Digest of Benefit Entitlement Principles Chapter 18 - Section 6

18.6.1.1 Scope

Employer penalties ^{Footnote 1} are authorized under EIA 39 and subject to the same considerations of fact, balance of probabilities and mitigating circumstances as are claimant penalties. The same legislation applies to an employer as to a claimant with regard to amending or rescinding a penalty ^{Footnote 2} .

By policy, the Commission imposes a penalty under EIA 39(4) only when the evidence concludes an employer issued or sold a Record of Employment when there was no employment relationship: this can mean no work was performed or no services provided. In very rare cases, it can also mean that an employer issued a Record of Employment knowing that the employee was not insurable.

A penalty may also be imposed under EIA 39(4) when there was a genuine employment relationship, but the employer misrepresented information in a manner that allowed the claimant to qualify for benefits — examples of this would be increasing the hours of insured employment to meet the qualification conditions of EIA 7/7.1, or issuing a ROE knowing there was no interruption of earnings or recording a quit or dismissal as a lay-off. In other words, the correct information would have prevented payment of EI benefits entirely; the incorrect information did, or would have, resulted in benefits being paid ^{Footnote 3} .

Any other employer misrepresentation, including situations when a Record of Employment is correctly issued but contains misrepresentative information – such as modifying the insurable hours to increase the number of payable weeks, or modifying the earnings to allow a higher benefit rate, or failing to correctly declare the reason for separation when issuing the ROE – is subject to penalty under EIA 39(2).

A violation cannot be recorded against a corporation or a non-insured person. A violation may be recorded when the Commission imposes a monetary penalty or warning letter against, or successfully prosecutes, an insured person acting on the employer's behalf, or on a third party misrepresenting him or her self as an employer.

Please note that although there is provision under EIA 39(5) and EIA 54(g.1) to impose a higher penalty for a major contravention, this provision can only be used if, and when, the Commission creates a regulation to govern how the clauses are applied. There is no such regulation, so these clauses cannot be used in calculating an employer penalty.

18.6.1.2 Who can be penalized

The legislation authorizes the Commission to impose a penalty on any employer, corporation or an individual director, officer or agent of a corporation, when the evidence concludes misrepresentation. When addressing employer penalties, there is no restriction on the number of parties against which penalties can be imposed. For example, if a penalty of $4,000.00 is assessed against the corporation, another penalty of $4,000.00 can be assessed against an officer and an additional $4,000.00 against an employee (or agent) acting on behalf of the employer. Conversely, if the Commission determines the false statement was made only by an agent of the employer and the employer had no knowledge of that statement, it may impose a penalty only against that agent.

By policy, the Commission does not impose a penalty on the employer if the employee or agent acted in a manner that breaches the employment relationship, providing the false information despite the employer's precautions to correctly control that information and without the employer's knowledge.

18.6.1.3 Defining employer misrepresentation

As with a claimant penalty, the presence of misrepresentation determines whether a penalty applies to the employer. Misrepresentation may include, but is not restricted to:

• a false Record of Employment;
• a Record of Employment containing false information; or
• any other written or verbal disclosure communicating false information to the Commission.

By policy, the Commission only applies the provisions of EIA 39(4) when the employer provides a false Record of Employment, or a Record of Employment with false information. This includes information provided verbally or in writing with respect to clarifying or correcting Record of Employment information. Penalties for all other misrepresentations are calculated under EIA 39(2).