Mainstay Insurance

We’ve been playing a guessing game since the federal government first announced changes to the EI sickness benefit back in the April 2022 budget.  When it would happen, and how it would work with private sickness benefits (WI/STD, LTD)etc. were just the beginning.  Well, the mystery is starting to clear up with December 18th being the go-live date, providing a more generous benefit increasing from the current 15 weeks to 26 weeks.

So, what does this mean for group disability plans?  There is still EI reform happening and more details are expected in the coming weeks and months specifically around the STD rate reduction program (this only applies if you have a formal STD plan and meet the qualifications).  We’ll watch and share more about this as it comes out.

Should you change your long term disability benefit as a result of this change?

There are a two primary options for employers to consider.

1.  Keep your existing LTD waiting period of 112 or 119 days.  This will provide an LTD benefit 2 months before the EI ends and in most cases, will provide a higher benefit period than the EI benefit maximum.  Insurers do a pretty good job of getting people back to work, so the earlier intervention should help with better outcomes. The downside is that there could be a duplication of EI and LTD payment, which the employee would have to repay (but the LTD benefit is higher so not a hardship).
2. Amend your plan to match the new EI sick benefits. This would delay your LTD benefits from 4 to 6 months.  A small rate decrease would be experienced (~3-7%), but staff would have the reduced benefit that EI offers.  This would also delay the LTD insurer from getting involved, which can make rehabilitation and return to work harder in some cases (early intervention is always better).

The decision will be unique to each employer’s situation. Some have no LTD benefit, so no changes are required. Some insurers will change all their plans one way or the other while others will leave it as is, but most are expected to allow employers to choose.

There is more info on the release below and we’ll be in touch as more information becomes available.

https://www.canada.ca/en/employment-social-development/news/2022/11/government-of-canada-improves-sickness-benefits-under-the-employment-insurance-system1.html

As we approach the end of November, the end of the pandemic and with so many wanting teams back together in real life, the idea of holiday parties comes up.  I saw this note from E2R ( an HR consulting firm) and thought a good reminder of items employers should consider. 

I’ve spent the last few weeks running and speaking at the CGIB educational events in Toronto, Calgary and Vancouver.  We’ve had employment lawyers speak at each of them on a number of topics employers face when it comes to benefits and how they handle them at termination. The one resounding theme that arose was the need for current up to date employment contracts.

Every employee /employer relationship has an employment contract, it’s only a matter if it is written or oral. Written is always preferred as it clearly states how the parties enter into the contract (pay, vacation, etc.) and how they exit (termination pay, benefit extension (or not) etc.).  This can prevent issues when the employment comes to an end.

In Ontario, the courts have ruled that having items like “non-compete clauses” in your contract can render the entire document invalid.  This can cause issues if you terminated a 20 year employee (as en example) who had a written employment contract that had both a non-compete and a termination clause that said that the employee would be paid 6 months of base pay only on being severed.  The non-compete clause would nullify the remainder of the contract leaving the employer responsible to the common law period (as much as 2 years) and could also include items like bonuses, benefits etc.  This can be corrected by reviewing these contracts with an employment lawyer and ensure they are up to date and enforceable.

The article below provides an example of how things go wrong even when written with the best intent.  Please consult an employment lawyer for advice to create enforceable contracts that are specific to your business and particular situation.

“Termination clauses can no longer be seen or read in an isolation of each other – they have to be read as a whole, so employers have to be very careful in reviewing their employment agreement templates from beginning to end, and ensuring that no provision of the agreement, whether it deals with termination or not, infringes on employees’ statutory rights to notice, severance pay, and benefits continuation under the under [employment standards legislation].”

READ ARTICLE

This is a cautionary tale with a BAD ending.  Terminations are never easy, but getting them wrong can be very costly which is why we ask clients to reach out BEFORE things take a turn for the worst.  On top of that, ensuring that you have Plan Administration Liability Coverage is critical as it, or Employment Practices Liability coverage, can help protect you when things go wrong.

In Pasap v Saskatchewan Indian Gaming Authority and Bear Claw Casino, in a wrongful dismissal action, the Court ordered the employer to pay their former employee $1,216,764.00 in damages on account of the employee’s loss of LTD benefits post termination.

READ ARTICLE

We’ve shared posts over the years about the importance of employment contracts, with written being better than verbal agreements.  These have gone through a number of legal challenges and the result is that they need to be written well (by lawyers is best), or they are tossed out in whole. 

Why does that matter?  Imagine having a sales rep with a non-compete clause, or something contrary to the ESA, the rest of the agreement could be ruled invalid.  This could lead to you paying up to 24 months severance + bonus ++ etc. rather than what was agreed to.

Although a written employment contract is not necessary in order for there to be an employment relationship, a written employment contract provides many benefits to employers. This article focuses on two types of clauses that typically benefit employers: Termination and layoff clauses…

READ ARTICLE

Very few Mainstay clients have employees being paid at the minimum wage, but those that do need to know that rate is increasing to $15.50 next week.  The Ministry of Labour sent a reminder today.  I’ve clipped it below for your reference.

Minimum wage is the lowest wage rate an employer can pay an employee. Minimum wage rates in Ontario will increase on October 1, 2022. The increase to the general minimum wage will be 50 cents, which will bring the new rate to $15.50 per hour.

Learn more

IF YOU USE, OR INTEND TO USE, INDEPENDENT CONTRACTORS – READ THIS

Many employers use “Independent Contractors”(IC) to perform services for the business.  This is not necessarily a problem if they are kept clearly at arms length (such as your once a week office cleaners).  The problem arises when they work; primarily for you, with tools you supply, when and how you instruct, then these IC’s can be deemed employees by CRA.  This can mean the “employee” loses all their deductions and the “employer” would be required to pay back taxes, withholdings etc.

Many insurance brokers have suggested that these people incorporate to protect the employer they work for, but that in itself does not help.  In fact, an incorporated business with up to 5 staff can be deemed a Personal Service Business (PSB) resulting in the highest tax rates and reducing the ability to write off most business expense.  As a result, this advice is not just potentially damaging, but it can be a difficult spot to “get out of”.

The article below alerts employers to the fact that CRA will be running a campaign in this area…

The Canada Revenue Agency is escalating their scrutiny of personal services businesses, and the consequences for breaching these tax rules can be severe. Find out what you need to know about the CRA’s campaign.

READ ARTICLE

We’ve seen many changes to employment relationships over the past few years and if you’re an Ontario employer, you may need to revisit employment contracts (working with an employment lawyer and/or an HR professional is best).  The article below highlights many of the changes you’ll want to consider.

It is common practice for technology companies to use standard form employment contracts for all staff.¹ Often those contracts are precedents from some other source—a prior start up, or even the Internet. Or they may have been provided by a law firm providing legal advice a number of years ago.

Regardless of the source of the standard form, if it has not been updated in the last six months to reflect recent changes in the law, there is a very good chance that some of its key terms are no longer enforceable in Ontario.

Key Highlights

• Employers likely need to update terms in employment contracts on termination provisions, restrictive covenants and arbitration clauses.
• Five practical tips for Ontario employers as they review and update employment contacts.
• Ontario employers need to stay mindful of new policy requirements on disconnecting from work and “electronic monitoring.”

READ ARTICLE