Regulations Amending the Employment Insurance Regulations: SOR/2026-18

Canada Gazette, Part II, Volume 160, Number 4

Registration
SOR/2026-18 February 5, 2026

EMPLOYMENT INSURANCE ACT

P.C. 2026-109 February 5, 2026

The Canada Employment Insurance Commission makes the annexed Regulations Amending the Employment Insurance Regulations under subsection 5(6)^{footnote a} and section 54^{footnote b} of the Employment Insurance Act^{footnote c}.

January 27, 2026

Her Excellency the Governor General in Council, on the recommendation of the Minister of Employment and Social Development, under subsection 5(6)^{footnote a} and section 54^{footnote b} of the Employment Insurance Act^{footnote c}, approves the annexed Regulations Amending the Employment Insurance Regulations, made by the Canada Employment Insurance Commission.

Regulations Amending the Employment Insurance Regulations

Amendments

1 Paragraph 7(f) of the Employment Insurance Regulations^{footnote 1} is replaced by the following:

• (f) employment under an employment support measure referred to in paragraph 59(b) of the Act — or a measure that is the subject of an agreement under section 63 of the Act — that is established to
  • (i) help insured participants start businesses or become self-employed, or
  • (ii) provide insured participants with employment opportunities through which they can gain work experience to improve their long-term employment prospects.

2 (1) Subsection 16(2) of the Regulations is replaced by the following:

(2) The allowances referred to in subsection (1) do not include

• (a) any amounts paid to the claimant for dependant care, travel, commuting, living away from home or disability; or
• (b) in the case of work-sharing benefits, any amounts paid to the claimant using financial assistance provided under section 61 of the Act for the purpose of implementing employment support measures in respect of claimants who are entitled to work-sharing benefits.

(2) Paragraph 16(3)(b) of the Regulations is replaced by the following:

• (b) is paid earnings or allowances under Part II of the Act for certain weeks for attending a course or program of instruction or training or is paid earnings from employment for certain weeks of employment under an employment support measure referred to in paragraph 59(b) of the Act that is established to provide insured participants with employment opportunities through which they can gain work experience to improve their long-term employment prospects; and

3 Section 50 of the Regulations and the heading before it are replaced by the following:

Employment Measures

50 The following are prescribed for the purposes of subparagraph 25(1)(b)(i) of the Act:

• (a) an employment support measure referred to in paragraph 59(b) of the Act that is established to
  • (i) help insured participants start businesses or become self-employed, or
  • (ii) provide insured participants with employment opportunities through which they can gain work experience to improve their long-term employment prospects; and
• (b) a measure that is the subject of an agreement under section 63 of the Act that is established to
  • (i) help insured participants start businesses or become self-employed, or
  • (ii) provide insured participants with employment opportunities through which they can gain work experience to improve their long-term employment prospects.

4 Subsection 55(11) of the Regulations is replaced by the following:

(11) A claimant who is not a self-employed person is not disentitled from receiving benefits for the sole reason that the claimant is outside Canada if the claimant is outside Canada, with the approval of the Commission, in the course of the claimant’s employment under an employment support measure referred to in paragraph 59(b) of the Act — or a measure that is the subject of an agreement under section 63 of the Act — that is established to help insured participants start businesses or become self-employed.

Coming into Force

5 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 Employment Insurance Regulations (EI Regulations) include provisions that reference specific Employment Insurance (EI) Part II program types that were deliberately removed from the Employment Insurance Act (EI Act) in 2022. As a result, regulatory changes are necessary to resolve inconsistent provisions in the EI Regulations and harmonize them with the legislative changes. These amendments are required before launching the new Worker Retention Grant (the Grant), which will be the first measure to use the amended EI Part II as its legal authority. An additional regulatory amendment is needed so that EI Part II-funded financial support provided by Work-Sharing employers through the new Grant will not trigger an automatic dollar-for-dollar reduction in participating employees’ EI Work-Sharing benefits.

Background

Regulatory changes to harmonize with legislative changes made to EI Part II

The Budget Implementation Act, 2022, No. 1 introduced changes to Part II of the EI Act to broaden program eligibility and shift the focus away from specific types of programs, known as employment benefits and support measures, to an outcomes-based approach for training and employment supports. These changes also removed the requirement for measures provided by a government, government agency in Canada or any other public or private organization to be similar to the employment benefits or support measures established by the Canada Employment Insurance Commission (the Commission) in order to be eligible for EI Part II contributions towards costs. The intent of these changes was to provide greater flexibility to design and deliver EI Part II-funded programs that can adapt to a rapidly changing labour market.

No corresponding changes have been made to the EI Regulations since Part II of the EI Act was amended. Existing programs using Part II authorities, such as the Labour Market Development Agreements (LMDAs) and the Indigenous Skills and Employment Training (ISET) programs, remain governed by pre-2022 legislative authority. A transitional provision in the Budget Implementation Act, 2022, No. 1 provides that any agreements made under the previous legislative framework will continue to be governed by the provisions that were in force before the amendments. However, the Grant, along with any other new measure funded under EI Part II authorities, will operate under the amended legislative framework.

Regulatory changes for Work-Sharing employees who receive financial support under the new Grant

The Work-Sharing program is a part of the EI program that helps employers avoid layoffs when there is a temporary decrease in the normal level of business activity that is beyond the employer’s control. The Work-Sharing Program helps employers reduce payroll costs until the business recovers, which, in turn, allows them to retain skilled employees. This means that employers avoid the costly process of recruiting and training new employees once business returns to normal levels. Meanwhile, the program helps eligible Work-Sharing employees maintain their skills and jobs while supplementing their wages with EI Work-Sharing benefits for the hours they are not working.

For example, in a case where production has slowed to 80% of normal volumes, an employer may opt to enter into a Work-Sharing agreement with their employees to avoid layoffs. The employees would all agree to temporarily reduce their work hours by 20% and share the remaining work among themselves evenly for the duration of the agreement. Each worker would take on four days of work and one day off per week during a five-day work week. For the day that the employees are not working (this may be on rotating days), the employees would collect EI Work-Sharing benefits. These benefits are structured like EI regular benefits and are paid at 55% of the employee’s income (up to the maximum insurable earnings threshold) for the hours that the employee is not working.

Under the EI Act, the Commission retains the discretion to put in place Work-Sharing temporary special measures to respond to events impacting levels of business activity, such as tariffs, economic downturns and natural disasters. Temporary special measures have been put in place on various occasions, including the 2008–2009 recession, wildfires, flooding, the COVID-19 pandemic, as well as trade disputes.

Most recently, the Commission enacted tariff-related Work-Sharing temporary special measures to support employers and workers impacted by the threat or potential realization of tariffs by increasing access to Work-Sharing via additional flexibilities to program rules (March 7, 2025, to March 6, 2026). These flexibilities include expanding the eligibility criteria for employers and employees and extending the maximum duration of agreements from 38 weeks to 76 weeks. The temporary Work-Sharing flexibilities have proven effective in supporting employers, leading to an increased use of the program from businesses of all sizes across the country, particularly those in sectors and regions most impacted by tariffs. From January 2025 to January 2026, over 1 600 Work-Sharing applications were approved across all sectors of the economy, with tariffs given as a rationale in 81% of all applications received. This figure represents double the number of Work-Sharing agreements approved compared to the same period in 2024 (806 approved). In the past year, more than 56 000 employees have participated in Work-Sharing agreements, and these agreements are estimated to have helped avert approximately 21 000 layoffs.

Despite increased use of the Work-Sharing program with the current flexibilities in place, some larger employers and labour groups in high tariff-exposed sectors are continuing to raise concerns about the potential impact on workforce retention, in particular during a period of business transformation or restructuring. Such concerns may be explained by the steep income drop that workers can experience while on EI Work-Sharing benefits. EI only replaces 55% of an employee’s income, up to a threshold of $68,900, which is the 2026 limit for maximum insurable earnings (MIE) under the program. This means the maximum possible EI benefit is $729 per week, equivalent to a salary of approximately $37,895 per year for 2026. For example, a high-earning steel worker with an annual salary of approximately $95,000 (i.e. above the MIE) may only have 40% of their income replaced (replacement rate) for the hours missed while on Work-Sharing. This situation reduces their incentive to participate in a Work-Sharing agreement and share available work while their employer restructures and transforms the business to adapt to a new economic environment.

To further enhance workforce retention and to address the issue of the adequacy of Work-Sharing benefits in industries impacted by tariffs, on November 26, 2025, the Prime Minister announced $102.7M over two years, starting in 2025–2026, for a new grant to Work-Sharing employers (i.e. the Worker Retention Grant, or the Grant). The Grant is part of a broader set of measures aimed at supporting sectors most affected by tariffs, notably the steel and softwood lumber industries.

The Grant will be made available to all sizes of employers from all sectors. Eligible employers are those that use Work-Sharing to prevent layoffs and who commit to supporting training and upskilling opportunities for their employees receiving EI Work-Sharing benefits. The Grant is not for employers to fund worker-specific training. Rather, funding from the Grant will allow these businesses to provide top-ups to their employees’ income while on Work-Sharing, helping them to maintain income levels closer to their full-time wages for the duration of the Work-Sharing agreement.

The amount of funds provided under the Grant to a Work-Sharing employer will be calculated using the average weekly earnings of workers within the Work-Sharing unit, with the aim of helping those employees on training to reach approximately 70% of their reduced income while working reduced hours. For example, a worker participating in a Work-Sharing agreement might see their income reduced to around 60% of their usual earnings as a result of working fewer hours. Payments from the Grant will be considered insurable earnings from employment. Therefore, any grant money paid to employees will be subject to the usual deductions (i.e. EI premiums, Canada Pension Plan contributions and federal and provincial income taxes).

While in receipt of the Grant, employees would continue to receive wages for the hours they still work, and EI Work-Sharing benefits would help replace part of the income lost for the hours they are not working. However, the combined amount of wages and EI benefits may still fall short of the targeted level of income support. The Grant would therefore provide an additional top-up so that the worker’s total income (i.e. combining wages, EI Work-Sharing benefits and the Grant) moves closer to approximately 70% percent of their regular earnings.

However, without additional changes to the EI Regulations, additional funds that flow from a Work-Sharing employer to their Work-Sharing employee who is participating in training will be considered a training allowance and deducted from the claimant’s EI Work-Sharing benefits on a dollar-for-dollar basis. This situation would effectively neutralize the Grant’s intended objective of providing income support on top of the EI Work-Sharing benefits, with the broader aim of incentivizing participation in the Work-Sharing program (on the part of employers and employees) and in training (on the part of employees). Increased Work-Sharing program take-up is important to help mitigate layoffs and support employers to retain their skilled workers, remain viable and transition back to full recovery.

Objective

The objective of the regulatory changes is to ensure that terminology and technical rules, such as those related to earnings, insurable employment, availability to work and disentitlement while outside Canada, are consistent with the legislation when new funding is provided under EI Part II and that the intended benefits of the Grant can be realized.

Description

The Regulations Amending the Employment Insurance Regulations change the EI Regulations as follows:

Employment excluded from insurable employment: Paragraph 7(f) is amended to remove references to programs that no longer exist in the EI Act (the Self-employment employment benefit and the Job Creation Partnerships employment benefit), while continuing to stipulate that participation in EI Part II-funded activities related to the original intent of these programs (starting a business or becoming self-employed, or short-term employment opportunities to gain work experience) does not count as EI insurable employment. This exclusion from insurable employment ensures that these types of employment activities do not enable individuals to re-qualify for EI Part I benefits based on their participation in these EI Part II-funded programs. The requirement for a measure to be similar to the employment benefits or support measure established by the Commission, in order to qualify for contributions towards costs, is also replaced to reflect the broader intent, set out in the legislative amendments, that the measure be consistent with the purpose and guidelines of EI Part II.

Deductions for earnings or allowances while on a course of instruction or program of training: Section 16(2) is changed to specify that a Work-Sharing claimant who receives allowances for attending a course or program or instruction or training via employment benefits and support measures implemented by the EI Commission (e.g. through the Grant) will not have their EI Work-Sharing benefits reduced dollar-for-dollar. This regulatory amendment ensures that claimants can receive both EI Work-Sharing benefits and the allowance provided by their employer using Grant funds, without any reduction in their EI benefits.

Deduction for earning or allowance from EI Part I benefit payable: Paragraph 16(3)(b) is amended to remove the reference to the “Job Creation Partnerships employment benefit,” which was removed from the EI Act, while continuing to stipulate that earnings and allowances from participation in EI Part II-funded activities related to the original intent of the program (short-term employment opportunities to gain work experience) be deducted from EI Part I benefits payable to the individual. Maintaining this deduction avoids duplication of payments under different sections of the EI Act. The reference to former paragraph 59(d) of the EI Act has also been updated in paragraph 16(3)(b) of the EI Regulations, replacing it with the amended corresponding paragraph 59(b).

Availability to work: Section 50 is amended to remove reference to programs that no longer exist in the EI Act (the Self-employment employment benefit and the Job Creation Partnerships employment benefit), while continuing to stipulate that participants in EI Part II-funded activities related to the original intent of these programs (starting a business or becoming self-employed, or short-term employment opportunities to gain work experience) be deemed unemployed and capable of and available for work despite participating in the employment activity. Being deemed available for work ensures that an individual can continue to collect EI Part I benefits while participating in these types of Part II-funded employment activities.

Disentitlement of claimants outside of Canada: The reference in subsection 55(11) to “Self-employment employment benefit or similar benefit” is removed, as this specific program no longer exists in the EI Act. The amendment continues to provide an exception to the general rule that a claimant is disentitled from receiving benefits while outside Canada, for participants in EI Part II-funded activities related to the original intent of this program (starting a business or becoming self-employed). This exception from disentitlement ensures that individuals employed under this type of employment activities can still receive benefits while outside Canada.

Consultation

In December 2025, a session was held with employer and worker representatives related to the Grant, with the EI Commissioners in attendance. While not specific to the regulatory amendments, both employer and worker groups emphasized that training funded through the Grant would need to be flexible and responsive to the needs of employers and workers. Stakeholders also shared concerns related to the reduction in benefits, which these regulatory amendments seek to address. No additional consultations, including on the cost-benefit analysis (CBA), were undertaken, given the need to implement the regulatory amendments quickly to support timely implementation of the Grant and ensure continued, reliable support to workers.

Indigenous engagement, consultation and modern treaty obligations

In accordance with the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, an assessment of modern treaty implications was conducted. There are no implications for modern treaty obligations or Indigenous engagement.

Instrument choice

The EI Act provides the Commission, with the approval of the Governor in Council, with the authority to make regulations governing the deduction of EI benefits for earnings or allowances received while participating in a course or program of instruction or training. Amending the EI Regulations is necessary to harmonize with the current legislative framework and ensure the seamless use of EI Act provisions amended through the Budget Implementation Act, 2022, No. 1. Amendments are also required to ensure that allowances provided by employers to EI Work-Sharing claimants under the new Grant are exempt from EI benefit deductions.

A regulatory amendment is the only mechanism available to adjust the EI Regulations as intended. There is no other viable option, regulatory or non-regulatory, that can achieve the intended objectives. Program changes or administrative measures cannot override existing regulatory requirements.

Regulatory analysis

Benefits and costs

An important first step in developing a cost-benefit methodology is establishing a baseline scenario against which options may be measured. For the purposes of this CBA, the baseline and regulatory scenarios are as follows:

The baseline scenario reflects the scenario that would exist in the absence of the regulatory amendment. Under the baseline scenario, the Grant gets implemented with no corresponding regulatory changes. This would result in the program not being implemented as intended. Claimants receiving the Grant would have the Grant payment reduced dollar-for-dollar from their EI Work-Sharing benefits. This is because, under section 16 of the EI Regulations, training allowances are deducted dollar-for-dollar from EI benefits. In this scenario, it is expected that employers would have no incentive to apply for the Grant. As a result, no grant amounts would be paid out, resulting in no additional costs to the EI Operating Account (EIOA), either in grant amounts paid or in administrative costs to administer the Grant.

Under the regulatory scenario, the Regulations would be amended so that the Grant would work as intended. The amendment would ensure that the allowances payable through the Grant to a Work-Sharing claimant who attends a course or program of instruction or training will not be deducted from EI Work-Sharing benefits. This amendment would apply to each week during which a claimant may receive EI Work-Sharing benefits, on or after the registration of the Regulations.

It is expected that 26 250 claims will benefit from this regulatory change by being able to receive the Grant money on top of their EI Work-Sharing benefits, meaning that it would not be deducted from EI Work-Sharing benefits.

For more information, a CBA report is available upon request. Please contact benoit.cadieux@hrsdc-rhdcc.gc.ca for the report.

General assumptions

The costs and benefits of the regulatory scenario were estimated based mainly on EI administrative data. Subject matter experts at Employment and Social Development Canada and Service Canada were consulted to develop time estimates for all reporting involved in the EI Work-Sharing program and the Grant.

Calculating the costs of the Regulations depends on the following assumptions:

• The benefits and costs are assumed to occur over two twelve-month periods starting from the date of registration of the Regulations.
• To forecast the number of EI payments that will be retained by employees in the regulatory scenario, the costing model considered historical claim volumes, the estimated number of weeks that the Grant will be paid per employee, the average estimated weekly rate of benefits paid, and the average percentage decrease in a Work-Sharing claimant’s work week.^{footnote 2}
• The estimated 26 250 EI Work-Sharing claims impacted can be broken down into existing claims and induced claims (also referred to as new claims):
  • The number of existing claims includes currently active claims as well as Work-Sharing claims that would have occurred regardless of the Grant but also happen to be eligible for the Grant. For the purposes of calculating the additional regulatory burden to employers, these claims are treated in the same manner. In total, 18 483 existing claimants are expected to take training and become eligible for the Grant. This number was derived from the number of Work-Sharing claims that are currently active as well as the projected number of Work-Sharing claims expected to begin in 2026. It is assumed that 35% of existing Work-Sharing claims will take training and become eligible for the Grant.
  • The number of induced claims is the number of new Work-Sharing claims established as a result of the incentive created by the availability of the Grant and the Regulations. It is expected that there will be 7 767 new Work-Sharing claims induced. ^{footnote 3}
• An average of 28 Work-Sharing claims per Work-Sharing agreement is assumed. Therefore, the 26 250 estimated Work-Sharing claims equal an estimated 937 impacted Work-Sharing agreements, 277 of which are new and 660 of which are treated as existing.
• All values listed in this section are presented in 2026 dollars, discounted to 2026 at a rate of 7%.
• Some numbers used in the “Benefits and costs” section are rounded. As a result, totals may not equal the actual value.
• It is assumed that any reporting by employers will be completed by a Human Resources (HR) employee with an hourly wage of $42.70 (including overhead), as per Statistics Canada data, expressed in 2026 dollars. Wage rates are used to determine costs to employers to perform the required Work-Sharing program and Grant reporting.

Assumptions regarding the parameters of the Grant

The costs and benefits of the regulatory scenario were estimated based on the assumption that the Grant will have the following parameters:

• All Grant agreements begin in February 2026, when the Grant becomes available and last until the end of the grant period, currently March 31, 2027. No Grant money will be paid to employers beyond March 31, 2027.
• The Grant will be delivered as a series of lump-sum payments to employers as an employment support measure under EI Part II legislated authorities. Employers will distribute grant money to employees.
• It is assumed that the temporary measure to extend the length of Work-Sharing agreements from 38 weeks to 76 weeks is extended after March 6, 2026.
• It is assumed that all employers with Work-Sharing agreements intend to use the maximum duration of 76 weeks.
• The Grant will be paid out over the 60 weeks between February 2026 and March 31, 2027. The Grant will be payable once the employer’s application has been received and processed, and up until the end of the agreement.
• The lump-sum payments for each Grant amount to be paid to a Work-Sharing employer will be determined based on the average weekly earnings of that employer’s Work-Sharing employees. The employer will then top-up employees’ EI Work-Sharing benefits from 55% (which is the standard EI replacement rate) to as much as 70% of their previous weekly earnings (see the “Benefits” section below for more details).

Benefits

Benefit #1: Worker Retention Grant money retained by EI Work-Sharing claimants

Stakeholders: EI Work-Sharing Claimants in receipt of the Grant

These amendments will apply to all EI Work-Sharing claims receiving top-up funding for training activities through the new Part II employment support measures put in place by the EI Commission (i.e. the Grant).

These regulatory amendments are expected to benefit 26 250 claimants under an active Work-Sharing agreement. This benefit is estimated at $102.7M, which is equivalent to the estimated value of the Worker Retention Grant that will be paid over 60 weeks to employers (and then redistributed to Work-Sharing claimants). It is also equivalent to the value of monies that will not be deducted dollar-for-dollar from claimants’ EI Work-Sharing benefits.

The total estimated benefit is calculated based on average weekly earnings for workers from all sectors participating in Work-Sharing ($1,361), the estimated number of Work-Sharing participants who would pursue training (26 250), the maximum number of weeks of Grant payments (60 weeks), and the average reduction in work hours from participants on Work-Sharing agreements (29%).

The total benefits paid are expected to be split into $80.71M in 2026 and $22.01M in 2027 based on EI administrative data.

Table 1: Summary table of benefits

Description of benefits	Top-up amount (A)	Work-Sharing participants pursuing training (B)	Work-Sharing weeks (C)	Total benefits (= A x B x C)
EI Work-Sharing benefits impacted by the Regulations	$65.20	26 250	60 weeks	$102.7M

Note: Top-up amount is calculated based on an average annual salary of $71,000 and a reduction rate of 29%. The total may not add up due to rounding.

Costs

Cost #1: Costs to the EIOA

Stakeholder: EIOA

The regulatory amendments will result in costs to the EIOA equivalent to the Grant money paid to employers and subsequently passed on to workers who pursue training while receiving EI Work-Sharing benefits. Because the Grant amounts will no longer be deducted from EI Work-Sharing benefits, this will result in a total undiscounted amount of $102.7M in costs to the EIOA.

In the baseline scenario, these costs would not exist because it is assumed that there would be no uptake of the Grant. The total cost to the EIOA is expected to be split into $80.71M in 2026 and $22.01M in 2027 based on EI administrative data.

Table 2: Summary table of costs to the EIOA

Description of costs	Stakeholders	Top-up amount (A)	Work-Sharing participants pursuing training (B)	Work-Sharing weeks (C)	Total benefits (= A x B x C)
Costs to the EIOA	EIOA	$65.20	26 250	60 weeks	$102.7M

Cost #2: Costs to the Government of Canada (Employment and Social Development Canada / Service Canada)

Stakeholder: Government of Canada (Employment and Social Development Canada [ESDC] / Service Canada)

ESDC / Service Canada will carry costs to develop materials for administering the Grant. As well, officers will need to complete activities related to the Grant, such as processing new Work-Sharing and Grant applications, determining eligibility for the Grant, disbursing the Grant to employers, monitoring the use and take-up through employer reporting, and calculating and reconciling Grant amounts based on the take-up of eligible training. Additional activities include time required for program oversight and functional guidance, and the development of training materials and tools for processing and call centre agents.

It is estimated that these amendments will result in operational costs of $9.45M in 2026 and $2.50M in 2027.

Cost #3: Costs to employers

Costs to employers are separated into the costs for employers with existing Work-Sharing agreements to apply for the grant and do necessary reporting to Service Canada, and employers that will be incentivized to enter into a Work-Sharing agreement due to the Grant. Incentivized employers will carry costs to apply for a Work-Sharing agreement, apply for the Grant and costs associated with necessary reporting.

It should be noted that while employers carry costs related to the Grant, applying to the Grant is voluntary. Therefore, it is assumed that employers who make the choice to apply for the Grant are aware of these costs and choose to carry them because the overall benefits outweigh the costs.

Stakeholder: Employers with existing Work-Sharing agreements

This category of employer includes both employers with existing Work-Sharing agreements and employers who would have joined the Work-Sharing program regardless of the Regulations, who will apply for the Grant. These employers face three types of costs: the cost of applying for the Grant, the cost of filling out the mid- and end-point reports to receive the second and third instalments of funding, and the cost of filling out the final program report.

The first cost is to apply for the Grant. It is estimated that 660 applications will be submitted in 2026 and 0 in 2027. It is assumed that employers (i.e. HR professionals) will take two hours to fill out the application. All Grant applications will occur in 2026, and employers will only need to fill out one application over the course of their Work-Sharing agreement. Total costs to employers with existing Work-Sharing agreements for applying for the Grant are estimated at $56,364 (undiscounted) in 2026 and $0 in 2027.

After the initial application, employers must complete mid- and end-point progress reports to receive the second and third Grant instalments. It is estimated that employers with existing agreements will complete 660 mid-point reports in 2026 and 660 end-point reports in 2027. These progress reports allow Service Canada to reconcile Grant payments with the number of employees participating in training to help prevent overpayments. It is expected each of these reports will take an employer an hour and a half to complete. Mid- and end-point reports will cost employers with existing Work-Sharing agreements $42,273 in 2026 and $42,273 in 2027, for a total of $84,546 (undiscounted).

Employers will have to fill out the final program report required by Service Canada at the end of the Work-Sharing agreement when all Grant instalments have been paid out. This report will be required by Service Canada to evaluate the effectiveness of the Grant in supporting Work-Sharing claimants to pursue training activities. Employers will complete 0 reports in 2026 and 660 reports in 2027. It is assumed that it will take an hour and a half to complete the final report. Final program reports will cost employers with existing Work-Sharing agreements $0 in 2026 and $42,273 in 2027 (undiscounted).

In total it is expected that employers with existing Work-Sharing agreements will carry administrative Grant costs (i.e. Grant applications, mid- and end-reports, and final reports) of $183,183 (undiscounted) due to these Regulations. Of these costs, $98,637 will be assumed in 2026 and $84,546 in 2027.

Stakeholder: Newly incentivized Work-Sharing agreement employers

This category consists of employers who have been newly incentivized to enter into a Work-Sharing agreement due to the availability of the Grant. These employers will face new costs associated with applying and participating in the Work-Sharing Program, as well as costs to apply for and receive the Grant.

Work-Sharing costs

Employers will carry costs to apply for the Work-Sharing Program. This is evaluated as the time it takes employers to fill out the online EI Work-Sharing application. It is estimated a total of 277 employers will be newly incentivized to apply for EI Work-Sharing benefits. These new Work-Sharing agreements will be established in 2026. It is estimated that it takes an employer three hours to apply for an EI Work-Sharing agreement. It is expected applications to the Work-Sharing Program will cost employers with new Work-Sharing agreements $35,484 in 2026 and $0 in 2027 (undiscounted).

As a condition to participate in the Work-Sharing Program, employers are required to fill out weekly utilization reports that track the actual hours worked versus reduced hours for each employee participating in a Work-Sharing agreement. These reports are a key tool for ESDC to determine the correct EI benefits payable under the program: a weekly record of work-hours reductions, missed hours, statutory holiday shutdowns, etc. It is estimated that it takes an employer an hour and a half to complete these reports each week. It is expected that 277 employers with new Work-Sharing agreements will each complete 76 reports over two 12-month periods (2026 and 2027). This will result in estimated costs to newly incentivized employers of $1,348,381 (undiscounted).

Total Work-Sharing costs for newly incentivized employers (i.e. the costs of the utilization reports and costs of applying to EI Work-Sharing) are $851,609 in 2026 and $532,256 in 2027 for a total of $1,383,864 (undiscounted).

Grant costs

It is expected that 227 Grant applications will be submitted in 2026 by newly incentivized employers, with no applications for the Grant in 2027 from employers with new Work-Sharing agreements. It is estimated that it will take an employer two hours to apply for the Grant. Total costs are $23,656 in 2026 and $0 in 2027 (undiscounted).

Employers with new agreements are estimated to complete 277 mid-point reports in 2026 and 277 end-point reports in 2027. Each of these reports will take an employer an hour and a half to complete. Mid- and end-point reports will cost employers with new Work-Sharing agreements $17,742 in 2026 and $17,742 in 2027, for a total of $35,484 (undiscounted).

Employers with new Work-Sharing agreements will complete 0 final program reports in 2026 and 277 reports in 2027. It is assumed that it will take an hour and a half to complete and submit the reports. Final program reports will cost employers with new Work-Sharing agreements $0 in 2026 and $17,742 in 2027 (undiscounted).

Total Grant costs for newly incentivized employers (i.e. costs of applying for the Grant, completing mid-end reporting, and the final program report) are $41,398 in 2026 and $35,484 in 2027 for a total of $76,881 (undiscounted).

Cost #4: Costs to newly incentivized employees for applying to EI Work-Sharing benefits

Stakeholder: Employees

Some employees who are not in a Work-Sharing agreement may be incentivized to do so after the Grant is implemented. For EI Work-Sharing benefits to be payable, each employee under an active Work-Sharing agreement must apply to and qualify for EI benefits using a special Work-sharing reference code given to them by their employer or employee/union representative(s). This cost only applies to employees who are newly incentivized to apply for Work-Sharing benefits due to the introduction of the Grant.

It is estimated that an employee spends 1 hour applying for EI. This estimate includes filling out online application forms and collecting information (such as their Work-Sharing reference code) from their Work-Sharing employer. Since these workers are motivated by the availability of the Grant, it is assumed that all EI applications will be submitted in 2026, when the Grant is introduced. Employees will only need to fill out one application. The analysis assumes an hourly wage of $38.89 (the weekly earnings of the target population are $1,361 divided by 35 hours). Approximately 7 767 EI Work-Sharing applications are expected in 2026 and zero in 2027. This results in a total cost of $302,025 (undiscounted) to employees.

It is important to note that there are no additional costs to the employee for the Grant, as it is the responsibility of the employer to fill out the reporting requirements associated with the Grant application.

Cost-benefit statement

• Number of years: two periods of 12 months (2026 and 2027)
• Price year: 2026
• Present Value (PV) base year: 2026
• Discount rate: 7%

Table 3: Monetized benefits (estimates)

Impacted stakeholder	Description of benefit	Base year (2026)	Final year (2027)	Total PV	Annualized value
EI Work-Sharing claimants in receipt of the Grant	Grant money retained by EI Work-Sharing claimants	$80.71M	$22.01M	$94.66M	$52.36M
Total benefits		$80.71M	$22.01M	$94.66M	$52.36M

Table 4: Monetized costs (estimates) 

Impacted stakeholder	Description of cost	Base year (2026)	Final year (2027)	Total PV	Annualized value
EIOA	Cost to the EIOA to provide Grant money	$80.71M	$22.01M	$94.66M	$52.36M
Government	Processing and implementation costs	$9.45M	$2.50M	$11.02M	$6.09M
Employers	Existing agreements (Grant application and reporting costs)	$0.10M	$0.08M	$0.17M	$0.09M
	Newly incentivized employers (Work-Sharing application, Grant application and reporting costs)	$0.89M	$0.57M	$1.33M	$0.74M
	Newly incentivized employees EI application costs	$0.30M	$0.00	$0.28M	$0.16M
All stakeholders	Total costs	$91.46M	$25.16M	$107.45M	$59.43M

Table 5: Summary of monetized costs and benefits (in millions of dollars)

Impacts	Base year (2026)	Final year (2027)	Total PV	Annualized value
Total costs	$91.46M	$25.16M	$107.45M	$59.43M
Total benefits	$80.71M	$22.01M	$94.66M	$52.36M
Net cost	$10.74M	$3.15M	$12.79M	$7.08M

Qualitative and quantitative impacts

• These Regulations are expected to provide additional benefits in the form of economic stimulus and income stabilization. Claimants who receive additional EI benefits will likely spend this 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.
• It is expected that these changes will help employers that may be restructuring or retooling to retain their skilled workforce, which will help them scale up production when market conditions improve and avoid costly hiring, onboarding and training processes for new employees.
• The changes will help employees avoid layoffs and maintain labour market attachment. Employees will also receive training or upskilling during the days and hours they are not working, solidifying their labour market attachment.
• While this measure is expected to result in costs to the EIOA, these costs are not expected to result in significant upward pressures on the 2027 EI premium rate. EI premium rates are set to ensure that the EIOA breaks even over a seven-year period. This incremental change in premiums reflects how the costs are shared between employees and employers, with the EI premium rate calculated for employees and then set at 1.4 times that rate for employers. Under the regulatory scenario, it is estimated that premiums would increase at a rate equivalent to 0.0627 cents per $100 of insurable earnings for employees. The employer rate would face upwards pressure of 0.0878 cents per $100 of insurable earnings. Given that the EI premium rate is rounded up to the nearest cent, it is unlikely these Regulations will result in a material change to the 2027 EI premium rate.
• It is expected that these Regulations may, in fact, result in overall savings to the EIOA by incentivizing more workers to agree to enter a Work-Sharing agreement. The reason for this is because the Work-Sharing program helps avoid layoffs, which, in turn, reduces the amount of EI benefits paid out to claimants who would otherwise have been laid off.
• Employees who receive the Grant will have to spend time training, which represents a time cost to them. Training duration is assumed to be the maximum 60 weeks. In practice, the duration may vary depending on factors such as the length of the original Work-Sharing agreement, whether or not employers choose to adhere to a minimum threshold for training, etc. The time cost for employees to undertake this training will be offset by the benefits they receive from the enhanced and/or updated skill set, which in turn increases their labour market potential.
• The costs to employers of offering training required to receive the Grant are expected to be limited, as training may be available at low or no cost through existing platforms, such as Job Bank, or through provinces and territories (PTs). Costs to employers to find training may be minimized by training provided by PTs, which are funded by the Labour Market Development Agreements (LMDAs). It should be acknowledged, however, that employers may carry some costs to arrange training courses of their own choosing. These costs may be variable and depend on the preferences of the employer and their employees; therefore, they are not quantifiable.

Small business lens

To assess the impact on small businesses in Canada, this analysis assumes that 48% of employers impacted by these Regulations are small businesses (450) and that 48% of the costs of the Regulations are borne by small businesses.

The administrative costs to small businesses are associated primarily with the Grant. The Grant was developed based on program data, evaluation results and consultations with employer and labour groups on Work-Sharing modernization, particularly in the tariff context. Program design also considered the historical characteristics and patterns of use of Work-Sharing employers, recognizing that small or medium-sized enterprises in the manufacturing sector make up the largest share of Work-Sharing employers and are likely, by proportion, expected to be the main users of the Grant. These costs will be assumed by all 450 small businesses expected to be impacted. This includes 317 employers with existing Work-Sharing agreements and 133 newly incentivized employers. Administrative costs include applying for the Grant, completing the mid- and end-point reports, and completing the final program report.

Additional costs for the 133 small businesses incentivized to join the Work-Sharing Program as a result of these Regulations include applying to the Work-Sharing program and completing the required weekly utilization reports. All administrative activities are designed for program integrity purposes and with the intention of minimizing administrative burden on employers.

There is no regulatory flexibility for small businesses because the requirements are needed for Service Canada to calculate benefits for employees, ensure compliance with the rules of the EI Work-Sharing Program and compliance with the parameters of the Worker Retention Grant. These requirements will be applied to all employers equally. However, the Grant parameters have been designed with flexibility in mind to ensure broad access to training as raised by employer and labour groups. This allows for a variety of training formats that are meaningful to each specific employer and are not required to lead to formal certifications (as those can often be more costly forms of training). Recognizing that employers of small or medium-sized enterprises have limited resources to plan for and offer formal training, eligibility includes informal training offerings, such as on-the-job training. ESDC will also offer guidance to Work-Sharing employers that apply for the Grant on relevant course offerings, in particular through the Job Bank’s new online Training Finder platform.

The purpose of the Regulations and the Grant is to help employers, including (but not limited to) small or medium-sized enterprises, retain their skilled workforces during a temporary slowdown in production.

Small business lens summary

• Number of small businesses impacted: 450
• Number of years: two periods of 12 months (2026 and 2027)
• Price year: 2026
• Present value base year: 2026
• Discount rate: 7%

Benefits

There are no monetized benefits for small businesses from these regulatory changes.

Table 6: Costs

Administrative or compliance	Description of cost	Present value	Annualized value
Administrative	Grant application (existing agreements)	$25,296	$3,602
	Mid- and end-point reports (existing agreements)	$36,703	$5,226
	Final program report (existing agreements)	$17,731	$2,524
Compliance	Work-Sharing application (new agreements)	$15,920	$2,267
	Weekly utilization reports (new agreements)	$585,167	$83,315
Administrative	Grant application (new agreements)	$10,613	$1,511
	Mid- and end-point reports (new agreements)	$15,399	$2,192
	Final program report (new agreements)	$7,439	$1,059
Total	Total costs	$714,269	$101,696

Table 7: Net impacts

Amount	Present value	Annualized value
Net impact on all impacted small businesses [total benefits minus total costs]	-$714,269	-$101,696
Average net impact on each impacted small business [net impact divided by number of impacted small businesses]	-$1,587	-$226

One-for-one rule

The one-for-one rule applies, since there is an incremental increase in administrative burden on business. The Regulations are considered administrative burden under the rule, and no regulatory titles are repealed or introduced. The amendments will result in an annualized administrative total cost of $9,460.

As per the Red Tape Reduction Regulations, the assessment of administrative impacts was conducted for a period of 10 years, beginning from when the Regulations are registered. All values listed in this section are presented in 2012 dollars, discounted to 2012 at a rate of 7%.

The amendments will lead to employers with new and existing Work-Sharing agreements completing a Grant application with an annualized total cost of $3,001. Up to 938 businesses will spend two hours to perform this task on one occasion in 2026. The average wage (including overhead) of the responsible individual is estimated to be $31.04.

The amendments will lead to employers with new and existing Work-Sharing agreements completing mid- and end-point reports with an annualized total cost of $4,355. Up to 938 businesses will spend an hour and a half performing this task once per year (a mid-point report in 2026 and an end-point report in 2027). The average wage (including overhead) of the responsible individual is estimated to be $31.04.

The amendments will lead to employers with new and existing Work-Sharing agreements completing a final program report with an annualized total cost of $2,104. Up to 938 businesses will spend an hour and a half performing this task once in 2027. The average wage (including overhead) of the responsible individual is estimated to be $31.04.

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.

International obligations

The Regulations are not subject to obligations in Canada’s international trade agreements.

Effects on the environment

In accordance with the guidance on conducting Strategic Environmental and Economic Assessments (SEEAs), 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

Regulatory changes to harmonize with legislative changes made to EI Part II

The amendments to harmonize with the legislative changes made to EI Part II constitute wording updates to ensure seamless use of the amended provisions. They are not expected to impact specific groups, as they do not introduce new authorities or policy directions, or alter eligibility rules, but instead ensure clarity, compliance and smooth implementation of support measures under EI Part II.

Regulatory changes for Work-Sharing employees who receive financial support under new Grant

The target population of these Regulations consists of workers who are in an active EI Work-Sharing agreement and whose employers use the Grant and commit to supporting their workers to take training on the days they are not working and in receipt of EI. The Regulations will impact workers of working age (i.e. between 18 and 60). Historical data and recent evaluation findings indicate that Work-Sharing participants have distinct characteristics. Based on the 2024 evaluation, 70% of participants were male, and 58% were aged 45 and older, reflecting the demographic profile of goods-producing industries where Work-Sharing agreements are most common. Regionally, 38% of participants resided in the Prairie provinces, and 72% worked in manufacturing, underscoring the program’s concentration in sectors vulnerable to trade fluctuations and temporary downturns.

Men are significantly more likely to work in U.S. trade-dependent industries (12.5%; 1.3 million workers) compared to women (4.7%; 455 000 workers). Workers with lower educational attainment are also more likely to be employed in these industries (high school diploma or a lower level of education: 11%; post-secondary education below a bachelor’s degree: 9.4%; bachelor’s degree or higher: 6.7%). These workers also receive above-average wages ($37.24 per hour, 6.5% higher than the $34.97 average in other industries).

Historically, the majority of Work-Sharing agreements have been from goods-producing industries. Therefore, Work-Sharing benefit recipients reflect the demographic characteristics of workers in these industries. In 2022–2023, women accounted for over one third of new claims, and 60% of claims were from workers aged 25 to 54 years. In terms of firm size, in 2022–2023, over 89% of Work-Sharing agreements assisted small businesses (1 to 99 employees).

Participants also tend to have a longer job tenure, with an average of 10.4 years, and a median annual income of $55,000, both values significantly higher than the $39,000 median for EI Regular benefit claimants. These characteristics align with the Work-Sharing Program’s role in supporting experienced, higher-earning workers in industries such as steel, aluminum, and softwood lumber, sectors that are heavily impacted by tariffs and reliant on cross-border trade.

Overall, the groups most likely to benefit from these Regulations include older men employed in manufacturing and other goods-producing industries, and workers in small businesses. These participants typically have a longer job tenure and above-average wages, and are concentrated in sectors vulnerable to trade fluctuations.

Implementation, compliance and enforcement, and service standards

Implementation

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

The Regulations will be implemented under the legacy EI system by Service Canada with only minor adjustments. Required activities are limited to updating business requirements and technical design, preparing IT specifications, and completing standard IT system development and testing (system, integration, and acceptance), supported by routine project management. Additional updates include minor adjustments to procedures, guidance and reference documents, training materials, public-facing content, and internal communications. Service delivery considerations are minimal and primarily involve maintaining existing resources and managing the claimant base associated with the Regulations.

Compliance and enforcement

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, ESDC’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.

Contacts

Benoit Cadieux
Executive 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

Shawn Plunkett
Director
Intergovernmental Policy and Programs
Skills and Employment Branch
Employment and Social Development Canada
140 Promenade du Portage, Phase IV
Gatineau, Quebec
K1A 0J9
Email: shawn.plunkett@hrsdc-rhdcc.gc.ca