Digest of Benefit Entitlement Principles Chapter 18 - Section 2

18.2.0 Legislation

Specific sections of the EI Act govern the nature and limits of penalties for claimants, employers, and persons acting on their behalf. Specific legislation also governs penalties in respect of employment benefit and support measures under Part II of the Act ^{Footnote 1} . Each time a penalty is imposed, the individual receiving the penalty may also accumulate a violation ^{Footnote 2} .

[ September 2010 ]

18.2.1 Legislative authorities

The Commission's authority to impose a claimant penalty is created under EIA 38:

• EIA 38(1) specifies the acts for which a claimant penalty may be imposed.
  • Please note that EIA 38(1)(c) cannot be used to determine misrepresentation. This clause became inoperative for claim information submitted after 12 August 2001 when the provisions governing the assignment of undeclared earnings ended.
• EIA 38(2)(a) sets the maximum penalty at no more than three times the benefit rate for each act or omission.
• EIA 38(2)(b) applies to claims on which an assignment of earnings was applicable under section 19(3) of the Act. "Assignment of earnings" provisions became inoperative after 12 August 2001.
• EIA 38(2)(c) sets the maximum penalty at no more than three times the maximum benefit rate in effect when the act or omission occurred, if no benefit period was established. This provision applies in cases in which a claim was never set up and in which the claim was retroactively cancelled after benefits are paid.
• EIA 38(3) is a definition that applies to Benefit Repayment Adjustment Calculation–-BRAC or "clawback"–-under EIA 145 and is not relevant in penalty considerations.

The Commission's authority to impose an employer penalty is created under EIA 39.

• EIA 39(1) specifies the acts for which an employer penalty may be imposed.
• EIA 39(2) sets the maximum penalty at not more than nine times the current maximum benefit rate per false statement.
• EIA 39(3) allows the Commission to penalize an officer, director or agent of a corporation responsible for an act described in EIA 39(1).
• EIA 39(4) allows for a penalty the greater of:
  • $12,000.00; or
  • the penalty assessed against a person who claimed for benefits on the basis of an employer's false information, when that false statement affects conditions for qualification and entitlement ^{Footnote 3} .
• EIA 39(5) and EIA 54(g.1) establish the Commission's right to make regulations in cases of major contravention. Since no regulations have been developed to date, these provisions are not applicable.

For both employer and claimant penalties:

• EIA 40 restricts the Commission's right to impose a penalty in two circumstances. A monetary penalty cannot be imposed under EIA 38 or 39 if:
  • the Commission initiates a legal prosecution ^{Footnote 4} ; or
  • the misrepresentation occurred more than 36 months ago.
• EIA 41 authorizes the Commission to change or remove a penalty when that penalty is later found to be inappropriate. This can mean there was a mistake or misunderstanding with regard to the original facts or that new facts are submitted.
• EIA 41.1 authorizes the Commission to impose a non-monetary penalty when a monetary penalty is too severe. EIA 41.1 also provides for the issuance of a non-monetary penalty, in the form of a warning letter, up to 72 months after the misrepresentation occurred ^{Footnote 5} .

The Commission's authority to impose a violation is created under EIA 7.1

• EIA 7.1 authorizes the Commission to decide whether or not to issue a violation when a monetary or non-monetary penalty is adjudicated, or when a prosecution is resolved in the Commission's favour.

[ September 2010 ]

18.2.2 Fishing claims

The provisions that govern reconsideration and penalty calculation are the same for fishing claims as for any other claim. Employment Insurance (Fishing) Regulation [EIR (Fishing) 11] re-states the consequences of a violation, because the increased entrance requirements must be framed as earnings rather than hours.