This policy change will undoubtedly have implications for startups. Here’s a quick breakdown for those that offer and don’t offer Short-Term Disability coverage.
Those offering Short-Term Disability: Plan sponsors who have their Short-Term Disability benefits integrated with EI on their plan will need to realign their benefits with the new 26-week extension carefully. If a plan’s maximum benefits amount is less than the EI weekly maximum of $638, plan sponsors can amend their STD payments to reflect the new weekly maximum amounts.
Those that do not offer Short-Term Disability: If members claim EI before Long-Term coverage, plan sponsors need to realign their plans to the 26-week elimination period to simultaneously avoid double payment of disability and EI benefits. A member might be required to refund EI for overpaid benefits if this happens.
Note: If a plan’s maximum disability benefit is based on the EI maximum weekly benefit or earnings, plan sponsors will not need to amend their contract.
Employers can apply for the EI Premium Reduction Program
With early-stage companies, many have to watch their burn rate and tighten their belts where labour is concerned – especially with talks about a pending recession. Luckily for businesses like this, the government has a solution. They can apply for the Premium Reduction Program (PRP), where they may be entitled to pay their Employment Insurance (EI) premiums at a rate lower than the standard employer rate of 1.4 times the employees’ EI premiums.
Businesses that offer short-term disability benefits can apply for the PRP. In addition, the government’s website can provide more information about everything employers need to know. It is worth noting that the EI premium reduction program will remain as is until 2024. It will not be until then that the program is updated to reflect the changes to EI.
Supplemental unemployment benefits are also an option. These are private-sector solutions to a public and common problem. These can act as a vital tool in the box for startups that are looking to entice their workers. The federal government does allow companies to use such a policy. However, they would have to register these benefits with Service Canada before taking effect. The same goes for short-term disability programs if you want to insure your workers against accidents. Currently, there are 25,000 or so such plans registered with the government.
Check out this blog for more information on the Federal Governments’ EI reform.