The Role Employment Insurance Benefits Play in Calculating an IRB

The Role Employment Insurance Benefits Play in Calculating an Income Replacement Benefits (IRB)

Employment Insurance (EI) benefits appear in many ways within IRB calculations. They can be the entire basis of eligibility for an IRB, a component of an individual’s pre-accident income, or received post-accident as a form of payment for loss of income.

This blog provides all you need to know about how to treat EI benefits in your calculations.

As you read this, it is important to remember that more than just EI-Regular benefits are available under the Employment Insurance Act, with the most common being EI-Sickness and EI-Maternity. For more details we recommend you read this post on other income sources under the Employment Insurance Act.

EI Benefits as Eligibility for an IRB

Eligibility must be addressed before an IRB is calculated. For an unemployed individual, the receipt of EI benefits at the time of the accident qualifies that individual for an IRB, as per s. 5(1)1.ii of the SABS.

If an individual is unemployed, and EI benefits are the sole reason an individual is eligible for an IRB, the insured’s gross employment income is based on the 52-weeks before the accident (s.4(2)2.ii). A 4-week calculation is not available.

An unfortunate exception for insureds to eligibility while on EI benefits was established in Kazimierczuk and Pembridge Insurance Company (FSCO Appeal P16-00057), in which it was determined the waiting period for EI benefits does not qualify as being in receipt of EI benefits at the time of the accident.

EI Benefits and Determining Eligibility for IRBs through 26 of 52 weeks Pre-Accident

An individual who was unemployed at the time of the accident, but not receiving EI benefits, may instead be eligible for IRBs if they had an employment relationship for 26 of the 52-weeks prior to the accident (s.5(1)1.ii of the SABS). However, it should be noted that receipt of EI benefits does not qualify towards this 26 weeks total when the employment relationship had ceased. This was confirmed in Vega and Certas (FSCO A12-001531).

EI Benefits as Pre-Accident Income

EI benefits are explicitly included as a component of gross employment income per the Statutory Accident Benefits Schedule (SABS).

Subsection 4(1) defines gross employment income as “salary, wages and other remuneration from employment, including fees and other remuneration for holding office, and any benefits received under the Employment Insurance Act (Canada)…”

Post-Accident EI Issues

An insured may receive EI benefits after an accident, whether as a result of the accident or due to prior circumstances (ie. unemployment, maternity leave). So where should you include them in the IRB calculations? There are three possibilities.

The first possibility is to consider the EI benefits other income replacement assistance. If this is your interpretation, s.4(1)(a)(i) of the SABS explicitly excludes the EI benefits from the calculation, and therefore, no adjustment to the IRB payable is required.

The second possibility is to consider the EI benefits collateral benefits, which is an interpretation only available if the EI benefits are being received as a result of an incident that occurred prior to the motor vehicle accident in question (i.e. you were already on sick leave). Like option one, s.47(3)(f) of the SABS explicitly excludes EI benefits from the calculation, and as such, they are not considered.

The final possibility is that, similar to pre-accident income, EI benefits are considered gross employment income. However, s.7(3)(a) of the SABS requires the insured to be “employed after the accident and during the period in which he or she is eligible to receive an income replacement benefit”. We interpret that as meaning the insured must have a continuing employment relationship for this option to even be considered. But then you must question why EI benefits are even mentioned in conjunction with other income replacement assistance or collateral benefits.

How do you choose between the three options, especially since decisions in the last few years have been a little conflicting?

In Veeran and State Farm (FSCO A13-006722), the arbitrator agreed with the ADS calculation that EI-Sickness benefits are not deductible post-accident.

The exclusion of post-accident EI – Sickness is further supported by a recent LAT decision, S.W. and Aviva (17-005302/ABSS).

In Nelson and State Farm (FSCO A14-000848), it was determined that because of an ongoing employment relationship, post-accident EI-Maternity benefits are deducted as gross employment income.

In regard to the Nelson decision, the problem with treating post-accident EI benefits as gross employment income, and an issue which didn’t appear to be addressed in the decision, is that the Employment Insurance Act (Canada) places benefits received under a motor vehicle insurance plan as primary. This is supported by letters ADS has from Service Canada, and a verbal confirmation from Service Canada that wage-loss benefits received under motor vehicle insurance are deductible from EI-Maternity payable. If this is the case, it is an impossibility that EI benefits can then also be deducted as gross employment income (or any of the options above) in calculating an IRB, as it creates a calculation with no conclusion.

So what do you do?

For the above reasons, it is our opinion at this time, that EI benefits received post-accident should not be deducted as gross employment income, other income replacement assistance, or collateral benefits. However, without definitive direction in decisions, you will have to proceed as your legal counsel feels appropriate.

How Do I Get Documentation to Support Receipt of EI Benefits?

The insured can obtain information pertaining to the number of weeks and amount received from EI Benefits directly from their My Service Canada Account at www.servicecanada.gc.ca.

Have questions? Ask the ADS team of experts.

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