THE EMPLOYERS' EDGE
The Employment Insurance Hearing Quandary: To Participate Or Not!!!
When an employee is dismissed, an employer must complete and submit a Record of Employment (“ROE”) that, among other things, explains why the employee’s employment is being terminated. Depending on the code used on the ROE, the employer may be contacted by Human Resources and Skills Development Canada (“HRSDC”) – the entity responsible for administering the federal Employment Insurance (“EI”) program. However, employers are often confused, or mistaken, about what obligations they might have beyond the ROE, and what strategies might best serve them. As a result, many employers expose themselves unnecessarily to risks regarding evidence and factual determinations that may come back to haunt them later. This blog is meant to give employers a brief overview of their rights and obligations with respect to the EI process, and also to warn employers of the dangers they face if they take the wrong approach.
The employer’s involvement with the EI process begins with the issuing of the ROE. While there are various reasons to issue an ROE, we are focused here on the two most common: dismissal without cause, and dismissal with cause. While there are also different ways to complete an ROE, and different codes that employers can use, the most prejudicial of these codes is “M – Dismissal”, properly used for dismissal with cause. This is because, according to section 30(1) of the Employment Insurance Act, an employee who has “… lost any employment because of their misconduct or voluntarily left any employment without just cause” is prohibited from receiving any EI benefits. Accordingly, any time an employer terminates someone’s employment for cause, they invariably get contacted by the HRSDC asking for more information about the reasons for dismissal, and inquiring as to whether the employer wants to participate in the benefits entitlement process. This is where the employer must be wary.
Many employers want to demonstrate that they have acted appropriately, or feel the need to justify their actions having dismissed an employee for cause; still others don’t want to see the employee receive benefits they believe he or she does not deserve, and therefore decide to participate in EI reviews and hearings. Others believe that they are legally required to participate in the hearing process. In almost every instance, we advise our clients that it is not worth participating in EI proceedings and, in fact, participation can be detrimental if there are other proceedings that could arise from the dismissal. Contrary to some employers’ understanding, companies are not legally obligated to participate in EI hearings.
The reason we advise clients to decline participation in EI adjudication is simply for their own protection. In EI adjudication there is a separate standard for determining whether an employee has “lost any employment because of their misconduct”; a standard that is not the same as, and rarely aligns with, the employer’s onus to prove just cause at common law in a wrongful dismissal action. Worse, because of a legal concept called “issue estoppel”, any determinations made by the EI adjudicators may prevent the employer from making argument or adducing evidence in relation to just cause in another proceeding.
This means that an employer who participates in the EI adjudication process and presents evidence may be stuck with the findings of the EI adjudicator(s) in the event of a separate common-law action for wrongful dismissal. Given the separate and different standards of proof required, and the lack of control an employer can exert over the process in the EI adjudication, it is simply not worth it for employers to participate.
Instead, we generally advise clients to fill out the ROE accurately in the case of a just cause termination but advise, either in the “comments” section of the ROE or to any HRSDC representative making inquiries, that the employer is not taking any position and will not participate in any decision relating to EI benefits. For the purposes of EI, “issue estoppel” only arises when the employer participates in the adjudication process. So, by dealing with it this way, but without participating, the employer preserves its right to make any and all arguments and adduce any evidence in the event it has to defend a separate wrongful dismissal claim.
If you are not sure how to properly and accurately complete an ROE, or need assistance dealing with the HRSDC or EI issues, the CCP team can help you comply with your legal obligations without exposing your organization to unnecessary risk.
Please Note: This blog has been prepared as an informational service for our clients and other interested parties. It is not intended to constitute legal advice, a complete statement of the law or opinion on any subject. Although we endeavour to ensure the accuracy of the content, no one should act upon the information provided without a thorough examination of the law after the facts of a specific situation are fully considered.