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Digest of Benefit Entitlement Principles Chapter 18 - Section 1

18.1.0 Introduction

When the Commission suspects benefits were paid contrary to the requirements of the Employment Insurance legislation, it investigates the file. When the facts indicate benefits were paid as a result of an innocent error that resulted in false or misleading statements, the Commission takes action to recover those moneys. While the claimant must repay the benefits for which there was no entitlement, there will be no penalty or other sanction. However, if the facts indicate benefits were paid as a result of false statements knowingly made, or misrepresentation Footnote 1 , the legislation allows the Commission to impose a penalty and issue a violation. In extreme cases, the legislation allows the Commission to prosecute in court.

The Employment Insurance Act (EIA) specifies the actions that constitute misrepresentation and for which the Commission may impose a penalty. The EIA also limits the Commission's powers. Case law - Canadian Umpire Benefits and Federal Court of Appeal decisions - interpret and refine the application of the EIA. This chapter consolidates the principles established in jurisprudence and dictates the considerations and procedures the Commission shall follow in creating a penalty Footnote 2 .

[ September 2010 ]

18.1.1 Scope

A penalty is not meant to be punishment. A penalty is meant to be a deterrent and to ensure individuals and employers neither benefit from nor repeat actions that risk the illegal payment of benefits Footnote 3 . Penalties are linked to overpayments, but can be imposed in situations when there is no overpayment. The Commission tests for misrepresentation to determine whether a penalty is applicable. The penalty applies to the individual or corporation responsible for the misrepresentation, and may be imposed on:

  • the claimant;
  • a person representing the claimant;
  • the employer; or
  • a person representing the employer.

A penalty can be:

  • non-monetary, in the form of a warning letter;
  • monetary, calculated in accordance with the provisions of the legislation and the policy contained in this chapter; or
  • the judgment rendered as a result of formal prosecution.

Only one kind of penalty can be imposed on a party for any one act of misrepresentation. For example, the Commission cannot first prosecute and later impose a warning letter for the same infraction. Similarly, the Commission cannot impose a warning letter and later decide to prosecute the same infraction.

When a monetary or non-monetary sanction is imposed, the Commission may also issue a violation. When a warning letter is issued, if a violation is also issued, it is considered an unclassified violation Footnote 4 . When there is a second, third or greater incident of penalty, and a violation is also issued, the violation is classified as subsequent. Otherwise, violations are coded based on the value of the net overpayment Footnote 5 . In each case, except for an unclassified violation, the claimant will need additional hours to qualify for benefits over the next 260 weeks (5 years) or two subsequent claims. Violations and penalties are progressive; a subsequent infraction results in a more severe consequence.

Finally, the decisions to impose a penalty or violation are discretionary and their consideration rests solely with the Commission. The Commission must exercise its discretion judiciously Footnote 6 . This means the Commission must take into account all relevant and ignore all irrelevant considerations and tailor the penalty to address the specific situation of the individual receiving the penalty. The written decision must identify what information was considered and why it was important or irrelevant in setting the final penalty amount and deciding to issue a violation.

[ September 2010 ]

18.1.2 Authority and responsibility

The Commission has the discretionary authority to:

The Commission, as part of its reconsideration policy, requires all agents follow specific steps when adjudicating reconsideration or amendment. Before proceeding, the Commission must ensure that these four operations can be completed within the legislated timeframe:

  • decide whether to exercise its discretion to reconsider (i.e. here is sufficient time, an overpayment or underpayment will result, information presented should be reconsidered);
  • make the new decision;
  • calculate the amount to be paid or recovered; and
  • notify the claimant of the decision.

If all four steps cannot be completed within the appropriate timeframe, the agent does not reconsider Footnote 7 .

Once the Commission determines it is appropriate to reconsider, it does reconsider. This means that any decision that resulted in the payment of benefits can be re-examined and the approval of those benefits reversed. Regular, fishing, special or training benefits may be re-examined when new or existing facts indicate that the claimant was not entitled to those benefits.

When a claimant is overpaid benefits because of information he or she submitted, the Commission must decide if all, or some, of those moneys were paid as a result of an innocent false statement or as a result of a false statement knowingly made or misrepresentation. If a misrepresentation has been made the Commission must decide whether a penalty can be imposed. The amount of that penalty can never exceed the limits set by legislation and policy. However, the amount must be decreased when mitigating circumstances are present.

The Employment Insurance Act provides for several different kinds of penalties:

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