Regulations Amending the Employment Insurance Regulations (Pilot Project No. 24): SOR/2025-115

Canada Gazette, Part II, Volume 159, Number 8

Registration
SOR/2025-115 March 23, 2025

EMPLOYMENT INSURANCE ACT

P.C. 2025-459 March 23, 2025

The Canada Employment Insurance Commission makes the annexed Regulations Amending the Employment Insurance Regulations (Pilot Project No. 24) under section 109 of the Employment Insurance Act footnote a.

March 21, 2025

Her Excellency the Governor General in Council, on the recommendation of the Minister of Employment and Social Development, under section 109 of the Employment Insurance Act footnote a, approves the annexed Regulations Amending the Employment Insurance Regulations (Pilot Project No. 24), made by the Canada Employment Insurance Commission.

Regulations Amending the Employment Insurance Regulations (Pilot Project No. 24)

Amendment

1 The Employment Insurance Regulations footnote 1 are amended by adding the following after section 77.994:

Pilot Project Establishing Measures to Respond to Major Changes in Economic Conditions

Purpose

77.995 Pilot Project No. 24 is established for the purpose of testing the outcomes of applying certain employment insurance measures to respond to the impacts on employment of major changes in economic conditions.

Waiting Period

77.996 The Commission may waive the waiting period in respect of any benefit period that begins during the period beginning on March 30, 2025 and ending on October 11, 2025.

Earnings for Benefit Purposes

77.997 The earnings paid or payable to a claimant by reason of a lay-off or separation from an employment do not constitute earnings for the purposes referred to in subsection 35(2) if

Rate of Unemployment

77.998 If the later of the weeks referred to in subsection 10(1) of the Act begins during the period beginning on April 6, 2025 and ending on July 12, 2025 and the regional rate of unemployment that applies to the claimant as determined under section 17 of these Regulations is less than 13.1%, the regional rate of unemployment that applies to the claimant is deemed to be

Coming into Force

2 These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: The continued threat and introduction of tariffs from the United States (U.S.) and other trading partners are unprecedented and expected to have significant impacts on the Canadian economy, including the potential for widespread layoffs in all regions and sectors. It is estimated that hundreds of thousands of direct and indirect jobs could be at risk, resulting in an estimated 415 000 additional Employment Insurance (EI) claims for regular benefits in the first 12 months.

Description: These Regulations introduce a six-month EI pilot project to test the outcomes of establishing the following three temporary measures:

  1. Waiving the one-week EI waiting period;
  2. Suspending the treatment of rules on monies paid on separation; and
  3. Artificially boosting the EI regional unemployment rates and establishing a minimum unemployment rate.

The first two measures will apply for a period of six months; the third measure, for a period of three months.

Rationale: Given the potential for widespread layoffs due to tariffs, an EI pilot project is being established to test the outcomes of applying certain temporary employment insurance measures in response to major changes in economic conditions. The present value of the monetized benefits from this pilot project is $1,013.3M over two years while the present value of the monetized costs from this pilot project is $1,069.2M over two years, for an expected net cost of $55.9M.

Issues

With the significant job losses expected in a tariff-impacted economy, volumes of EI regular benefits claims are expected to rise substantially, with anticipated 415 000 additional claims in the first 12 months. It is also expected that a greater percentage of these regular benefit claims will exhaust their weeks of entitlement, with the potential of a return to employment in trade-exposed sectors becoming more difficult. The measures in this pilot project are designed to ensure that workers are supported with timely access to EI benefits, providing income support when they need it most.

Background

According to Statistics Canada, exports to the U.S. accounted for 18% of Canada’s gross domestic product and more than 2.4 million jobs in Canada in 2022.footnote 2 With tariffs of up to 25% on all Canadian goods exported to the U.S., hundreds of thousands of direct and indirect jobs are at risk in many industries, including in the manufacturing, transportation, energy, agri-food, and construction sectors.footnote 3 The manufacturing industry is expected to be especially hard hit as close to forty percent of jobs depend on US demand for Canadian exports. Within manufacturing, the sectors most vulnerable to tariffs include motor vehicle and automotive parts, machinery, aluminum and steel, chemicals, food, and wood and paper, some of which are already subject to additional and more severe tariffs. In addition, transportation and warehousing is also expected to be impacted. This at a time when demographic shifts and technological changes are already challenging workers and employers, in turn exacerbating affordability, labour productivity and long-term growth. Tariffs could also have ripple effects for other parts of the economy, affecting employment in industries adjacent to the most trade-exposed sectors. For reference, approximately 400 000 jobs were lost during the 2008–2009 financial crisis, while employment fell by 3 million at the beginning of the COVID-19 pandemic.

Workers in insurable employment who lose their job through no fault of their own (e.g. a layoff) can receive temporary income support through EI regular benefits while they look for a new job or re-skill, provided they meet the entrance and eligibility requirements.

The EI program is designed to function as an automatic economic stabilizer in response to changes in economic conditions that affect local labour markets. The unemployment rate specific to an EI economic region is used to determine the eligibility requirements for regular benefits (i.e. the number of hours of insurable employment needed to qualify) and entitlement duration (i.e. the maximum number of weeks of benefits payable). When the regional unemployment rate increases, the number of hours of insurable employment required to qualify for regular benefits decreases, and the number of weeks of entitlement to regular benefits increases. This makes it easier for claimants to qualify for regular benefits and provides them with additional weeks of income support while searching for employment. The rationale for this adjustment is when the unemployment rate is higher there are fewer jobs available in the local labour market, more competition for these jobs, and claimants may take longer to find a job in this situation. An increase in the unemployment rate also increases the weekly benefit rate received by some regular, special, and fishing benefits claimants as it reduces the number of best weeks (i.e. weeks with the highest earnings) used to calculate the benefit rate.

Generally, the design of the EI program is effective in adjusting to normal fluctuations within the economic cycle. However, in situations of sudden and significant economic shock, such as the financial crisis of 2008–2009, the commodities price downturn in 2014–2016, or COVID-19 pandemic in 2020–2022, it has not been flexible enough to be responsive to the needs of workers. Therefore, temporary enhancements to the EI program were implemented previously during these economic-shock situations to help address the economic and labour market impacts of these events.

Employment insurance benefits

Regular benefits

Workers in insurable employment require between 420 and 700 hours of insurable employment during the qualifying period to establish a claim for regular benefits and are entitled to between 14 and 45 weeks of benefits, depending on the regional unemployment rate. The regional unemployment rate also determines the number of best weeks of insurable earnings, which varies between 14 and 22 weeks, and is used to calculate the claimant’s EI weekly benefit rate.

Fishing benefits

Eligible self-employed fishers who cannot qualify for EI regular benefits can access EI fishing benefits. Eligible fishers require between $2,500 and $4,200 in fishing income during their qualifying period to qualify to receive fishing benefits. The income required varies based on the regional unemployment rate. Eligible fishers are entitled to 26 weeks of benefits in each of the summer and winter fishing off-seasons. Duration of entitlement does not vary based on the regional unemployment rate.

Special benefits

EI special benefits provide temporary income support to eligible workers to help them balance work and life responsibilities when they are unable to work because of illness, pregnancy, caring for a newborn or newly adopted child, or supporting a gravely or critically ill family member. Workers require 600 hours of insurable employment during their qualifying period to qualify for special benefits, and the number of weeks of entitlement depends on the type of special benefit claimed (e.g. 15 weeks for maternity benefits, 26 weeks for sickness benefits).

Monies on separation

A claimant may receive monies on separation, such as severance and vacation pay, which are compensation from their employer after a job separation. Monies on separation received by an EI claimant are deducted from their weekly EI benefits at the rate of their normal weekly earnings from that employment. These deductions either delay or reduce the payment of EI benefits to a claimant until all their monies on separation have been deducted.

EI regional unemployment rates

​To calculate the regional rates of unemployment for the EI program, the country has been divided into 62 EI regions. The EI unemployment rate applicable to each region in a given period is determined by Statistics Canada using data from their monthly Labour Force Survey. Regional rates of unemployment are updated every four or five weeks with the release of the monthly results of the Labour Force Survey. For EI regions in the provinces, the EI unemployment rates are the average of the seasonally adjusted monthly unemployment rates from the three most recent Labour Force Survey releases. For example, the EI regional unemployment rates that are in effect in the provinces from March 9 to April 5, 2025, are the averages of the unemployment rates from the February, January, and December Labour Force Survey releases. For EI regions in the Territories, the higher of the 3- and 12-month unemployment rate (in which the average is calculated over a 12-month period) applies each month.

Waiting period

All workers who qualify for any type of EI benefits are subject to a one-week waiting period. It is usually served in the first week for which benefits would otherwise be payable to the claimant but can be deferred in some cases.

Pilot projects

​​​The Employment Insurance Act (the EI Act) provides the Canada Employment Insurance Commission with the authority to make regulations to introduce pilot projects; the duration of such pilot projects cannot exceed three years. To be introduced, a pilot project must test whether potential changes to the EI Act or related regulations would make them more consistent with current industry employment practices, trends, or patterns or would improve service to the public. This allows the impacts of new approaches to be tested before permanent changes to the EI program are considered.

Objective

This pilot project is being established for the purpose of testing the outcomes of applying certain employment insurance measures to respond to the impacts on employment of major changes in economic conditions.

Description

The Employment Insurance Regulations (the Regulations or EI Regulations) are amended to introduce a six-month EI pilot project that includes the following measures:

1) Waiving the one week waiting period so that claimants are able to receive benefits for the first week of unemployment, softening the shock of an income drop.  Regular, special, and fishing claimants are eligible for this measure, which will apply to claims with a benefit period that begins on or after March 30, 2025, but no later than October 11, 2025.

Waiving the waiting period increases the upfront payment workers received but does not increase the speed of processing or the maximum amount of benefits to which claimants are entitled during their claim.

2) Suspending the treatment of monies on separation so that earnings paid or payable by reason of a lay-off or separation from employment do not constitute earnings for EI benefit purposes. As a result, claimants receiving benefits will not experience a delay in the payment of EI benefits, or a reduction of their benefits, if they receive monies on separation. This measure will apply to claims for regular benefits with a benefit period that begins on or after March 30, 2025, but no later than October 11, 2025, or to claims where the first week that monies on separation would normally be applied falls during this period.

3) Artificially boosting the EI regional unemployment rates as follows:

This measure would result in an artificial boost to all EI regional unemployment rates of one percentage point, up to a maximum of 13.1%. This boost will be applied to the rates each month when they are updated. It also establishes a minimum unemployment rate of 7.1% in all EI regions. This minimum rate will be in place each month that the measure is in effect.

For EI regular benefit claimants, the artificial boost to the unemployment rate may result in a decrease to the number of hours of work required to qualify, an increase to the number of weeks of benefit entitlement, and an increase in the weekly benefit rate. For EI fishing benefit claimants, the artificial boost to the unemployment rate may result in a decrease to the earnings required to qualify and an increase in the weekly benefit rate. For EI special benefit claimants, the artificial boost to the unemployment rate may result in an increase in the weekly benefit rate.

More specifically, claimants will have improved access to regular benefits (maximum of 630 hours of work to qualify), increased regular benefit entitlement (by up to four weeks), and higher weekly benefit rates for all benefit types (to a maximum of $695 in 2025); the measure will also improve access to fishing benefits (maximum of $3,800 in fishing earnings to qualify).

Increasing the EI unemployment rate in each region by one percentage point, to a maximum of 13.1%, will help the regional unemployment rates better reflect the regional labour market conditions following the implementation of tariffs. As the regional unemployment rates used in the EI program are moving averages, there can be a lag in responding to economic shocks that result in sudden and significant increases in job losses. The one-percentage-point increase will help address any potential lag in the responsiveness of these unemployment rates to the impacts of the tariffs.

This measure will commence on April 6, 2025, and end on July 12, 2025. All new EI benefit claims with a benefit period that begins on or after April 6, 2025, but no later than July 12, 2025, will have the artificially boosted unemployment rates and minimum rates applied.

Regulatory development

Consultation

This proposal is informed by what was heard from stakeholders during ministerial roundtables in January 2025 with employers, unions and labour groups. It is also informed by two years of extensive consultation on EI modernization starting in 2021 and 2022 which included over 35 stakeholder roundtables with organized labour and employer groups, community organizations, academics, and other experts. During these consultations, the key priority of labour groups has been on improving access to EI for workers who contribute to the program but have insufficient hours to qualify. Another key takeaway from these consultations was the need for the EI program to be responsive in times of economic downturns. During these consultations, some stakeholders indicated the need for a support program during emergencies, while other stakeholders had concerns with EI being the primary funding source for all emergency-related support programs. 

Since the Regulations need to be put in place expeditiously and. given there will be no negative impacts on claimants and no additional burden on businesses, the amendments were exempted from prepublication in the Canada Gazette, Part I.

Modern treaty obligations and Indigenous engagement and consultation

In accordance with the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, an assessment of modern treaty implications was conducted in relation to the proposal. There are no implications for modern treaty obligations or Indigenous engagement in these Regulations. No Indigenous groups were engaged in designing this pilot project.

Instrument choice

The EI Act is the only mechanism that allows the development of pilot projects for the EI program, and the EI Regulations are the only instrument available to implement such a pilot project.

Regulatory analysis

Benefits and costs

The Regulations introduce a pilot project designed to test the outcomes of applying certain employment insurance measures to respond to the impacts on employment of major changes in economic conditions. The measures increase the access and adequacy of EI benefits for workers who become unemployed in the six months following the imposition of tariffs, which are expected to have impacts on employment in all regions, and particularly in trade-exposed sectors. The increase in EI benefits paid as a result of this measure constitutes the primary benefit of the Regulations. The economic stimulus provided by the additional income support is an indirect benefit of the pilot project, and as such, is described in the “Qualitative and quantitative impacts” section below.  Due to the urgency of the Regulations, consultations were not undertaken as part of this cost-benefit analysis.

The increased EI benefits paid out because of these Regulations will result in increased program costs to the Employment Insurance Operating Account. Furthermore, there will be administrative costs to the Government which will be reimbursed by the Employment Insurance Operating Account. These increased program and administrative costs are described and quantified in the “Costs” section below.

Operating and administration costs were estimated by Employment and Social Development Canada, using a workforce impact model. This model uses expected increases in claim volumes and types of interventions to estimate the operating costs, such as increased staff, of changes to the EI program. This model has been used for costing previous EI program changes.

The EI benefits to be paid to claimants were estimated using the EI microsimulation model.  Using historical claimant data, this model allows the EI program to assess the impact of varying different program parameters. For this analysis, the parameters used by the model were assumed to be constant over the duration of each measure in the pilot project. For example, the claimants impacted by each measure are assumed to be evenly distributed throughout the duration of the measure and the average weekly benefit rate of the impacted claimants was assumed to be constant over the duration of the measure.

The benefits and costs of this pilot project are assumed to occur over two 12-month periods.  This duration is chosen to reflect that a claimant’s benefit period is typically 52 weeks, although it can last as long as 104 weeks in some situations. Thus, a claim that commences during the first 6 months of a 12-month period could have benefits paid in the second part of that 12-month period and possibly into a second 12-month period. For this pilot project, it was assumed that the number and impacts of any claims that stretched into a third 12-month period would be minimal — these were not costed.

A discount rate of 7% is used to calculate present values.

Some numbers used in the “Benefits and costs” section are rounded. As a result, totals may not equal the actual value due to rounding.

Baseline scenario

The baseline scenario reflects the scenario that would exist in the absence of the pilot project. Workers would continue to access the EI program and EI benefits as they do now. Program parameters, such as eligibility requirements, entitlement durations, and weekly benefit rates, would be determined based on the rules currently in place under the EI Act and EI Regulations. Claimant uptake, EI usage, etc., would continue to reflect historical trends.

Claim volumes for EI regular benefits are expected to be about 1 800 000 for the first year following the imposition of tariffs, higher than the historical average of about 1 400 000 claims per year. This reflects the expected increase in job losses and a corresponding increase in EI claims resulting from the tariffs. The increase in claim numbers was derived from the estimated job losses associated with the imposition of 25% tariffs on all Canadian goods exported to the United States.

Claim volumes for EI special benefits, including, maternity benefits, parental benefits, caregiving benefits, and sickness benefits, are expected to be about 500 000 per year while volumes for claims by self-employed fishers are expected to be about 30 000 per year, reflecting historical averages and trends for these types of claimants. The imposition of tariffs is not expected to significantly impact these claim numbers.

Regulatory scenario

Under the regulatory scenario, eligible workers accessing the EI program would have the three measures included in the six-month pilot project applied to their claims. Two of the measures will apply for six months, while the other will apply for three months. These temporary measures are

The measure to waive the waiting period would result in some claimants receiving an extra week of benefits payments. It would also result in new claims that would not have received benefits under the baseline scenario to receive benefits paid.

Simplifying the treatment of rules on monies on separation would result (a) in some regular benefits claimants who would not otherwise have received regular benefit payments under the baseline scenario to receive benefits; and (b) in some claimants who would receive regular benefits under the baseline scenario to receive additional weeks of benefits paid because of the simplification.

Artificially boosting the unemployment rate would result in some regular benefits claimants receiving additional weeks of entitlement duration. As well, some regular benefits claimants who would not have qualified for regular benefits under the baseline scenario will qualify for benefits under the regulatory scenario because of the reduced hours of insurable employment required to qualify for EI regular benefits.

The actual unemployment rate for 41 of the 62 EI regions between March 9 and April 5, 2025, was below 7.1%. These regions account for about 61% of Canada’s labour force. Eighteen of the 62 EI regions had an EI unemployment rate between 7.1% and 13.0%. These regions account for about 38% of Canada’s labour force. The other three regions have unemployment rates above 13.1%.

It is expected there will be about 1 900 000 claims for regular benefits in the first 12 months following the imposition of tariffs, an increase of about 100 000 claims (from 1 800 000) over the baseline scenario. This increase reflects the pilot project’s expected impact on benefit access.

It is expected that 702 000 claims will benefit from the measure waiving the waiting period, 174 100 claims are expected to benefit from the measure that will simplify the treatment on monies on separation, and 317 700 claims are expected to benefit from the measure that will artificially boost the unemployment rate by one percentage point, to a maximum of 13.1%, and establish a minimum unemployment rate of 7.1%. Included in the numbers above, it is expected there will be about 14 600 new claims of all benefit types that will receive benefits because of the measure on waiving the waiting period, 58 800 new claims for regular benefits that will receive benefits because of the measure to simplify the treatment on monies on separation, and 7 400 new claims for regular benefits that will receive benefits because of the measure artificially boosting the regional unemployment rates. Note that these numbers are not mutually exclusive as it is possible for claimants to benefit from more than one of the measures included in the pilot project.

Benefits

The provision of additional EI benefits to claimants represents the primary benefit of the pilot project and is estimated to be $1,096.6 million (undiscounted). This is equivalent to the total amount of additional EI benefits that will be paid out by the EI Operating Account. The stakeholders who benefit from this measure are EI claimants. These benefits will occur over two fiscal years (from 2025–2026 to 2026–2027).

The methodology, assumptions, and how claimants are expected to benefit from this measure are described below. Note that numbers in this section below may not add up due to rounding.

1. Waiving the waiting period

Stakeholders: Claimants receiving EI regular benefits, EI special benefits, and EI fishing benefits who would not exhaust their EI benefits.

Waiving the waiting period will result in claimants who will not exhaust their EI benefit entitlement receiving an additional week of EI benefits, relative the baseline scenario. For example, a claimant who, under the baseline scenario, would receive 30 weeks of entitlement but would only receive benefits for 20 of these weeks before they found new employment will now receive benefits for 21 weeks under the regulatory scenario due to the waiving of the waiting period. A claimant who, under the baseline scenario, would receive 30 weeks of entitlement and would use all 30 weeks of this entitlement will still receive and use 30 weeks of entitlement (and receive 30 weeks of benefits paid) if the waiting period was waived, and will therefore not benefit from this measure.

It is estimated that 539 500 claims receiving EI regular benefit payments will benefit from the waiving of the one-week waiting period and will be paid an additional week of EI benefits payments paid at an average benefit rate of $602. Of these, 10 900 are expected to be new regular benefits claims who would not have received benefits if the waiting period was not waived. New claims resulting from waiving the waiting period are expected to be from claimants with short durations of unemployment who would otherwise not access regular benefits but who would as a result of the waiving of the waiting period. The total undiscounted benefit from this element of the measure is estimated to be $324.7 million.

It is estimated that 154 000 claims receiving EI special benefit payments will benefit from the waiving of the one-week waiting period and will receive an additional week of EI benefits payments paid at an average weekly benefit rate of $567. Of these, 3 700 are expected to be new special benefits claimants who would not have received benefits if the waiting period was not waived. The total undiscounted benefit from this element of the measure is estimated to be $87.3 million.

It is estimated that 8 600 claims receiving EI fishing benefits will benefit from the waiving of the one-week waiting period and will receive an additional week of EI benefit payments paid at an average weekly benefit rate of $649.  Of these, about 25 are expected to be new fishing benefits claimants who would not have received benefits if the waiting period had not been waived. The total undiscounted benefit from this element of the measure is estimated to be $5.6 million.

The total undiscounted benefit from waiving the one-week waiting period is estimated to be $417.6 million.

The number of claims expected to benefit from waiving the waiting period is based on expected claim volumes and historic exhaustion rates during economic downturns. The average weekly EI benefit rate is projected from recent claimant data for the different claimant populations (claimants receiving EI regular, benefits, special benefits and/or fishing benefits). The data used for this analysis comes from EI program administrative data.

2. Suspending the treatment of rules on monies on separation

Stakeholders: Claimants receiving EI regular benefits who receive monies on separation, such as severance and/or vacation paid or payable to them by reason of separation from an employment, and who would find new employment before exhausting their EI regular benefit entitlement.

These regular benefits claimants would be paid additional weeks of EI regular benefits because, under the rules of this measure, EI benefits will start being paid earlier in a claimant’s benefit period. Similarly, regular benefits claimants who would normally not have applied for EI regular benefits because they knew that the money they received upon separation of employment would delay the payment of EI regular benefits may choose to apply and would be able to receive EI regular benefits earlier during their EI benefit period. It is estimated that 115 300 regular benefits claims who receive monies on separation, who would otherwise also receive EI regular benefits, and who would otherwise not exhaust their weeks of EI benefit entitlement, will be paid an average of 2.36 additional weeks of EI regular benefits paid at an average weekly EI benefit rate of $593.  The total undiscounted benefit from this element of the measure is estimated to be $161.4M.

It is estimated that 58 800 regular benefits claims who receive monies on separation and who would not otherwise receive EI benefits would receive them as a result of this measure. These regular benefits claims will receive an average of 7.29 additional weeks of EI benefits paid at an average weekly EI benefit rate of $612. The total undiscounted benefit from this element of the measure is estimated to be $262.4M.

The total undiscounted benefit from suspending rules around monies on separation is estimated to be $423.8M.

The number of regular benefits claims expected to benefit from each element of the measure is based on expected claim volumes, historic rates of claimants receiving monies on separation, and historic EI usage and exhaustion rates of these claimants. The average weeks of additional EI benefits paid, and the average EI weekly benefit rate are estimated based on historic claim data for this population of claimants. The data used for this analysis comes from EI program administrative data.

3. Artificially boosting the EI regional unemployment rates

Stakeholders: Claimants residing in EI regions where the actual monthly EI unemployment rate is lower than 13.1%. Claimants in these regions receiving regular benefits may benefit from the reduced eligibility requirements and increased entitlement durations.

Artificially boosting the EI unemployment rates by one percentage point would decrease the number of hours of insurable employment needed to qualify for EI regular benefits by at least 35 hours in all regions where the EI unemployment rate is more than 5.0% and less than 13.1%. This reduction in qualifying hours will allow some workers to qualify for regular benefits when they would not otherwise have had enough hours. The application of the minimum unemployment rate of 7.1% in all EI regions would further help some workers qualify for regular benefits. For example, regular benefits claimants residing in an EI region where the actual unemployment rate is 5.7% would currently require 700 hours of insurable employment to qualify for regular benefits. At the minimum rate of 7.1%, regular benefits claimants in this region would only need 630 hours to qualify for regular benefits.

It is estimated that 7 400 additional claims would be able to qualify for regular benefits as a result of the adjustment to the unemployment rates and the establishment of the minimum unemployment rate. These regular benefits claims would use an average of 17.64 weeks of regular benefits paid at an average weekly benefit rate of $403. For forecasting purposes, the average benefit rate is assumed to be constant throughout the duration of the measure and does not change each month when the unemployment rates are updated. The total undiscounted benefit from this element of the measure is estimated to be $52.7M.

Artificially boosting the unemployment rates used by the EI program will increase the duration of regular benefit entitlement by up to four weeks for EI regular benefits claimants living in regions where the EI unemployment rate is less than 13.1%.

For example, under the baseline scenario, a claimant who qualified for EI regular benefits with 1 000 hours of insurable employment and who live in an EI region where the unemployment rate was 5.5% would qualify for 18 weeks of benefits. The application of the one percentage point increase and the establishment of the minimum unemployment rate would increase the claimant’s entitlement duration to 22 weeks, an increase from the 18 weeks provided under the baseline scenario.

It is estimated that 310 300 existing regular benefits claims who would receive EI regular benefits under the baseline scenario will benefit from this measure. These regular benefit claims will use an average of 1.33 weeks of additional benefits beyond the baseline scenario paid at an average weekly benefit rate of $490. For forecasting purposes, the average benefit rate is assumed to be constant throughout the duration of the measure and does not change each month when the unemployment rates are updated. The total undiscounted benefit from this element of the measure is estimated to be $202.6M.

The total undiscounted benefit from adjusting the unemployment rates and establishing the minimum rate is estimated to be $255.3 million.

The number of regular benefits claims expected to benefit from this measure is based on expected claim volumes. The number of new regular benefits claims is based on claims data from fall 2021 to fall 2022, when a flat common eligibility requirement of 420 hours was in place in all EI economic regions. When this measure was in place, there was a significant increase in claimants who were able to qualify for EI regular benefits with a lower number of hours. Once this measure expired, the proportion of regular benefits claimants who accumulated between 420 and 699 hours of insurable employment decreased from 15.1% to 3.0%, as claimants with less than 700 hours of insurable employment who lived in regions where the EI unemployment rate was 6.0% or lower were no longer able to qualify for regular benefits. The average weekly benefit rate is projected from recent claimant data. The data used for this analysis comes from EI program administrative data.

Summary table of benefits
  Claimants who would benefit (A) Avg. additional benefit weeks paid (B) Avg. weekly benefit rate (C) Total Benefit (= A x B x C)
Waiving the Waiting Period 702,000 - - $417.6M
Regular benefits claims 539,500 1.00 $602 $324.7M
Special benefits claims 154,000 1.00 $567 $87.3M
Fishing benefits claims 8,600 1.00 $649 $5.6M
Simplification on Monies on Separation 174,100 - - $423.8M
New regular benefits claims receiving additional benefits 58,800 7.29 $612 $262.4M
Existing regular benefits claims receiving additional benefits 115,300 2.36 $593 $161.4M
Artificially boosting the unemployment rates by one percentage point, to a maximum of 13.1%, and establishing a minimum unemployment rate of 7.1% 317,700 - - $255.3M
New regular benefits claims 7,400 17.64 $403 $52.7M
Existing regular benefits claims 310,300 1.33 $490 $202.6M

Table 1 note(s)

Table 1 note *

Note that numbers in the above table may not add up due to rounding

Return to table 1 note * referrer
Additional benefits from the Regulations

Beyond the direct benefits to EI claimants resulting from the increased access to and duration of EI benefits, the pilot project is expected to provide further indirect benefits in the form of economic stimulus. It is expected that claimants who receive the additional EI benefits from the pilot project will spend this additional income in their local economies, and/or rely less on social programs and community supports, providing economic stimulus during a time of potential economic downturn. The magnitude of this benefit has not been quantified for this analysis due to data limitations and challenges with reliably estimating this type of impact prior to a downturn.

Some special benefits and fishing benefits claimants may receive slightly higher weekly benefit rates as a result of artificially boosting the unemployment rate by one percentage point, to a maximum of 13.1% and establishing a minimum unemployment rate of 7.1%. A claimant’s weekly benefit rate is calculated based on the highest weeks of insurable earnings during the qualifying period. The number of weeks used for calculating the weekly benefit rate ranges from 14 to 22, depending on the monthly unemployment rate in a claimant’s EI economic region. The adjustments to the regional unemployment rate under the pilot project would result in a maximum divisor for determining the benefit rate of 20 best weeks.  As a result, claimants residing in regions where the actual unemployment rate is lower than 13.1% will benefit from a decrease of up to two weeks in the divisor. The effect of this reduced divisor has not been quantified for EI special benefits claimants or EI fishing benefits claimants.

Additionally, it is possible that some self-employed fishers who would not have otherwise qualified for EI fishing benefits may now qualify as a result of artificially boosting the unemployment rate by one percentage point, to a maximum of 13.1% and establishing a minimum unemployment rate of 7.1%. This measure would result in fishers requiring no more than $3,800 in fishing earnings to qualify for fishing benefits, down from a maximum of $4,200 under the baseline scenario. The number of additional fishers who may qualify for benefits as a result is expected to be very small, and possibly even zero, and as such, it has not been quantified in this analysis.

Costs

There are three main costs associated with the Regulations. Note that numbers in this section below may not add up due to rounding.

1. EI program costs from increased EI benefits paid

Stakeholders: Employers and workers who pay into the EI Operating Account

The provision of additional EI benefits to claimants is a cost to the Employment Insurance Operating Account.  This cost is estimated to be $1,096.6 million (undiscounted), equivalent to the total amount of additional EI benefits that will be received by claimants from the pilot project. These costs will occur over two fiscal years (from 2025–2026 to 2026–2027).

2. EI operational costs related to the administration of the pilot project

Stakeholders: Employers and workers who pay into the EI Operating Account

Employment and Social Development Canada would incur operating costs for administrating the measures. Activities covered under these costs include processing claims, providing client support through Service Canada call centres, IT system changes, development of communication and training materials, monitoring the status and usage of the pilot project, and integrity measures to ensure compliance with EI program rules.

These costs, which would be paid through the EI Operating Account, are estimated to be $57.5 million (undiscounted) and are anticipated to occur over one fiscal year (2025–2026).

3. Opportunity cost of applying for EI benefits for newly eligible claimants

Stakeholders: Newly eligible EI applicants

Employment and Social Development Canada estimates that there would be 80 800 new claims as a result of the introduction of the pilot project. Of these, 14 600 are expected to receive benefits from waiving the waiting period, 58 800 from simplifying the treatment on monies on separation, and 7 400 from artificially boosting the unemployment up one percentage point, to a maximum of 13.1%, and establishing a minimum unemployment rate of 7.1%. These are new claims that would not have been filed under current EI rules. There would be an opportunity cost to these claimants for applying to EI. This analysis assumes it will take EI claimants an average of one hour to apply for benefits at a wage rate of $29.70 per hour. The average application time is based on findings by Employment and Social Development Canada that found it takes an average of about 30 minutes to apply for EI benefits, but that inexperienced claimants take longer. The analysis doubles this average time to one hour to reflect that most of the 80 800 new claims are expected to come from inexperienced claimants who will require more time to apply. The average wage per hour is based on the average weekly insurable earnings ($1,072) of these claimants divided by the average hours worked per week (36.1). The average hours worked per week were determined using data from Statistics Canada.footnote 4 Employment and Social Development Canada estimates this opportunity cost to be $2.4M (undiscounted). This cost would occur in the first year (2025–2026).

Cost-benefit statement
Monetized benefits (estimates)
Impacted stakeholder Description of benefit Base year (2025–2026) Final year (2026–2027) Total (present value) Annualized value
EI Claimants Additional EI benefits paid to claimants $907.9M $188.7M $1,013.3M $560.5M
All stakeholders Total benefits $907.9M $188.7M $1,013.3M $560.5M
Monetized costs (estimates)
Impacted stakeholder Description of cost Base year (2025–2026) Final year (2026–2027) Total (present value) Annualized value
EI Premium Payers Administrative costs $57.5M $0.0M $53.7M $29.7M
Program costs $907.9M $188.7M $1,013.3M $560.5M
Newly Eligible EI Applicants Opportunity cost to apply for EI benefits for newly eligible claimants $2.4M $0.0M $2.2M $1.2M
All stakeholders Total costs $967.8M $188.7M $1,069.2M $591.4M
Summary of monetized benefits and costs (estimates)
Impact Base year (2025–2026) Final year (2026–2027) Total (present value) Annualized value
Total benefits $907.9M $188.7M $1,013.3M $560.5M
Total costs $967.8M $188.7M $1,069.2M $591.4M
Net impact -$59.9M $0.0M -$55.9M -$30.9M

Table 4 note(s)

Table 4 note *

Note that numbers in the above tables may not add up due to rounding

Return to table 4 note * referrer
Qualitative and Quantitative Impacts

Small business lens

Analysis under the small business lens concluded that the Regulations do not impact Canadian small businesses. No regulatory, administrative or compliance burden on small businesses has been identified. As per standard processes currently in place for businesses to comply with the EI program, businesses will continue to be required to provide a record of employment when there is a termination, without any change in the form or frequency as a result of this pilot project. Any increase in the number of records of employment that small businesses issue due to terminations will be a result of tariffs themselves, not a result of the pilot project.

One-for-one rule

The one-for-one rule does not apply, as there is no incremental change in administrative burden on business and no regulatory titles are repealed or introduced. The Regulations do not add any new burden on employers, as no additional action is required on behalf of the employer.

Regulatory cooperation and alignment

The Regulations do not have implications for international agreements, obligations, or voluntary standards. They are not aimed at minimizing or reducing regulatory differences, nor at increasing regulatory compatibility with another jurisdiction. They do not introduce specific Canadian requirements that differ from existing regulations in other jurisdictions for an international program.

The EI program is a federal program that applies across Canada.

Effects on the environment

In accordance with the guidance on conducting Strategic Environmental and Economical Assessments (SEAAs), a Climate, Nature, and Economy Lens (CNEL) template was completed. The completion of this template has concluded that an assessment of environmental and economic effects is not required, nor is an assessment of cross-cutting considerations.

Gender-based analysis plus

The target populations of these Regulations are workers who become unemployed following the imposition of tariffs on Canadian goods exported to the United States. The population that directly benefits from the Regulations is expected to be gender balanced. As the Regulations are targeted to workers, those of working age, notably between 30 and 60, are expected to directly benefit more from the Regulations.

Some sectors may be more impacted than others by the tariffs, resulting in workers in these sectors being likely to benefit more than those in other sectors. According to Statistics Canada, more than 600 000 direct and indirect jobs in the manufacturing sector (e.g. motor vehicles, food, plastic, steel and aluminum), more than 200 000 direct and indirect jobs in the transportation sector, more than 100 000 direct and indirect jobs in the energy sector, and more than 75 000 direct and indirect jobs in the agri-food sector are dependent on exports to the United States.footnote 3 Workers from those sectors would likely benefit the most. However, most industries, if not all, would be impacted directly or indirectly by tariffs; therefore, workers from most sectors would benefit from the Regulations.

Workers residing in EI regions with lower unemployment rates will benefit from this measure. These regions are found in all provinces and territories and include regions that are urban and regions that are more rural. The introduction of a minimum regional unemployment rate will most significantly benefit workers who lose their jobs in EI regions that routinely have low unemployment rates and higher eligibility requirements. Most of Canada’s labour force is concentrated in these EI regions. However, it is important to note that no one will be negatively impacted by these measures as individuals residing in EI regions with unemployment rates above 13.0% will maintain that unemployment rate and the affiliated eligibility requirements.

The indirect benefits of this measure, such as increased economic stimulus from more generous EI benefits, are expected to be general and apply to all groups.

The Regulations are not expected to have significant impacts on income distribution or have generational impacts.

Implementation, compliance and enforcement, and service standards

Implementation

The Regulations come into force on the day on which they are registered.

The measures in this pilot project will be implemented under the legacy EI system by Service Canada. The work required for Service Canada to implement this pilot includes updating business requirements, technical design, preparation of IT specifications, IT system development and testing (system, integration and acceptance), and project management. Implementation also includes adjustments to procedures and guidance / reference documents, training material, public-facing content, and internal communication.

Service delivery considerations associated with this implementation include managing the claimant base and maintaining the resources in place that support the claims associated with the measures. The longer the life cycle of a claim, the more claim maintenance is required.

An evaluation of the pilot project will occur following its completion. Some of the metrics assessed may include the number of new qualifying claimants in areas with lower unemployment rates, the use of the additional weeks of benefits available in some regions due to the minimum unemployment rate, and the rate of benefit exhaustion among workers in regions where the minimum unemployment rate was applied. The impact of the initiative will also be tracked through the annual EI Monitoring and Assessment Report (MAR), which is the main reporting and analysis tool that captures the overall effectiveness of EI income benefits, active measures and service delivery.

Compliance and enforcement

As this initiative is undertaken within the EI program, the same compliance and enforcement authorities as currently found in the EI Act apply. Compliance reviews consist of ensuring compliance with applicable legislation, regulations, and policies, including identification of cases of error, misrepresentation and abuse. Enforcement investigations occur when there are reasonable grounds to suspect that an offence against the EI Act has occurred and, where supported by the evidence, a prosecution may be pursued.

Service standards

Service Canada provides clients with a single point of access to a wide range of government services and benefits, including the processing and payment of EI claims. Clients can access information, apply, and get support for these services through a national network of service centres, online through tools like the My Service Canada account, and by telephone using the 1 800 O-Canada number. Regarding service standards, the Department’s objective is to issue a payment or notice of non-eligibility within 28 days from the date on which the EI application is received, 80% of the time.

Contact

Benoit Cadieux
Director
Employment Insurance Policy
Skills and Employment Branch
Employment and Social Development Canada
140 Promenade du Portage, Phase IV
Gatineau, Quebec
K1A 0J9
Email: benoit.cadieux@hrsdc-rhdcc.gc.ca