May 16, 2008

CCA backs changes to Employment Insurance rate-setting process

VINCE VERSACE

staff writer

The Canadian Construction Association supports proposed changes to the Employment Insurance rate-setting process that encourage more independent management.

“Gaining some measure of independence for the rate-setting process is something we fully support” says Jeff Morrison, director, government relations and public affairs for CCA.“An arm’s-length, independent body to manage the (EI) fund will help maintain its integrity.”

The CCA recently spoke before a Commons Standing Committee on human resources to express the industry’s views on a proposed Canada Employment Insurance Financing Board.

The CCA thinks a new governance structure for EI would ensure:

• any operational surpluses and investment returns remain in the EI Fund

• all EI funds are managed by individuals with some expertise in the management of similar funds

• the rate-setting process will be based entirely on financial considerations.

Despite these positive steps, CCA explained to the committee further reforms were needed in EI areas such as employer over-contributions, which are not refundable, says Morrison.

“Employees are refunded for excess contributions over the contribution limit but there is no mechanism in place to refund employer over-contributions,” Morrison points out.

Given the nature of the construction industry, it is not uncommon for a construction employer to operate a group of associated companies. The same employee could work for more than one of these associated companies over the course of a year. This group of associated companies is treated as a single entity for tax measures such as the Small Business Deduction but are treated as different employers for the purposes of the EI Act.

“Employers are finding themselves paying more than the maximum levels with no means for a refund even in situations where the employee is essentially working for the same employer,” explains Morrison.

CCA would like to see a mechanism introduced for refunding over-contributions to employers and to treat associated companies as a single employer for the purposes of annual EI premium contribution limits and the proposed refund system.

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