding the last paid employment day are taken into consideration. These weeks can be regular weeks (earning above the threshold now at $225) or small weeks (earning less than $225.)
A combination of regular weeks and small weeks can lower the benefit rate on the next claim. As a consequence, workers may be reluctant to accept small weeks of work. Increasing the threshold to $225 gives more flexibility in calculating EI benefits without lowering the benefit rate on future claims, a press release issued by Human Resources Development Canada stated.
| Example |
| Here’s an example provided by HRDC, starting off with some terminology: •Rate calculation period: The 26 weeks preceding the last day of paid employment prior to the commencement of the benefit period. •Minimum divisor: The divisor is the number of 35-hour weeks of work in the rate calculation period in the regions required to qualify for EI plus two. For example, if the number of 35-hour weeks required to qualify is 12, the minimum divisor is 14. Example: In a region where the minimum divisor is 14, an individual has accumulated 12 regular weeks of work at $400, 13 small weeks at $175 and one small week at $220. The average weekly earnings would be calculated as follows: All regular weeks of earnings: 12 weeks x $400 = $4,800. Plus the two best small weeks: $175 and $220 = $395. For a total of $5,195. The total is divided by the minimum divisor (in this case, 14): $5,195 ÷ 14 = $371. Multiply that total by 55 per cent: $371 x 55% = $204 The weekly benefit is $204. Using the current small weeks’ threshold of $150, the benefit rate would have been $154 in this example. All earnings must still be reported and earnings allowed while on claim are still $50 per week or 25 per cent of weekly earnings (whichever is higher.) As well, all insurable hours will count for eligibility purposes even if they are not used to calculate the benefit rate. |
History of small weeks
The small-weeks initiative was first introduced as a pilot project in 1997 and made into a permanent feature of EI in 2001 in response to employer and worker concerns that accepting weeks with lower earnings acted as a disincentive to accepting part-time or short-term work. It is designed to encourage workers to accept all available work.
By raising the threshold, HRDC said its recognizing that average wages have increased. The new rate of $225 per week aligns with the current earnings and hours profile of the employment that workers are encouraged to accept. According to HRDC, the average part-time wage is currently $12.40 per hour and the average part-time workweek is 18 hours, or almost $225.
