Digest of Benefit Entitlement Principles Chapter 2 - Section 3
2.3.0 Exceptions to the interruption of earnings requirements
The regulations provide for exceptions to the seven days without work and earnings requirement in very specific situations (Digest 2.2.2). These are discussed below in the context of their individual circumstances.
2.3.1 Special benefits
When an insured person stops working because of an illness, injury, quarantine, pregnancy, to care for a new born or child placed for the purpose of adoption, or to provide care or support to a family member with a serious medical condition, an interruption of earnings can occur even if the claimant does not completely stop working or receiving earnings. In these cases, an interruption of earnings occurs at the beginning of the week in which the claimant’s earnings are reduced by more than 40% of their normal weekly earnings (EIR 14(2)).
In this context, the normal weekly earnings are calculated on the basis of the regular hourly rate multiplied by the regular hours worked in a week, or an individual’s weekly salary, including overtime worked on a regular basis. When stopping work due to one of the previously mentioned reasons, the interruption of earnings occurs when the individual's earnings (EI Regulation 35(2)), including in particular wages or salary, fall below 60% of their normal weekly earnings.
Payments a claimant has received or, should they apply, would be entitled to receive under a group sickness or disability wage-loss indemnity plan, or workers' compensation plan, are not earnings to be taken into account when determining if an interruption of earnings has occurred (EIR 35(4)). What is taken into account, however, are payments a claimant has received or, should they apply, would be entitled to receive under a paid leave plan for sickness, maternity, the care of a new born or a child placed for the purpose of adoption, or for the care of a seriously ill or injured family member (EI Regulation 35(2)(c)).
Also taken into account are payments a claimant has received or, should they apply, would be entitled to receive from:
- a motor vehicle accident insurance pursuant to a provincial law for an actual or presumed loss of income from employment , or
- indemnity payments pursuant to a provincial law in case of preventive withdrawal of work (EI Regulation 35(2)(f)).
Moneys received as borrowed sick leave against future credits are earnings. As such, a person who requests and obtains an advance on their sick leave credits does not have an interruption of earnings until payment stops, as they continue to be paid.
2.3.2 Lay days or periods of leave
In some workplaces, employees will regularly work more hours, days or shifts than that normally worked in a week by individuals employed full-time elsewhere. Some examples where this type of work schedule could occur would be isolated work mines or sites, ocean platform drilling rigs or vessels on the St. Lawrence or Great Lakes, or along the Pacific and Atlantic coasts.
Many other workplaces whose operations are continuous may also adopt similar uninterrupted work patterns. Quite often in these cases employees will work for 4, 5, 6, or 7 continuous days, following which they have a period of leave. Another pattern of work that is common is one that allows the employee to work more hours in a week according to a schedule, and consequently accumulate a period of leave within an established calendar period.
Specific provisions in the contract of employment or the collective agreement will generally provide the method pursuant to which the period of leave will be determined. There are two basic methods for determining the period of leave: one is based on a credit system whereby credits are earned and accumulated based on the number of hours or days worked, while the other method is based on an established schedule alternating periods of work and leave. Whichever method is used, this period of leave does not constitute an interruption of earnings regardless of whether the period is remunerated (EI Regulation 14(3); EI Act 11(4)). However should a stoppage of activities occur or if the employee is laid off or separates from employment, the manner in which the period of leave is treated may be different.
Credits earned and accumulated based on number of hours or days worked
Budget 2021 measures alert – Temporary measures are in place from September 26, 2021 to September 24, 2022 which affects the following information:
- earnings paid due to separation from employment are not deducted from benefits
With respect to the accumulated leave credit system, what needs to be determined when a stoppage of activities or a lay-off or separation occurs is whether, according to the contract of employment or collective agreement, the insured person has a right to use up the lay days or accumulated leave credits. If such is the case, then the interruption of earnings would only occur after all of the lay days are used up and the period of leave covered by such accumulated lay days, ends (FCA A-708-92, CUB 20866; FCA A-100-89, CUB 16027; FCA A-762-90, CUB 16027A).
Where a person works this type of schedule, a benefit period may be established if they had a previous interruption of earnings in their qualifying period. However, they would not be considered unemployed in any week in which the period of accumulated leave falls. Additional information on lay days and other periods of leave can be found in section 4.3.5 of this digest.
However, if the collective agreement or the employment contract stipulates that the claimant loses those lay days or accumulated leave credits when the employment or employer’s activities stop, the interruption of earnings occurs at the end of the employment, as there is no longer any entitlement to a period of leave (FCA A-220-87, CUB 13443). Where the claimant is still entitled to be paid for the lay days, the allocation of earnings would prevent an interruption of earnings (EI Regulation 36(9)). It is important to keep in mind that, as the claimant is not entitled to an actual leave period for the lay days, the provisions of EI Act 11(4) do not come into play. Therefore, a disentitlement for failing to prove the claimant is unemployed, would not apply.
Established schedule alternating periods of work and leave
With regard to the pattern of alternating period of work and leave, it is considered that the established work schedule is interrupted during any period where the employer’s activities are stopped, or when the employment relationship ends. An interruption of earnings therefore occurs in these situations, provided that, during the week the activities stop, the employee had not used any accumulated lay days prior to stopping work. If there were lay days used, the interruption of earnings will only occur as of the following week.
2.3.3 Compensatory leave
When the contract of employment provides a period of paid leave to compensate for additional hours worked from time to time during a period of employment, there is no interruption of earnings. For example, an employee who occasionally or regularly works overtime may choose to be compensated with time off rather than with pay. The interruption of earnings in this situation would only occur at the end of the paid time off.
In some cases, a claimant may have already had an interruption of earnings before the compensatory leave, or from other employment held during the qualifying period. In that case, a benefit period may be established; however, entitlement to benefits will be determined by examining the employment status, the determination of earnings or other elements of entitlement.
2.3.4 Payment for specific contract period
A claimant's contract of employment may provide for payment for a period longer than a week, regardless of the amount of work completed during that period. No matter how or when the payment is made, there is no interruption of earnings during this period (EI Regulation 14(4)). An example of this is a stevedore who is guaranteed an income equivalent to forty weeks of work during the year.
The same principle applies in the case of a claimant who has an agreement with the employer to self-fund a period of leave. For example, the claimant works and defers a portion of their salary for four years in order to finance and be on leave for the fifth year. The claimant does not have an interruption of earnings during the self-funded leave period (EI Regulation 14(6), EI Act 11(3)), unless the agreement concerning the self-funded leave is broken, for example, if the claimant permanently terminates this employment. The claimant, in principle, cannot establish a benefit period during such a leave period, regardless of the type of benefits that are claimed.
A claimant could establish a benefit period because of an interruption of earnings that occurred before or during the self-funded leave. In such a case, entitlement to benefits will be determined by examining the employment status of the claimant, the determination of earnings, or other elements of entitlement.
2.3.5 Real estate salespersons
In the case of an insured person who holds a license issued by a provincial authority to work in the sale or purchase of real estate on a commission basis, the interruption of earnings occurs only when the license of the insured person is surrendered, suspended or revoked, or when the insured person ceases to work in that employment due to illness, injury, quarantine, pregnancy, to care for a new born or child placed for the purpose of adoption, or to provide care or support to a seriously ill family member (EI Regulation14(5)(a)).
If the claimant stops working for any other reason, there will be no interruption of earnings while they still hold such a license. Simply returning the license to the broker while the office is closed for the winter, is not sufficient to prove that the claimant's actions are irrevocable, and that they no longer possesses such a license (CUB 23836).
Like employees paid by commission, a benefit period can be established for a real estate salesperson on the basis of an interruption of earnings that occurred from other employment during the qualifying period, even if that person is still in possession of a license. The issue to consider will be whether the claimant is in fact unemployed during any given week, and what their earnings are.
2.3.6 Employees paid by commission
For workers whose earnings consist mainly of commissions, an interruption of earnings occurs only when the contract of employment is terminated. An interruption will occur if the claimant stops working due to illness, injury, quarantine, pregnancy, to care for a new born or child placed for the purpose of adoption, or to care for a seriously ill family member (EI Regulation 14(5)(b)). Conversely, if the claimant ceases to work for any other reason, there will be no interruption of earnings while the contract continues.
If an interruption of earnings occurred with respect to other employment during the qualifying period, a benefit period can be established even if the person is still under contract from the employment paid by commissions.
[ February 2019 ]
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