Archived 2009 - Digest of Benefit Entitlement Principles

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ARCHIVED JANUARY 2009 – CHAPTER 18 – FALSE OR MISLEADING STATEMENTS

18.1.0 STATUTORY POWER

18.2.0 A CLAIMANT OR A PERSON ACTING ON THE CLAIMANT'S BEHALF

  • 18.2.1 An Employer or a Person Acting on the Employer’s Behalf 
  • 18.2.2 A Claimant in Receipt of Financial Assistance Under Employment Benefits (Part II)
  • 18.2.3 False or Misleading Statement
  • 18.2.4 Knowingly Made

18.3.0 BURDEN OF PROOF

18.4.0 VIOLATIONS

  • 18.4.1 Application of Violations
  • 18.4.2 Classification of the Violation

18.5.0 SANCTIONS

  • 18.5.1 The Warning Letter–A Non-Monetary Sanction
  • 18.5.2 The Penalty–A Monetary Sanction
    • 18.5.2.1 Penalty Amounts–Claimants
    • 18.5.2.2 Penalty Amounts–Employers
    • 18.5.2.3 Penalty Amounts–Situations of Undeclared Earnings
    • 18.5.2.4 Penalty Amounts–In Respect of Receipt of Financial Asistance Under Employment Benefits (Part II)
  • 18.5.3 The Increased Entrance Requirements Sanction
  • 18.5.4 Prosecution

18.6.0 DISCLOSURE POLICY

18.7.0 APPEALS

18.8.0 TIME LIMITS FOR RECONSIDERATION

18.9.0 RECOVERY

18.10.0 WRITE-OFF

APPENDIX - NATIONAL POLICY ON FALSE OR MISLEADING STATEMENTS MADE KNOWINGLY

18.1.0 STATUTORY POWER

18.1.1 A Sanction
18.1.2 A Violation
18.1.3 Scope of Application

18.1.0 Statutory Power

The Act and Regulations define the procedures governing the administration of Employment Insurance (EI) benefits and the Commission basically relies on the good faith and honesty of claimants and of those who act on their behalf. The essential role played by the program in the country's economy, and the substantial amounts involved, justify using serious deterrents against making false or misleading statements to ensure that it operates properly.

The Commission is not only authorized to recover overpayments, but it also has the power to impose penalties and violations on persons who have received or tried to receive benefits as result of knowingly making false or misleading statements. The objective of such measures is twofold: to eliminate any advantage gained by the person as a result of the false statements and to deter repetition of such conduct.

However, care must be taken to avoid being excessively harsh and to impose penalties and violations commensurate with the nature and gravity of the offenses while taking into consideration the circumstances in which it occurred.

18.1.1 A Sanction

A sanction can be monetary or non-monetary in nature and is in addition to the repayment of all benefits to which there was no entitlement. A sanction may be imposed on a claimant, an employer, or any person acting on their behalf who has, in relation to a claim for benefit, knowingly made false or misleading representations or statements to the Commission, or held back essential information, or without just cause failed to attend, carry out or complete a course, program or activity for which financial assistance was provided, or was expelled from same.

There are four types of sanctions used by the Commission:

  1. the warning letter–a non-monetary sanction,
  2. the penalty–a monetary sanction,
  3. the increased entrance requirements sanction–the existence of a violation1 results in an increase in the number of hours required to qualify, and
  4. prosecution.

The increased entrance requirements sanction2 supplements the existing monetary and non-monetary sanctions and prosecution to make the consequence of fraud more severe and deter abuse by imposing a further sanction on repeat abusers.

Procedures regarding sanctions are governed by particular sections of the Act for claimants or persons acting on their behalf3, for employer or persons acting on their behalf 4 and with respect to financial assistance under employment benefits (Part II)5.

  1. see 18.4.0, "Violations";
  2.  EIA 7.1;
  3. EIA 38;
  4. EIA 39;
  5. EIA 61; EIA 65.1.

18.1.2 A Violation

The Act1 clearly states that a person accumulates a violation when the Commission issues a notice of violation. A notice of violation is issued as a result of the imposition of any monetary or non-monetary sanction or court judgement on or after June 30, 1996. The violation in turn gives rise to the application of the increased entrance requirements sanction2. [Also see National Policy]

[October 2005]
[June 2003]

  1. EIA 7.1(4).
  2. See Section 18.5.3 “The Increased Entrance Requirement Sanction”.

18.1.3 Scope of Application

The Commission may at any time within the legislated limitations1 verify information provided by claimants, employers or representatives acting on their behalf. The type of benefits (regular or special) or whether benefits were paid or not is irrelevant. The Commission must determine whether a person received or attempted to obtain benefits by knowingly making false or misleading statements and whether the offence involves the provision of information about any matter which involves the fulfillment of conditions for the qualification and entitlement of receiving or continuing to receive benefits. A penalty may be imposed on individuals who were corporate directors, officers or agents at the time the offence occurred whether or not a penalty has been imposed on the corporation. This can be in addition to a warning to the corporation. However, this determination may be revised by appellate review2.

It is necessary to consider the legislative consequences whenever false or misleading statements and/or omissions have been knowingly made. While the Commission may impose penalties it must exercise this discretion3 and take into consideration all the relevant factors in each particular case. Furthermore, maximum penalty amounts should be imposed in only the most serious cases of fraud.

  1. EIA 52(1); EIA 52(5);
  2. R. M. Purcell (A-694-94, CUB 25953);
  3. S. Smith (A-330-93, CUB 22527).

18.2.0 A CLAIMANT OR A PERSON ACTING ON THE CLAIMANT'S BEHALF

18.2.1 An Employer or a Person Acting on the Employer’s Behalf
18.2.2 A Claimant in Receipt of Financial Assistance Under Employment Benefits
(Part II)
18.2.3 False or Misleading Statement
18.2.4 Knowingly Made

18.2.0 A Claimant or a Person Acting on the Claimant's Behalf

The Act1 authorizes the Commission to impose a penalty whenever a claimant or a person acting on the claimant's behalf knowingly makes a false or misleading statement in relation to a claim for benefit.

Without being restrictive, as a general rule2, there are three situations where benefits may be paid to an authorized third party: when the claimant is mentally handicapped, incapacitated or deceased. There may be other circumstances which may require a representative (for example, an ill or incapacitated person who temporarily cannot manage his or her affairs, an illiterate claimant) and to which the Commission would not object.

By definition, this person is authorized to act on the claimant's behalf if this power has been conferred by a representation, power of attorney or judicial document. It is essential that this responsibility be expressed in clear and unambiguous terms. Once it is established that a person is properly appointed to act on behalf of the claimant, whether or not the claimant was aware of the actions of his or her representative, the claimant will be responsible for the false and misleading statements committed by this person and a penalty could be imposed against the claimant3.

There may be situations that, while there is an absence of a documented representation, it is nonetheless reasonable to conclude on the basis of the particular circumstances, that the claimant either gave formal or implicit authorization to that person to represent or to act on his/her behalf.

In all cases, it is up to the claimant to show that neither he nor she nor his/her representative who acted under a formal or implicit authorization is responsible for the offence. A penalty will not be imposed on the claimant who can show that the person who committed the offence was not authorized to do so.

  1. EIA 38;
  2. EIR 27; see also Subject 4, Insurance Services Policy Manual;
  3. Jurisprudence Index/penalties/cards signed by third party/.

18.2.1 An Employer or a Person Acting on the Employer's Behalf

Employers are subject to penalties when the offence involves the provision of information about any matter that involves the fulfillment of conditions for the qualification and entitlement of receiving or continuing to receive benefits1.

An employer penalty may also apply to corporate directors, officers and agents if they held those positions at the time the offence occurred. This can be in addition to or regardless of the imposition of a sanction on the corporation itself.

  1. EIA 39.

18.2.2 A Claimant in Receipt of Financial Assistance Under Employment Benefits
(Part II)

Pursuant to the Act1 the Commission may impose a penalty of not more than the financial assistance provided on a person for knowingly making false or misleading representations, in relation to the application or request for assistance under employment benefits (Part II), or for without good cause failing to attend, carry out or complete a course, program or activity for which the assistance was provided or was expelled from it2.

  1. EIA 61;
  2. EIA 65.1.

18.2.3 False or Misleading Statement

Although Parliament has used the term "statement", it has also used the words "representation" and "information". Despite the variety of the terms used, their basic nature is the same, as they signify any information or documentation transmitted to the Commission orally or in writing in relation to a claim for benefit.

What must also be included in this definition is any relevant information which the claimant, or someone acting on their behalf, failed to provide to the Commission, knowing that he or she would consequently lose entitlement to benefits. This in itself would amount to a false or misleading statement. The same holds true in the case of an employer or a person acting on their behalf, when the offence involves the provision of information about any matter which involves the fulfillment of conditions for the qualification and entitlement of receiving or continuing to receive benefits.

The statement may come to our attention from the claimant, employer, or someone acting on their behalf, a third party, etc., by way of such forms as the application for benefit, the Record of Employment, a questionnaire, the bi-weekly claimant's report forms, or by a telephone call, or a meeting with an officer of the Commission.

Those persons claiming maternity, parental or apprenticeship training and not required to submit report cards are nonetheless subject to these penalty provisions1. These claimants have entered into a legal agreement to inform the Commission of any information that may change their entitlement to benefits.

The interpretation of the expression "false" or "misleading" may vary from one individual to another and depends on the context in which the statement was made. Thus, it is important to refer to well-known definitions2.

False:

  • The word "false" has two distinct and well-recognized meanings:
    1. intentionally or knowingly or negligently untrue;
    2. untrue by mistake or accident, or honestly after the exercise of reasonable care.

Misleading :

  • Delusive; calculated to lead astray or to lead into error.

It can be seen on reading these definitions that the expression can have a twofold meaning: a willful falsification, or simply a completely unintentional mistake by the person. A complete reading of the wording in the Act and Regulations is what permits us to see the legislator's intent and the approach to be adopted by the Commission's officers.

Before deciding this issue, however, it is extremely important to ensure that the allegations made against the person or persons acting on their behalf are accurate. To do this, it is first necessary to know the material facts and to determine whether the facts in the file are contrary to the information that has been gathered. This will also include verifying and assuring oneself of the credibility of the evidence. The relevance of the evidence and the impartiality of the sources from which the information is obtained are important criteria.

Finally, it is necessary to consider those circumstances where there is a difference in what actually happened and what was reported and then determine whether this is a case of unintentional or deliberate inaccuracies. To this end the insurance officer should be guided by the principles set out below3.

  1. EIR 77; pilot project no. 1;
  2. Black's Law Dictionary, 5th edition, 1979;
  3. see 18.2.4, "Knowingly Made."

18.2.4 Knowingly Made

The mere fact of furnishing false or misleading information to the Commission does not necessarily lead to the imposition of a penalty. Considering the variety of the information requested and the forms to be filled out, it should not be surprising that mistakes may be made.

Care must be taken not to jump to conclusions. Above all it is necessary to be able to prove that the act was committed knowingly. In fact, before the Commission may impose a penalty, the Act requires it to prove that the person or person acting on their behalf made a statement he or she knew to be false or misleading. To discharge this obligation, one must first start with the meaning of the term "knowingly", which has been defined as1:

  • With knowledge; willfully; consciously. Used in a statutory provision of a penal nature, the word denotes that the person has knowledge of the facts that render the act complained of culpable. 

This definition taps into the rather subjective aspects of the matter: knowledge and intent. However, the focus of our attention should be the person's degree of knowledge at the time the offence is committed, and this can be determined by reviewing the facts on the file and drawing the appropriate conclusions2. Demonstrating the person's intent to deceive or defraud would be to impose an additional burden on the Commission that the legislation does not require3. The Commission need only believe, on the basis of the evidence on the file, that the person knew or should reasonably have known that what he or she stated was false or misleading. If the Commission is unable to reach such a conclusion, a penalty should not be imposed.

Making a false or misleading statement or providing inaccurate information is prima facie evidence that an offence has been committed, however that person may be able to prove that he or she is not responsible by showing that he or she took all the necessary precautions. The explanation may be accepted if the person believed on reasonable grounds in the authenticity of the information furnished or if he or she took all the normal precautions to avoid submitting erroneous information to the Commission.

Moreover, jurisprudence has established that a person is acting with full knowledge of the facts when there is a way for him or her to obtain information, that he or she knows so and he or she can obtain information upon making a request. Where a person through carelessness or neglect fails to clarify a doubtful situation, this will constitute a false or misleading statement knowingly made.

A distinction must be made between objective questions, such as those based on measurable facts (earnings, for example) and subjective questions which are more open to perception and personal interpretation (such as, availability, capability and being unemployed). Degree of knowledge is more easily demonstrated for offences involving objective questions since the facts are generally simple and easily determined.

However, subjective questions on the other hand are based to a large extent on interpretation that may vary substantially from one individual to the next. Offences related to questions of this nature require more substantial evidence and the insurance officer, who bears the burden of proof, must be very careful and circumspect before concluding that a false or misleading statement was knowingly made.

It may sometimes be difficult to prove that the person who made the statement had some particular knowledge. The test, however, is what would a reasonable person have done in the same circumstances. If an explanation of his/her actions is plausible, it cannot reasonably be concluded that he or she knew his/her statement to be false or misleading. In such cases, the claimant, employer, or persons acting on their behalf will be given the benefit of the doubt and a penalty will not be imposed.

Before concluding a false or misleading statement was knowingly made, the person must be given the chance to explain why the inaccurate statement was made. Although actually obtaining the explanation is not essential, it is essential that the person be given the opportunity to explain. If the person refuses or fails to give a credible explanation, imposing a penalty would be appropriate.

The factor of time4 is another equally important factor that must be taken into account in determining the person's knowledge. One must determine as accurately as possible the degree of knowledge at the exact time the statement was made. It is for this reason that fact finding is so important. The imposition of a penalty would be inappropriate solely on the basis that the claimant, employer, or persons acting on their behalf should have known that he or she had made a mistake earlier.

  1. The Canadian Law Dictionary;
  2. P. Zysman (A-27-94, CUB 23694);
  3. C. Gates (A-600-94, CUB 25451);
  4. see 18.3.2, "Required Standard of Proof";
     Jurisprudence Index/penalties/late reporting of earnings/.

18.3.0 BURDEN OF PROOF

18.3.1 Onus of Proof
18.3.2 Required Standard of Proof
18.3.3 Establishing the Proof

18.3.0 Burden of Proof

In order to prove that there is an offence, it is necessary to gather all the evidence that demonstrates that a fact is inconsistent with the circumstances of the case. In the context of the penalty provision, it is the Commission that must discharge this responsibility. We will now examine more closely what is meant by the burden of proof, the required standard of proof and how to establish the proof.

18.3.1 Onus of Proof

A definition of the "burden of proof" from a well-known source1 reads as follows:

  • In the law of evidence, the necessity or duty of affirmatively proving a fact or facts in dispute. . . .
    The obligation of a party to establish by evidence a requisite degree of belief concerning a fact in the mind of the trier of fact. . . .     

A fundamental rule we can adopt is that the burden of proof is on the party that makes a substantive allegation concerning something in dispute. For the purposes of the administration of EI benefits, jurisprudence has consistently maintained that the Commission principally bears the weight of the burden of proof and is responsible for proving that the person not only made false or misleading statements, but also made them knowingly.

Once the Commission has completed its fact finding, it will be up to the claimant, employer, or persons acting on their behalf to provide a reasonable explanation to show an honest mistake. If there is no response to the Commission's request for an explanation, a penalty can still be imposed. It is essential, however, that the Commission provides all parties with the opportunity to provide an explanation.

  1. Black's Law Dictionary, 5th edition, 1979.

18.3.2 Required Standard of Proof

The Federal Court of Appeal decided this question and has outlined the path of reasoning to be adopted1. The FCA confirmed again its position in a subsequent decision2. The Court first held that the use of the words "knew to be" does not in itself constitute an offence requiring proof in accordance with the criminal law standard, that is, beyond a reasonable doubt, but rather it prevents penalties from being imposed in respect of mistaken statements innocently made.

The Court considered the required standard of proof and held that it is the ordinary civil law standard of the "balance of probabilities." This expression has been defined3 as follows:

  • . . . evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it. . . . With respect to burden of proof in civil actions, means greater weight of evidence, or evidence which is more credible and convincing to the mind. That which best accords with reason and probability. . . . It is that degree of proof which is more probable than not. 

As can be seen, it is basically a question of good judgment, logic and experience. To determine whether the person made a declaration that he or she knew to be false or misleading and whether a penalty should be imposed, the insurance officer should refer at all times to the concept of probability.

  1. D. McDonald (A-897-90, CUB 18611);
  2. D. Corner (A-18-93, CUB 22165);
  3. Black's Law Dictionary, 5th edition, 1979. 

18.3.3 Establishing the Proof

As we saw earlier, the Commission has the initial responsibility for proving on a balance of probabilities that a false or misleading statement, act or omission has been made, after which it is up to the claimant, employer or persons acting on their behalf to give an explanation for his or her acts or omissions. If the person who made the statement fails to give an explanation, the Commission may then conclude that a false or misleading statement has knowingly been made and, if appropriate, impose a penalty. The amount of the penalty may vary depending on criteria we will consider later. However, the determination of the notion of "knowingly" may be revised by appellate review1.

The Commission can discharge its responsibility by gathering direct evidence (evidence that bears directly on the fact whose proof or rebuttal is wanted) or indirect or circumstantial evidence that might support the allegations. Of course, the best evidence is the claimant's admission to the false or misleading statement. Generally, the Commission has to resort to other methods that will permit it to prove or refute any allegation of fact that is at issue in the investigation. In conducting this research, it must be remembered that any contradiction in the explanations provided by the claimant damages the credibility of his or her evidence.

There are no absolute tests for assessing the credibility of evidence. Its value will be determined by good judgment, logic and experience. For objective questions, direct evidence is usually sufficient and does not have to be supported by other evidence. The opposite is true for subjective questions, in respect of which the claimant's statements might not be sufficient proof of what he or she alleges. Then the claimant's conduct must also be taken into consideration. For example, the claimant's attitude towards accepting employment, the degree of participation in a business, the ability to actually accept a suitable job, etc.

Lack of credibility may be found where the issue is a perception of inherent improbability in the facts presented by the claimant, the employer, or the persons acting on their behalf. However, merely disbelieving the testimony is not a sufficient basis for the conclusion that false or misleading statements were knowingly made and that the Commission has discharged its burden relating to the person's state of mind2.

The impartiality of the source of the evidence is also an important factor for assessing its credibility. Provided that the person has relevant knowledge concerning the situation, evidence from an impartial source is usually more credible than evidence presented by a person connected to the parties or who has something to gain or lose in the resolution of the case.

Evidence can be gathered in several ways, orally or in writing, by mail, telephone, or in person. Although there is no hard and fast rule governing evidence, a written statement signed by the person who is testifying is generally more preferable and more credible. Nevertheless, any form of evidence may have validity. The position that an unsigned statement may be credible and accepted as proof has been consistently maintained by the jurisprudence3. However, any use of the expression "statutory declaration" means that it was signed by the person making that statement; otherwise, it would be considered inadmissible by the Court4.

Although it is a sound and valid principle to give greater weight to an initial statement than to one made after disentitlement has been imposed, this principle must not be applied blindly and automatically. Here again, it is a question of good judgment. If the person is credible and the action appears to be reasonable, then the statement may be accepted.

After gathering all the facts, the insurance officer must take into consideration all the information and explanations produced and decide whether they are reasonable. Over the years this exercise had been the subject of debate and sometimes has been opposed in judicial decisions but the matter was finally resolved by the Federal Court of Appeal5.

  1. R.M. Purcell (A-694-94, CUB 25953);
  2. D. McDonald (A-897-90, CUB 18611); C. Gates (A-600-94, CUB 25451);
  3. W. Mills (A-1873-83, CUB 8750); Jurisprudence Index/Board of Referees/weight of statements/contradictory/; Jurisprudence Index/Availability for work/applicability/proof/; Jurisprudence Index/Board of Referees/weight of statements/not signed/; Jurisprudence Index/Board of Referees/weight of statements/from a Commission agent/;
  4. G. Dhillon (A-444-95, CUB 25943A); s. 41 of the Canada Evidence Act;
  5. see 18.3.2, "Required Standard of Proof."

18.4.0 VIOLATIONS

18.4.1 Application of Violations
18.4.2 Classification of the Violation

18.4.0 Violations

As stated earlier1 there is a violation whenever a notice of violation is issued as a result of the imposition of a sanction, monetary or not, or there is a court judgement against the claimant, the employer, or anyone acting on their behalf.

The date of the violation is the date the notice of violation is issued; a violation does not exist until a notice of violation is issued. Claimants who have accumulated violations in the 260 weeks prior to the establishment of their benefit period or since June 30, 1996 whichever comes first, are subject to the increased entrance requirements sanction. When referring to the 260-week period it is the date the notice of violation is issued that is considered. [Also see National Policy]

[October 2005 ]

  1. see 18.1.2, " A Violation."

18.4.1 Application of Violations

A notice of violation is issued when a sanction, monetary (a penalty) or non-monetary (a warning letter), is imposed pursuant to the provisions imposing penalties on claimants or anyone acting on their behalf, on an employer or a person pretending to be or act for an employer, or a penalty under Part II of the Act because the person perpetrated a fraudulent or misleading act or omission1. The issuance of this notice of violation constitutes a violation.

A notice of violation issued for a warning letter is a violation but not a classified violation2. This means that on its own a warning letter or any number of warning letters will not increase the entrance requirements for a claimant. It will however have the effect of increasing the number of insurable hours required when a classified violation follows the warning letter. The violation will be classified a subsequent violation.

A violation that occurs within 260 weeks of a previous violation is a subsequent violation. It does not matter if the second violation is the result of a notice of violation issued for acts or omissions committed before the first violation.

Once a violation has been characterized as a subsequent violation it remains a subsequent violation for a period of 5 years from the date of its establishment as a subsequent violation, or until the establishment of two subsequent benefit periods, whichever occurs first. Should the previous violation be overruled on appeal, the subsequent violation is re-classified and becomes a first violation.

A violation accumulated in the 260 weeks prior to the establishment of a benefit period or since June 30, 1996, whichever is first, causes the increased entrance requirements sanction provision3 to apply for the next two initial claims for benefit established for that claimant. However, a violation outside the 260 weeks period prior to the establishment of the benefit period, not followed by another violation i.e. a subsequent violation within that 260 week period, has no effect on the entrance requirements.

When a person is found guilty of one or more offences under the Act or Regulations as a result of an act or omission mentioned in the Act4, a notice of violation is issued and constitutes a violation. The same will occur when a person is found guilty under the criminal code as a result of an act or omission relating to the application of the Act.

Every time the Commission imposes a penalty on an insured person and issues a notice of violation, a violation exists for that insured person and is classified depending on the value of violation. A violation can be accumulated by any insured person mentioned under the relevant sections of the Act5, and may include any person acting on behalf of a claimant or employer or a person pretending to be or act for an employer.

When the Commission imposes a monetary penalty or a warning letter on an insured person acting for a claimant and issues a notice of violation to that person who acted on behalf of the claimant, a violation exists for that person. The value of the violation is determined using the total amount of the overpayment, real and estimated, created for the claimant. Third party violations are also classified6.

Although a penalty can be imposed on a corporation7, it cannot be followed by a notice of violation because only insured persons can accumulate violations. When a sanction is imposed on the officer, director or agent of the corporation8, a notice of violation is issued provided they are insurable persons. These persons accumulate a violation classified on the basis of the value of the violation. [Also see National Policy]

[October 2005 ]

  1. EIA 38; EIA 39; EIA 41.1; EIA 65.1;
  2. see 18.4.2, "Classification of the Violation";
  3. EIA 7.1;
  4. EIA 135; EIA 136;
  5. EIA 38; EIA 39; EIA 41.1; EIA 65.1;
  6. see 18.4.2, "Classification of the Violation";
  7. EIA 39;
  8. EIA 39; EIA 41.1.

18.4.2 Classification of the Violation

The value of the violation determines its classification and consequently the increase on the entrance requirements. The value of the violation is the amount of the overpayment of benefits resulting from the acts or omissions plus 50 percent of the benefit rate multiplied by the number of weeks of entitlement remaining in the claimant's benefit period if the claimant is disqualified or disentitled, or if a recalculation occurs as a result of the act or omission1. The value of the violation does not include the amount of penalty.

A violation2 will be classified as minor, serious or very serious:

  • minor violation-when the value of the violation is less than $1000.00, the violation is classified as minor. When a notice of violation is issued because a penalty was imposed and the overpayment is nil, the violation is classified as a minor violation.
  • serious violation-when the value of the violation is $1000.00 or more but less than $5000.00, the violation is classified as serious.
  • very serious violation-when the value of the violation is $5000.00 or more, the violation is classified as very serious.

A violation that occurs within 260 weeks of a previous violation is a subsequent violation.

  1. EIA 7.1(6); EIR 13;
  2. EIA 7.1(5).

18.5.0 SANCTIONS

18.5.1 The Warning Letter–A Non-Monetary Sanction
18.5.2 The Penalty–A Monetary Sanction

18.5.2.1 Penalty Amounts–Claimants
18.5.2.2 Penalty Amounts–Employers
18.5.2.3 Penalty Amounts–Situations of Undeclared Earnings
18.5.2.4 Penalty Amounts–In Respect of Receipt of Financial Assistance Under Employment Benefits (Part II)

18.5.3 The Increased Entrance Requirements Sanction
18.5.4 Prosecution

18.5.0 Sanctions

In order to deter and prevent abuse and fraud, the Commission may resort to sanctions such as penalties that are monetary in nature, or warning letters a non-monetary sanction or prosecution. The imposition of a sanction gives rise to a violation1 that in turn causes the application of the increased entrance requirement sanction2. Sanctions are generally used in a progressive manner, taking into account the gravity of the offence and recidivism and are intended to take away any financial advantage that may have been derived from the false statement, act or omission and to discourage subsequent abuse. [Also see National Policy]

[October 2005]

  1. see 18.4.0, "Violations";
  2. see 18.5.3, "The Increased Entrance Requirements Sanction."


18.5.1 The Warning Letter–A Non-Monetary Sanction

The warning letter is a non-monetary sanction, it is considered to be a penalty, and may give rise to application of the increased entrance requirement sanction. The warning letter may be the preferred sanction when there are exceptional circumstances surrounding the statements made.

A warning letter is also appropriate when the offence occurred beyond the 36-month period during which a penalty (a monetary sanction) may be imposed. However the warning letter cannot be issued beyond 72 months of the date of event1.

The fact that a warning letter was issued is particularly significant with respect to recidivism2 and the decision to issue a warning letter is subject to appeal.

The fact that an offence did not result in an actual or possible overpayment does not mean that the warning letter is the only recourse open to the Commission. It may be that an overpayment was only avoided due to the Commission's vigilance or rapid intervention. In light of the circumstances and of the type of offence, imposing a penalty may sometimes be warranted even in the absence of an overpayment. [Also see National Policy]

[October 2005]

  1. EIA 41.1; see 18.5.2, "The Penalty–A Monetary Sanction";
  2. see 18.4.0, "Violations."

18.5.2 The Penalty–A Monetary Sanction

The penalty is a monetary sanction that may in some cases be more effective than prosecution. However a monetary penalty can only be imposed during a very specific period, that is within the thirty-six month1 period after the date on which the offence was committed. Even though a monetary penalty cannot be imposed after thirty-six months, the time frame for rendering a decision, such as an allocation of earnings, is seventy-two months where it is determined that statements were falsely made.

It is because of the serious nature of such a measure that parameters exist in order to have penalty amounts that are commensurate with the recidivism rate and the seriousness of the offence and in order to ensure a certain degree of uniformity on the national scale. The Act2 provides that the Commission may impose a penalty in respect of each false or misleading statement3. Maximum penalty amounts have been set in respect of claimants4, employers5, those receiving financial assistance under employment measures6 and situations of undeclared earnings7. To increase its deterrent effect, the Commission progressively increases the amount of the penalty on the basis of the recidivism factor. In these situations, a penalty may be imposed for each week in the claimant’s period of eligibility for maternity and parental benefits, and apprenticeship courses or apprenticeship programs authorized under Section 25(1)(a) of the Act 8.

The person has two options: either take advantage of the disclosure policy to avoid having a penalty imposed, or take the risk of disclosing nothing in the hope that the Commission will not discover the other offences. The consequences of choosing not to disclose the information may result in more severe penalties. However, as in any case of recidivism, the claimant may contest the notice and its consequence on the determination.

We cannot over emphasize the importance that the insurance officer examine and evaluate carefully the reasons that led to the claimant committing the offence. This is a fundamental exercise that the officer must take on each and every time he or she is called upon to decide on an offence, whether it is the first, second or any subsequent offence.

It is the experience that we have acquired thus far that enables us to evaluate whether extenuating circumstances are present in any offence. Without limiting the possible circumstances that could reduce the amount of the penalty or even result in no penalty at all, these could include lack of education, language difficulties, misunderstanding of the legislative provisions, a claimant under emotional or financial stress due to personal health problems or family illness, etc.

Agents must not consider only the above-noted extenuating circumstances, but in fact take into account all the circumstances that, in their view, may have influenced the actions of the person who is guilty of an offence. Agents thus have more flexibility in applying the policy on penalties.

As can be seen, circumstances that may influence the seriousness of an offence are numerous and vary considerably from one person to another. Furthermore, mitigating circumstances are not only considered on first offences and repeat offenders cannot automatically be excluded from consideration of a reduced penalty by reason of mitigating circumstances. In these cases, any such consideration must be weighed against the fact that the claimant had been previously warned. [Also see National Policy]

[October 2005]
[November 2005]

  1. EIA 40; EIA 65.1;
  2. EIA 38;
  3. S. Smith (A-330-93, CUB 22527);
  4. EIA 38(2);
  5. EIA 39;
  6. EIA 65.1;
  7. EIA 19(3);
  8. EIR 26.1
18.5.2.1 Penalty Amounts–Claimants

Care should be taken not to mechanically apply these percentages1. They may be appropriate if no explanation is given for the offence but any mitigating circumstances that are provided by the claimant or that are evident on the file must be taken into consideration. All factors existing before or at the time a penalty is imposed that may affect its appropriateness are relevant to determining its amount2. In such circumstances the penalty rate will be lower than the ceilings.

In addition, the policy on penalties in cases involving the use of a false record of employment (ROE) is more specific. The policy of course applies not only to those who submit false ROEs but also to those who do not submit all of their ROEs in order to receive a higher rate of benefit. Since the legal basis is essentially the same, a similar approach may be used. For the purpose of the application of the policy, a false ROE is one on which the hours and/or earnings are falsified to get a benefit period established and/or a higher benefit rate.

In such cases, agents may impose a penalty for each of the claimant's statements completed during the benefit period. Clearly, the decision must take into account the entitlement principles set out in this chapter, any mitigating circumstances and the possibility of a repeat offence.

Finally, it cannot be overemphasized that all extenuating circumstances must be fully documented on the file. This information is essential for providing explanations to the claimant and, especially, for the purposes of an appeal. Although the Commission has the discretion to impose a penalty, it still has to demonstrate that it properly exercised its discretion in light of all relevant considerations. [Also see National Policy]

[October 2005]

  1. Jurisprudence Index/penalties/Commission policy/;
  2. L. Morin (A-681-96, CUB 28068A);
18.5.2.2 Penalty Amounts–Employers

Employers are subject to penalties when the offence involves the provision of information about any matter that involves the fulfillment of conditions for the qualification and entitlement of receiving or continuing to receive benefits1.

There are three alternatives when calculating the amount of employer penalties:

up to 9 times the maximum weekly benefit rate in effect when the penalty is imposed on an employer as a result of an act or omission other than those listed in (a) or (b) below; or not more than the greater of:

  1. up to $12,000 where the employer provides a false record of employment to an employee or sells one to any person; or
  2. an employer penalty equal to the amount of the total of all the claimant penalties where one or more persons have received claimant penalties based on the false
    or misleading information provided by the employer.

EIA 39;

18.5.2.3 Penalty Amounts–Situations of Undeclared Earnings
[See National Policy]

[October 2005]

18.5.2.4   Penalty Amounts–In Respect of Receipt of Financial Assistance Under Employment Benefits (Part II)

Under the Act, the Commission may impose a penalty1 for each act or omission of not more than the financial assistance provided, on a person for knowingly making false or misleading representations, including non-disclosure in relation to the application or request for assistance under employment benefits (Part II), or for without good cause failing to attend, carry out or complete a course, program or activity for which the assistance was provided or was expelled from it. For this penalty to apply2, financial assistance3 has to have been provided to the participant.

The maximum penalty for each act or omission may be equal to the cost of the course plus an amount equal to any other expenditure relating to the course. A liability to return the amount of the penalty is established and can be collected by deduction from any future benefits that may become payable. This could be in addition to any disqualification that may be imposed pursuant to the Act.

However, the Human Resources Investment Branch (HRIB) advises that the policy on how and when these penalties may be applied has not yet been developed and penalties should not be imposed pending its development.

  1. EIA 65.1;
  2. EIA 65.1;
  3. EIA 61. 

18.5.3 The Increased Entrance Requirements Sanction

Under the increased entrance requirements sanction, a claimant who has had a classified violation1 in the 260 weeks prior to the establishment of his or her benefit period or June 30, 1996, whichever is earlier, requires additional insured hours to qualify for benefits. The number of hours required to qualify as a result of the application of the increased entrance requirements sanction are set in the legislation and are determined by the seriousness of the offence and whether the claimant is a new entrant or re-entrant2 or not3. The maximum entrance requirements will not exceed 1,400 hours.

  1. see 18.4.2, "Classification of the Violation";
  2. EIA 7.1(2);
  3. EIA 7.1(1).

18.5.4 Prosecution

Prosecution is of course the severest and the greatest deterrent of abuse and fraud. However, just as with penalties, there are legislated time limits. A prosecution may be commenced at any time within five years after the Commission becomes aware of the subject-matter of the prosecution1.

By definition, the laying of charges constitutes the first stage of a prosecution and, for the purposes of the penalty provisions, is considered a prosecution initiated against the claimant. Consequently, if this process is initiated and later withdrawn, an administrative penalty cannot be imposed2.

However, where the option of prosecution is withdrawn or rejected by Investigation and Control before the laying of charges, the Commission may consider the possibility of imposing a penalty. The reason for not prosecuting will be recorded on the file by the investigation officer.

For certain offenses3 prosecution is the only possible sanction and no penalty may be imposed for a false or misleading statement after a prosecution has been initiated in respect of that offence4. The same is true of a prosecution if a penalty has already been imposed for the same offence5. The responsibility or deciding whether or not to prosecute rests with the Investigation and Control Branch6.

[October 2003]

  1. EIA 125(4);
  2. EIA 40; 
  3. EIA 135; 
  4. EIA 40; 
  5. EIA 135; 

6. see Investigation and Control Manual (C-3-4).

18.6.0 DISCLOSURE POLICY

The Commission has a policy to encourage a person guilty of abusing or defrauding the Employment Insurance Program to disclose the offences for which he or she is responsible. This is the disclosure policy.

The admission, however, must be authentic in that it must not be related in any way to an investigation already under way. In addition, the facts on the file must confirm that the offence would have led to a penalty or prosecution had there been no disclosure policy.

The person who takes advantage of this policy will not face a monetary penalty or prosecution under the Act and Regulations. Furthermore, the claimant may take advantage of this policy as often as he or she wants as long as the criteria of the policy are met.

In the event the Investigation and Control Officer and the Insurance Officer do not agree on the recommendation to accept or refuse a disclosure and the disagreement cannot be resolved at the first level (Supervisors Insurance and Investigation and Control), the case should be reviewed by the Service Canada Centre Manager before referral to Regional Office. [Also see National Policy]

[October 2005 ]

18.7.0 APPEALS

The Employment Insurance Act permits a person to appeal a decision by the Commission to impose a sanction1. Due to the seriousness of a sanction, the preparation of the appeal file is therefore of the utmost importance.

The appeal submission should include all the documents for regular appeals in addition to all relevant claimant report forms, as well as an explanation of the factors which are considered to support imposing the sanction, whether or not there are mitigating circumstances, and the method of calculation that was used to determine the penalty amount. As we saw earlier, the burden of proof is on the Commission and the latter has to prove that it exercised its discretion in a judicial manner.

On the other hand, in accordance with the discretionary power granted by the Act, the Commission has the sole authority to impose a penalty. However, the determination of the concept of "knowingly" may be revised by appellate review2. Courts and tribunals can modify the amount of the penalty3. Before proceeding however, they must review whether the Commission has exercised its discretionary power in a judicial manner4. The criteria by which the exercise of a statutory power must be judged have been defined in many authoritative cases and it is well stated that if the discretion has been exercised, bona fide, uninfluenced by irrelevant considerations and not arbitrarily or illegally, no court is entitled to interfere even if the Court, had the discretion been theirs, might have exercised it otherwise.

  1. EIA 114;
  2. R.M. Purcell (A-694-94, CUB 25953);
  3. C. Dunham (A-708-95, CUB 29211);
  4. E. Chartier (A-42-90, CUB 17581); D. Martin (A-1001-92, CUB 21226); J.D. Plourde (A-80-90, CUB 17776).

18.8.0 TIME LIMITS FOR RECONSIDERATION

The Commission has a period of thirty-six months1 after benefit has been paid or would have been payable to reconsider any claim made in respect thereof. The period is extended to seventy-two months2 where, in the opinion of the Commission, a false or misleading statement or representation has been made in connection with a claim for benefit. It is worth noting here that the Commission does not need to prove that the false or misleading statement or representation was made knowingly.

It is used only at the discretion of the agent and only in those cases where the Commission would be negligent in overlooking it. It is not the intent of the Commission to place the claimant in a reconsideration position indefinitely and guidelines have been defined. The Commission will reconsider3 only in the following situations: underpayment of benefits; contrary to the structure of the Act; benefits paid in error and claimant failed to come forward and, false or misleading statement/misrepresentation attributable to the claimant4.

  1. EIA 52(1)(2)(a)(b);
  2. EIA 52(5);
  3. EIA 52;
  4. see chapter 17, "Reconsideration, Amendment of a Decision, and Error Correction".

18.9.0 RECOVERY

Action for recovery is taken where a claim is reconsidered and an overpayment is the result. It also applies where a penalty was imposed for a statement that resulted either in an overpayment or not.

The limitation period1 to recover overpayments is seventy-two months whether or not the amount to be recovered results from a false or misleading statement. Furthermore, the 72-month counter stops while a decision is under appeal. Once the appeal process has ended, if the overpayment is still recoverable, the counter will commence without taking into account the time that elapsed during the appeal process2.

  1. EIA 47(3);
  2. EIA 47(4).

18.10.0 WRITE-OFF

The Regulations1 provides the Commission with the discretionary authority to write off debts under certain circumstances and conditions. If the overpayment resulted from a false or misleading statement, whether or not knowingly made certain regulatory2 provisions governing write-off cannot be applied3.

  1. EIR 56;
  2. EIR 56;
  3. see chapter 20, "Write-Off."

APPENDIX TO CHAPTER 18

NATIONAL POLICY ON FALSE OR MISLEADING STATEMENTS MADE KNOWINGLY

1. INTRODUCTION

The Commission is responsible for the administration of the Employment Insurance Act (EIA) and Employment Insurance Regulations (EIR). In that respect, it must ensure that the Employment Insurance (EI) program is not subject to any abuse and take appropriate measures to deter any abuse of the program. Under the EIA the Commission has the discretionary authority to impose penalties or to prosecute claimants, employers or other parties who receive or try to receive benefits by knowingly making misrepresentations.

The imposition of a penalty or prosecution is a deterrent measure intended to protect the integrity of the EI program and should not be seen as a punishment. The Commission must ensure the application of these measures is commensurate with the seriousness of the misrepresentation made by the person and take into consideration all mitigating factors present in the case. The impact of the deterrent measure on the claimant and employer community must be considered as well as jurisprudence arising from previous challenges to similar penalties.

Under the National policy on levels of adjudications, decisions to impose a penalty are Level II decisions, which are rendered by Agent II, except where this decision making power was delegated to the Investigations clerks.

Effective date

This new policy must be applied to any decisions made 1 June 2005 or later.

2. OBJECTIVE

This document introduces policy guidelines and procedures to reflect the Commission’s new approach in deterrent measures, such as the calculation of a claimant penalty amount based on the overpayment (O/P) amount, the determination of a repetitive misrepresentation and voluntary disclosure. It should be noted that while this policy makes reference to prosecutions, its main focus is on deterrent measures.

3. LEGISLATIVE POLICY

The EIA gives the Commission the authority to impose a penalty, issue a warning letter or prosecute anyone who abuses or tries to abuse the EI program. The Commission determines which one of these options is applied. For instance, if the Commission decides to prosecute, it cannot also impose a penalty or issue a warning letter for the same act or omission; conversely, if the decision is to impose a monetary or non-monetary penalty, also referred as warning letter, there can be no prosecution for the same act or omission.

Each of these deterrent measures, except for the warning letter, triggers a violation that is classified as minor, serious, very serious or subsequent. A subsequent violation is one imposed within 260 weeks following the notice of a prior violation. 

Definition of misrepresentation   

The EIA states the acts or omissions considered to be misrepresentations which may result in a penalty or a prosecution.

These occur when a person:

  • in relation to a claim for benefits, made a representation that the person knew was false or misleading;
  • was required under the EIA or the EIR to provide information, provided information or made a representation that the person knew was false or misleading;
  • made a claim or declaration that the person knew was false or misleading because of the non-disclosure of facts;
  • was the payee of a special warrant knowingly negotiated or attempted to negotiate it for benefits to which the claimant was not entitled;
  • knowingly failed to return a special warrant or the amount of the warrant or any excess amount, as required by Section 44;
  • imported or exported a document issued by the Commission, or had it imported or exported, for the purpose of defrauding or deceiving the Commission;
  • participated in, assented to or acquiesced in an act or omission mentioned in the previous paragraphs.

The EIA specifies the maximum amount of a penalty which can be imposed on claimants, employers or other persons and limits the time period in which a penalty can be imposed.

Refer to Sections 7.1, 38, 39, 40, 41.1 and 135 of the EIA.

4. POLICY RATIONALE

An in-depth review of the policy on administrative penalties was requested by the Federal Court of Appeal, the Umpires, the Boards of Referees, Commissioners, and various divisions at National and Regional Headquarters.

The Courts in particular, often felt the penalties imposed were too harsh and not commensurate with the seriousness of the act or omission that triggered the penalty. They suggested consideration be given to the claimant’s circumstances when the misrepresentation was knowingly made as well as those present at the time the decision is rendered. The Courts went on to say that the issue of hardship and ability to pay must be a factor when fixing or reviewing a penalty, however, they put the onus on the person to ensure the Commission has the relevant facts about his or her ability to pay before the penalty is set.

Regional Headquarters requested changes to support operational needs and ensure consistency in application across the country.

The Commission took the opportunity of this review to recommend employer penalties also be addressed so as to reflect the concept of ascending levels of penalty for repetitive misrepresentation.

Consequently, the new policy on misrepresentations made knowingly involves more than just the manner used to calculate the penalty amount. It takes into account the operational processes the Commission has in place and modifications made to the EIA in the past ten years. Changes in our policies, such as charging interest on misrepresentative debts and penalties and imposing violations have affected claimants and employers.

This new National Policy on False or Misleading Statements Made Knowingly addresses the concerns expressed by the different groups. It strikes a balance between the seriousness of a misrepresentation and the corresponding penalty and maintains fairness and consideration to claimants and employers while deterring abuse of the EI program.

It is the policy of the Department that prosecutions under the EI Act and the Criminal Code of Canada be used only in extreme cases (recidivism and criminal offences); and in an additional number of cases that may serve as examples to meet specific deterrence objectives identified in regional plans.

Investigation and Control (I&C) is responsible for national prosecution procedures.

5. DEFINITIONS

Agents or Commission representatives   

All Commission employees who are in contact with the public or allowed to access a file and make recommendations.

Misrepresentation

This term is used throughout this policy instead of act, omission, false statement or information, misleading information or representation or any other synonymous term, unless there is a reason to refer to a specific term.

O/P

For the purpose of this policy, an overpayment (O/P) is defined as the net amount of all overpayments and underpayments arising from misrepresentations knowingly made. The O/P amount is a factor in the calculation of the penalty amount and is used to establish the value of a violation.

Disclosure

An admission by a claimant, an employer or a third party that he or she knowingly made a misrepresentation with respect to EI benefits.

Judicial manner

Relates to the application of a discretionary power. If it can be established that a decision-maker acted in bad faith or for an improper purpose or motive, or took into account an irrelevant factor, or ignored a relevant factor, or acted in a discriminatory manner, then he or she has not acted in a judicial manner. Any decision which flows from the improper exercise of this discretionary power will be set aside1.

Mitigating circumstances

Those which lessen the seriousness of a misrepresentation due to unusual or out of the ordinary events existing before or at the time the misrepresentation was knowingly made, or at the time the Commission renders the decision2.

Repetitive misrepresentation

When a second or any additional misrepresentation occurs after a person was notified that a penalty was imposed, a warning letter was issued or the person was found guilty following a prosecution.

1. Purcell (A-694-94), Dunham (A-708-95)
2. Morin (A-681-96), McLean (A-549-99)

6. PENALTY POLICY GUIDELINES

6.1 CALCULATING THE PENALTY AMOUNT FOR THE CLAIMANT

In several decisions3 the Federal Court of Appeal has supported, the Commission’s former policy of establishing guidelines to ensure a certain level of consistency and to avoid capriciousness in matters involving the imposition of penalties. The Court has clearly indicated that there was nothing from which it could be determined that this policy was more restrictive than a number of others designed to guide and not to compel. The purpose of the policy is to ensure a degree of consistency in the decisions being made. Nor is there anything to support a belief that the policy suggested parameters that are inconsistent with those imposed by the Act or Regulations. On the other hand, the Court also stated that the Commission should exercise its discretion in a judicial manner, meaning the penalty amounts (percentages) should not be applied mechanically.

The method of calculating the penalty amount in this new policy respects the parameters imposed by the Act and maintains a progressive percentage to deal with first, second, and third or more misrepresentations. The penalty amount is based on 50%, 100% or 150% of the net O/P amount.

For instance, a percentage of up to 50% of the net O/P is used to calculate the penalty amount for a first misrepresentation.

When dealing with a repetitive misrepresentation, the penalty amount for a second misrepresentation is calculated on a percentage that will go up to 100% of the net O/P.

For a third or more misrepresentation, the calculation of the penalty amount is based on a percentage of up to 150% of the net O/P.

This method of calculation allows for the determination of penalty amounts that are more commensurate with the amount of the O/P arising from a misrepresentation knowingly made.

This method also respects the legislative limits found in the EIA with respect to the maximum penalty that may be set for each misrepresentation knowingly made.

It is important to stress that the calculation of the penalty amount is based on a percentage that may go up to these limits but these limits are not used in every case. Hence, when calculating the amount of a penalty an agent must take into consideration all mitigating circumstances that may exist.

There may be the odd situation where a claimant was disentitled or disqualified from receiving benefits, before any benefits was paid. In such a situation, the 2nd level adjudicator will send a warning letter,no monetary penalty will be imposed.

Penalty less than $20

Furthermore, whenever the result of the calculation of the penalty results in a penalty of less than $20, including situations where the penalty amount is reduced to less than $20, a warning letter will be issued instead of a monetary penalty.

BPNE

The penalty is not calculated in this manner in situations where the benefit period was not established (BPNE). There are two possible scenarios, either the claim was never established and there was no O/P, or the claim was established but later voided and there exist an O/P.

In situation such as these, a penalty pursuant to paragraph 38(2) (c ) of the EIA must be imposed. This paragraph addresses situations where a penalty may be warranted but no benefit period was established.

According to this paragraph, a penalty can be imposed up to three times the maximum rate of weekly benefits in effect when the misrepresentation occurred. Therefore, in order to maintain the progressive penalty approach, a penalty of once, twice or three times the maximum weekly benefit rate in effect when the misrepresentation occurred could be imposed, for each misrepresentation.

In a case where a claim was not established and there was no O/P, there would be only two misrepresentations, that is, the false Record of employment (ROE) and the application for benefits. The maximum penalty for a first level misrepresentation would be 1 X $413 X 2 misrepresentations.

However, in a case where a benefit period (BP) was established but later voided and there is an O/P because the claimant was able to cash some warrants, there would be a misrepresentation for each warrant cashed in addition to the false ROE and the application for benefits. The penalty would be calculated pursuant to paragraph 38(2) (c) of the Act. Once the claim is voided and considered as not having been established, there is no longer a claimant’s weekly rate of benefit which exists to calculate a penalty pursuant to paragraph 38 (2) (a ).

Thus, if a claimant cashed 10 warrants, there would be one misrepresentation for each warrant plus one for the false ROE and one for the application for benefits. The maximum penalty for a first level misrepresentation would be calculated as follows: 1 X $413 X 12 misrepresentations.

3. Dunham (A-708-95), Hudon (A-34-03), Gagnon (A-52-04).

6.2 ADJUDICATION : A FOUR STEP PROCESS

There are four steps that must be completed before the final decision to apply the appropriate sanction is reached and the following questions are considered:

  • Was there a false or misleading representation?
  • Was the false or misleading representation knowingly made?
  • How serious was the act or omission and are there any mitigating circumstances?
  • What is the appropriate administrative penalty (monetary or warning letter)?

In the first step, the Commission determines whether there is evidence of a false or misleading representation. This evidence may include the provision of inaccurate information or the withholding of necessary information in relation to a claim for benefit.

In the second step, the Commission determines whether the false or misleading representation was knowingly made. Jurisprudence has provided standards by which the facts and statements made by the claimant, employer, or a party acting for either can be reviewed and a decision made.

In the third step, if it has been found that a false or misleading representation was knowingly made, the Commission determines the seriousness of the act or omission and whether any mitigating circumstances exist.

In the fourth step, the appropriate sanction is imposed; that is, a monetary penalty or the issuance of a warning letter.

It is important that the adjudicator keep the steps of this process separate. The fact there is evidence of a false or misleading representation does not automatically mean that it was knowingly made. The test of knowingly made requires a series of questions, established by jurisprudence, must be answered before a decision on this matter can be made. This step must not be confused with the third step, the determination of the seriousness of an act or omission, or the presence of mitigating circumstances. An act or omission of less gravity or the presence of mitigating circumstances can never be the deciding factor as to whether the false or misleading representation was knowingly made. Finally, it is in the last stage of this process that the adjudicator considers all the information gathered from the first three steps to determine the appropriate sanction that will act as an effective deterrent to future abuse.

6.3 MITIGATING CIRCUMSTANCES

Once the Commission has established that a person knowingly made a misrepresentation, it must consider the seriousness of the misrepresentation and whether there are any mitigating circumstances that could reduce the penalty amount. A proper determination of the seriousness of a misrepresentation and the existence of mitigating circumstances constitutes the cornerstone of the Commission's discretionary authority to establish the amount of a penalty.

It does not matter whether it is a first, second, or third or further misrepresentation: the Commission must always determine if mitigating circumstances do exist and take those circumstances into consideration when setting the penalty.

The Commission must try to contact the person who knowingly made the misrepresentation and allow that person to provide an explanation regarding the reasons for discrepancy and/or the misrepresentation. When a Request for clarification of employment information (INS 5098), has been sent to the claimant, this obligation is met. Where possible, the Commission should advise the person of the consequences of failing to provide a reasonable explanation for the discrepancy and/or the misrepresentation. Furthermore, the 2nd level adjudicator must also review all documents (including the INS 5098), facts or information on file that could be related to the misrepresentation to be able to determine whether or not mitigating circumstances can be taken into consideration. The existence of mitigating circumstances must never be assumed, there must be a clear indication that such circumstances do exist.

Mitigating circumstances are facts or actions that do not condone the misrepresentation knowingly made but explains the actions and require some degree of leniency in the calculation of the penalty amount. The mitigating circumstances that need to be considered usually relate to the time period the misrepresentation was knowingly made and they may also exist up to and including the time of review for decision making. Additionally, they may only arise at the time a decision is being made or even after that decision has been reached.

Factors such as lack of education, language difficulties, emotional or financial stress due to personal health problems or family illness, coercion by a third party, genuine regret for having knowingly made a misrepresentation, O/P already reimbursed, alcohol or drug addiction, gambling problems, financial hardship, etc., can all be considered as mitigating circumstances.

There are many situations or factors that may be considered as mitigating circumstances. Here are some additional examples of the factors or situations which may be considered as mitigating circumstances. When looking at this list, it must be kept in mind that this is not an exhaustive list. Each case must be considered in relation to the claimant’s situation or factors which are linked to a claimant’s particular context.

6.3.1. FACTORS

Illness

  • Illness of family member;
  • Medical circumstances of the claimant;
  • Claimant’s medical condition;
  • State of mental illness or depression;
  • Stress on the claimant.

Financial

  • Actions of spouse left family in precarious financial situation;
  • Claimant’s family income is below the poverty line;
  • Claimant’s other debt obligations;
  • Consequences of repayment for claimant & family;
  • Claimant’s ability to pay;
  • Children of claimant financially unable to attend college;
  • Penalty must reflect claimant’s socio-economic status.

Emotional

  • Death of a close friend;
  • Death of claimant’s spouse;
  • Suicide of a close friend;
  • Marital problem.

Addiction

  • Addiction to gambling;
  • Addiction to drugs;
  • Alcoholism.

Other

  • Honesty and remorse of claimant;
  • Claimant’s plans to marry failed;
  • Claimant is a new immigrant, unfamiliar with system;
  • New facts not available when penalty imposed;
  • Physical and mental abuse by one’s spouse;
  • Single parent family.
6.3.2 SITUATIONS
  1. The claimant demonstrates an urgent need for money due to personal or family circumstances at the time of the misrepresentation.
  2. The under reported earnings are only marginally above the allowable earnings and the O/P of benefits is minimal.
  3. The claimant fails to take reasonable care and does not accurately fill out multiple claimant declarations completed at the same time.
  4. Although claimant under reported moneys received, the employer’s pay period was not on a calendar week basis, making declaration of earnings difficult to compute.
  5. The claimant's unreported earnings are for one claimant’s report period during a longer period of correctly reported earnings.
  6. The claimant was required to estimate employment earnings when completing claimant's reports (CR) and under reported the amount earned due to his or her own negligence and on many occasions.
  7. The claimant reported net versus gross earnings and this is not the first time it occurs, or he or she did it for numerous CRs.
  8. The claimant failed to report a single week of employment and there is no prior misrepresentation.
  9. The claimant’s declarations were completed a long time after the period covered making accurate reporting more difficult, although not unreasonably so.
  10. The claimant does not report the first days or first week of a new job either on the appropriate or a subsequent declaration but ceases to make declarations or declares employment for subsequent weeks.
  11. The claimant failed to declare earnings to offset a cash shortage caused by a lengthy delay on the part of Human Resources and Skills Development Canada (HRSDC) in issuing benefits.
  12. The claimant, acting on the advice of a third party whom is not familiar with the EI program, made a false statement which had he or she contacted the Commission would not have occurred.
  13. The claimant reported one week of employment on a two week CR, on more than one occasion, although both weeks were worked.
  14. The claimant only reported those earnings over the allowable amount (as long as not a repeated pattern).
  15. The file reveals prior problems in completing declarations although such misunderstanding does not justify the false statements completely.

NOTE

It is important to stress that the above noted examples are aimed at providing an overview of situations or factors that might be considered as mitigating circumstances and are not intended to be all inclusive or exactly as presented.

Situations where the sole reason for misrepresentation is not a mitigating circumstance

There are also situations where the reason provided by a person for having knowingly made a misrepresentation cannot be considered as mitigating circumstances.

For instance, after conducting fact-finding with the claimant, and having considered all information on file, if the claimant states that the sole reason for his or her misrepresentation is because of one of the following, then these are not to be considered as mitigating circumstances :

  1. A person did not report all his or her earnings because he or she wanted to go on a trip.
  2. A person did not report all his or her earnings because he or she wanted to buy a new car.
  3. A person did not report that he or she had gone back to work as he or she had a debt to pay and did not wish to make a bank loan.

6.4 CAP ON PENALTY AMOUNT

In order to address concerns expressed by the Courts in particular the fact that penalty amounts sometimes appear to be unreasonable, the maximum penalty amount per benefit period (BP) will be capped by policy.

Penalty cap per BP

The penalty cap per BP also has a progressive approach and takes into consideration first, second and third or further misrepresentations. The penalty cap per BP for the first misrepresentation is $5,000; for a second misrepresentation $8,000; and for a third or more misrepresentation the cap rises to $10,000.

The penalty can be any amount up to the specified cap for each BP, based on the individual circumstances of the case. Ensuring that the penalty amount does not exceed the cap is the last step in the penalty calculation.

In most instances, the penalty cap per benefit period (BP) will be determined only once. However, should the Commission detect a repetitive misrepresentation on the same BP, the penalty cap will go up to the next cap but it must not be added to the previous penalty cap. This will be explained in more detail in the next section.

6.5 REPETITIVE MISREPRESENTATION

A misrepresentation is considered a repetitive misrepresentation if:

  • it occurs after a person was previously notified that a penalty was imposed, a warning letter was sent, or a person was found guilty following prosecution of a prior misrepresentation; and
  • the previous notification was issued within a period of 6 years prior to the notification of the decision corresponding to the current misrepresentation.

The 6 years period is linked to the extended time to reconsider a claim found in the EIA. For ease of understanding and to avoid any misinterpretation, it is important to clearly explain this concept and its impact on the penalty calculation method as well as the penalty limit per benefit period (BP).

Example 1

During the course of a BP that ran from December 21, 2003 to December 18, 2004, the Commission conducted two investigations. The first investigation was conducted on September 2, 2004. The investigation revealed that the person knowingly made misrepresentations on his or her CRs for a period of time stretching from March 1, 2004 to July 2, 2004. On October 4, 2004, the person was informed that a penalty was imposed. On December 5th, 2004, a second investigation showed that there was also a misrepresentation for the weeks of February 1, 2004 to February 21, 2004. This misrepresentation is not considered as a repetitive misrepresentation as it occurred prior to the first penalty notice. Therefore, it does not meet the definition of a repetitive misrepresentation and will be treated as a first misrepresentation.

In this example, because the misrepresentations are considered to be at the first misrepresentation level the penalty calculation method would be up to 50% of the net O/P for each misrepresentation to a maximum of $5,000 per BP.

Example 2

Using the same scenario as example 1, a second investigation conducted on December 5th, 2004, shows a misrepresentation was knowingly made during the weeks from November 7, 2004 to November 27, 2004. The fact that this misrepresentation occurred after the person was notified of a penalty on October 4, 2004, means the second misrepresentation meets the definition of a repetitive misrepresentation. The penalty calculation method would now allow the Commission to determine the amount of the penalty by using up to 100% of the net O/P rather than up to 50% of the net O/P and the penalty cap per BP would be raised from $5,000 to $8,000.

It is important to stress that the above percentages and caps are the maximum amounts that can be imposed if there are no mitigating circumstances. However, the Commission must attempt to determine and document if there were or are mitigating circumstances prior to determining the penalty amount to be imposed.

6.6 THIRD PARTY MISREPRESENTATION

There are situations identified under the EIR where benefits can be paid directly to a person acting on the claimant’s behalf, or to a legal representative in the case of a deceased person (the executor or the administrator of the estate). These benefits are issued in the name of the representative.

In these situations, there is a formal signed acknowledgement of responsibility for any actions taken on the claim by the representative and the representative is held responsible for any O/P and any misrepresentation and is subject to prosecution, penalty or a warning letter.

Claimants can also have another person handle matters on their claim without the above noted formal signed acknowledgement. In these situations, EI benefits continue to be paid directly to the claimant, and the claimant is usually liable for actions on the claim.

This commonly occurs with claimants who have some literacy problems or language difficulty due to lack of education or their country of origin or claimants who allow someone such as spouses, relatives or friends, to complete their CR Automated telephone reporting service (ATRS) and Internet reporting service (IRS).

This kind of informal authorization can give rise to one of two scenarios should there be misrepresentation. In the first scenario, the claimant consents to a declaration on his or her behalf of information that he or she knew to be false. Where the facts support collusion both the claimant and the individual acting on his or her behalf are subject to prosecution, penalty or a warning letter. The claimant is responsible for the O/P.

The claimant in the second scenario, while agreeing that the person was acting on his or her behalf, claims to be unaware of any misrepresentation. When this is confirmed by the investigation, the third party is held responsible for the O/P and the misrepresentation and is subject to prosecution, penalty or a warning letter. He or she is considered to have made a claim for benefit.

Finally, there are those situations where there is no agreement between the claimant and the third party in which case the third party is considered to have made a claim for benefit on his or her own account using someone else’s information. The definition of a claimant under the EIA is a person who applies or has applied for benefits.

This definition of a claimant does not require that a BP be established for that person in order to be considered a claimant. It is enough that the person has applied for benefits, even if it is done illegally4.

The claimant is not held accountable or subject to a sanction when a third party receives EI benefits without the claimant’s knowledge, participation, or agreement to representation. This includes situations where a third party (known or unknown to the claimant) files an application in the claimant’s name and/or submits CRs.

When a third party makes a claim for benefit, without an authorization by the claimant or without his or her knowledge, the Commission will review the claim and establish the O/P against the third party. The third party is also subject to a penalty, a letter or prosecution and the penalties are applicable for each misrepresentation identified.

4. Fournier (A-419-99), Brière (A-637-86)

6.7 CALCULATING THE VALUE OF VIOLATION AND CLASSIFYING A VIOLATION

The value and classification of a violation are two different issues that intertwine and which sometime may give the impression that they are one and the same. The important factor to remember is that a violation cannot exist on its own. For a violation to exist there must also be a sanction, that is, a prosecution where the person is found guilty, a penalty or a warning letter.

The classification of a violation is determined by calculating the O/P resulting from the misrepresentations and if applicable, the amount of benefits that could have been paid to the claimant if he or she had not been disentitled or disqualified or had met the qualification requirements5. The amount of benefits that could have been paid (if claimant is disqualified or disentitled), is determined by taking the number of weeks remaining payable on the claim and multiplying that number by the claimant’s weekly rate of benefits, with the result divided by two6. All net O/Ps, actual and estimated, resulting from the misrepresentations, must be factored into the final O/P amount which then determines the classification of the violation.

When the investigation encompasses more than one BP, the value of the violation is determined by combining the O/P and underpayment amounts (net O/P) on all claims involved to arrive at the final amount.

Once it has been determined that there is a classified violation (prosecution and found guilty or penalty), the O/P amount is used to determine whether the classified violation is a minor, serious or very serious violation. When the value of the violation (O/P amount) is:

  • less than $1,000 it is a minor violation;
  • $1,000 or more, but less than $5,000, it is a serious violation; and
  • $5,000 or more, it is a very serious violation.

There is another type of classified violation which is determined by the existence of a prior violation within a period of 260 weeks, after the person accumulated the first violation. Such a violation is called a subsequent violation 7. This means any new violation issued within 260 weeks after the person accumulated a previous violation will be considered as a subsequent violation, even if the misrepresentation occurred before the previous violation

Like all classified violations, subsequent violations are subject to more severe sanctions, meaning an increase in the number of insurable hours required to qualify for benefits. On the other hand, according to subsection 7.1 (3) of the Act, a violation may not be taken into account in more than two initial claims for benefits. Thus, if a third claim was submitted after this violation, the claimant would not require the increased number of insurable hours specified in subsection 7.1(1) or 7.1(2) to qualify for benefits.

On the other hand, when a second violation occurs within 260 weeks after the person accumulated the first violation, it will be considered automatically as a subsequent violation. The claimant would require the increased number of insurable hours as mentioned above to establish his or her next claim.

However, a non-classified violation, meaning a violation for which a warning letter was sent but no monetary penalty imposed, will never be deemed a subsequent violation, even though that violation occurs after a previous violation (classified or non-classified), within the above period.

For example, two cases have identical net O/Ps of $3,000 (the value of the violation). In the first case, the 2nd level adjudicator concluded that there was misrepresentation and that there were serious mitigating circumstances. A penalty of $400 was imposed. A violation will be imposed and classified as a serious violation8.

In the second case, the 2nd level adjudicator also concluded also that there was a misrepresentation, but that the mitigating circumstances present warranted only a warning letter. Even though the value of the violation is also $3,000, it is non-classified because a warning letter was sent and there was no monetary penalty.

5. EIA 7.1 (6) (b) and 7.1 (7)
6. EIR 13, EIA 7.1 (6)
7. EIA 7.1 (5) b)
8. EIA 7.1 (5) a) ii

6.8 VOLUNTARY DISCLOSURE

The Commission has a longstanding policy encouraging individuals to come forward and voluntarily disclose any misrepresentations. Under this policy a voluntary disclosure is a person's admission that he or she knowingly made a misrepresentation to abuse or attempt to abuse the EI program.

In reporting earnings, the Commission grants a person up to four weeks from the date the misrepresentation was made (earnings under reported or not reported at all) to make a correction without considering this declaration under the voluntary disclosure policy. In these cases, the Agent would simply amend the claimants reports (CRs).

Further to a Federal Court of Appeal decision9, the Commission has removed the imposition of any sanction when the voluntary disclosure policy is applied. Therefore, when a person makes a disclosure under this policy, the person is not subject to a warning letter, there is no violation, no interest is charged on the debt arising from the O/P and the misrepresentation is not taken into account to determine if a repetitive misrepresentation occurs.

When there is an admission of a misrepresentation knowingly made, a caution letter is sent and the resultant O/P is a fraudulent O/P for which recoupment will begin immediately. Finally, given that the O/P is fraudulent, the O/P will be maintained despite the bankruptcy and cannot be written-off.

Criteria for voluntary disclosure

It is important to stress that to be a voluntary disclosure an admission must meet two criteria:

  1. the voluntary disclosure must be authentic, this means, there cannot be an investigation in progress;
  2. the facts on file must confirm that the admission would have led to a penalty, a warning letter or a prosecution had there been no voluntary disclosure policy.

Strict adherence to those two criteria is necessary to ensure consistent application of the voluntary disclosure policy.

The following decision making process is implemented to ensure consistency in the application of the voluntary disclosure.

  1. All insurance staff who receives an admission from a person to the effect that the person knowingly made a misrepresentation must refer the admission to I&C.

This is required to determine whether or not an investigation is in progress through the Investigation and control case management system (ICCM).

  1. The I&C officer (ICO) conducts fact-finding and completes a written report recommending acceptance or refusal of the voluntary disclosure.
  2. The recommendation must be supported with clear facts so that the 2nd level adjudicator can take action on the recommendation.
  3. The 2nd level adjudicator takes action on the recommendation.

Regardless of the Insurance officer’s decision he or she must document the decision and rationale.

Examples

Some examples of situations where the Voluntary Disclosure Policy may or may not apply follow:

  1. A Commission representative who conducts a general interview (no specific issue) with a claimant, including a Group information session (GIS), or communicates with a claimant (in-person, by phone, or mail) and the claimant voluntarily discloses having knowingly made a misrepresentation. The Voluntary Disclosure may be applicable provided it meets the 2 voluntary disclosure criteria. This example also applies to situations when the ICO delivers the GIS.
  2. A Commission representative other than an ICO conducts an issue specific interview with the claimant (in-person, by phone, or mail) and the claimant voluntarily discloses knowingly making a misrepresentation related to the specific issue that gave rise to the interview. The Voluntary disclosure policy is not applicable as we had already taken an external action by inquiring into the matter at hand. However, if the claimant discloses having knowingly made a misrepresentation on unrelated issues during or after the interview, the Voluntary disclosure policy may be applicable provided it meets the 2 voluntary disclosure criteria.
  3. A person being interviewed by an ICO cannot benefit from the Voluntary disclosure policy regardless of whether or not the disclosure is related to the issues being investigated. In his or her role as an ICO, once a claimant is directed to report for an interview, an investigation is deemed in progress thus eliminating the first criteria of the voluntary disclosure.

9. Limosi (A-534-01)

6.9 EXCEPTION REPORTING - NO CLAIMANT REPORT

Under Subsection 26.1 (2 ) of the EI Regulations a person claiming maternity, parental, compassionate care benefits (CCB), attending a training course or participating in an apprenticeship program authorized by the Commission can be exempted from completing claimant reports (CRs).

Claimants exempted from completing CRs must complete a form provided by the Commission, attesting that:

  • to the best of the person's knowledge at the time of completing the form, there are no conditions of entitlement to benefits that will not be fully met for each week in the eligibility period, except with respect to earnings;
  • the person is to notify the Commission as soon as possible if he or she ceases to meet a condition of entitlement to benefits at any time during the period of eligibility and that failure to meet that condition has the effect of reducing or eliminating any benefits for any week in the period of eligibility, or if the person has earnings during that period; and
  • the person will notify the Commission at the end of the period of eligibility whether or not he or she has met the conditions of entitlement to benefits for each week in the period of eligibility and whether or not he or she has declared all earnings that could be deducted during that period.

Claimants exempt from completing CRs must notify the Commission of any condition that could impact their entitlement to benefits and declare all earnings for each week during a period of eligibility. They may choose to advise the Commission as soon as possible during the period of eligibility or at the end of the period of eligibility.

The Commission, relying on previous jurisprudence from the Supreme Court, in Abraham10 is applying the principles laid out by that decision, that is, to allow for a liberal interpretation of the regulation.

The Commission by policy is granting four (4) weeks from the date the insert reminding claimants that they must disclose any condition of entitlement or earnings related issues that could reduce or eliminate their entitlement to benefits for any weeks during the period of eligibility is sent.

A person who makes a declaration to the Commission within that time frame is considered to be making a request for a correction to an error and the Commission will proceed with that request.

The Commission continues to conduct random investigations to detect abuse to the EI program and to act on any new information. Any information so discovered is considered a correction given the current liberal interpretation.

The Regulation11 on exception reporting allows the Commission to end such an agreement if it learns a person does not meet a condition of entitlement during his or her period of eligibility. In such cases, the exception reporting ceases to apply as of the date the Commission becomes aware of the person's failure to meet a condition.

Nevertheless, a penalty, a warning letter or the voluntary disclosure policy still applies if the person entering into the agreement knowingly made a misrepresentation by failing to inform the Commission that there existed a condition of entitlement to benefits that was not or would not be fully met during the period of eligibility. So if the Commission discovers that the person knew when he or she completed the claim for benefits, or when he or she signed the agreement, that such a condition may exist, or that he or she would be working, and did not report it at that time, a sanction will be imposed.

10. Abrahams (1980) (16698) (A-872-80)
11. EIR 26.1 (3)

6.10 INVESTIGATING CLERKS - PENALTY AMOUNT CAP

Investigation clerks can render Level I decisions to impose penalties and allocate earnings only on computer generated investigations when the claimant:

  • does not reply to a questionnaire; or
  • agrees to the Commission’s finding without providing any explanation; or
  • disagrees with the amount but provides no explanation or evidence for the disagreement.

With this policy, the Commission further limits the Investigation clerks’ authority. Investigation clerks may not impose penalties exceeding $1,000 per investigation. When the calculated penalty amount exceeds $1,000 or when there may be mitigating circumstances present, the case must be referred to a Level II Adjudicator.

This is also the case if the penalty would exceed the $1000 cap, but is lower, because limited by the cap. For example, the calculated amount of penalty is $1500, but the penalty cap for this BP is $5,000, and a previous penalty of $4,100 was imposed for a first misrepresentation. There is only $900 left, because of the $5,000 cap. Since the calculated penalty is higher than the $1,000 authorised for the Investigation clerks, the case has to be submitted to a 2nd level adjudicator.

6.11 CALCULATING THE PENALTY AMOUNT FOR THE EMPLOYER

Employers are subject to penalties when the misrepresentation involves the provision of information about any matter that is related to the fulfillment of conditions for the qualification and entitlement to benefits.

Two methods to calculate employer penalty

The EIA states that there are two different methods used when calculating the amount of an employer penalty.

The first option is to set the amount of a penalty for each act at not more than nine times the maximum rate of weekly benefits in effect when the penalty is imposed.

The second option is to set the amount of the penalty at not more than the greater of $12,000 or the amount of the penalty imposed under Section 38 of the EIA on any person who made a claim for benefits based on the information provided.

The EIA further states that this second method is used when the misrepresentation involves the provision of information about any matter in respect to the fulfillment of conditions for the qualification and entitlement for receiving or continuing to receive benefits.

By policy, the second option (maximum of $12,000 penalty amount) is used for the act of issuing or selling a false record of employment (ROE). For example, an employer may knowingly give a person a false ROE, or may sell one to someone for cash although no work was performed.

If the employer issues an ROE with more insurable hours of work or changes the reason for separation to permit this person to qualify for EI benefits, the second option could also be used to calculate the penalty amount.

Under this new policy, the Commission includes a progressive or escalating level of penalties for employers or persons acting on their behalf similar to the one for claimants and other persons. Mitigating circumstances and repetitive misrepresentations also apply to employers or individuals acting on their behalf.

As with claimant penalties, employer penalty levels are progressive and have a maximum. For employers, the penalty range is up to three, six and nine times the maximum benefit rate per misrepresentation.

The penalty level is not automatic and all factors must be considered before setting the penalty amount. The Commission must use its discretionary authority judicially and consider only those factors that are pertinent to the case as well as any mitigating circumstances.

Thus, if the first calculation method is used to determine the amount of a penalty, the Commission sets the amount of a penalty for each act at not more than nine times the maximum rate of weekly benefits in effect when the penalty is imposed.

Progressive penalty amounts

The penalty amount for a first misrepresentation will be up to three times the maximum rate of weekly benefits in effect when the penalty is imposed.

When dealing with a second misrepresentation, the penalty amount will be up to six times the maximum rate of weekly benefits in effect when the penalty is imposed.

For a third misrepresentation or more, the calculation of the penalty amount will be up to nine times the maximum rate of weekly benefits in effect when the penalty is imposed.

If the act or omission is related to the fulfillment of conditions for the qualification and entitlement to receive or continue to receive benefits, the Commission will set the amount of a penalty for each misrepresentation at not more than the greater of $12,000 or the amount of the penalty imposed under Section 38 on any person who made a claim for benefits based on the information provided by the employer.

Here again, the Commission will use a progressive level of penalties linked to first, second or third or more misrepresentation. The Commission must also consider the presence of mitigating circumstances.

The penalty amount for a first misrepresentation will be up to $4,000.

The penalty amount for a second misrepresentation will be up to $8,000.

Finally, the penalty amount for third or more misrepresentation will be up to $12,000.

Although, this calculation method also respects the one third progressive or escalating level of penalty amount, the calculation does not end here. The EIA states that it is the greater of two amounts that must be considered as the penalty.

A comparison must be made with the penalty amount calculated above and the penalty amount that may be imposed on a claimant or any person who made a claim for benefits based on the information provided by the employer. The greater of the two penalty amounts will be imposed as the employer’s penalty.

The notion of repetitive misrepresentation which was explained in 6.4 of this policy also applies to employer repetitive misrepresentation.

A misrepresentation will be considered repetitive when it occurred after the date the employer was notified of a penalty or a warning letter or found guilty by a Court following prosecution.

6.12 APPLICATION

This policy is effective as of 1 June 2005.

The policy will apply to all original decisions with respect to a penalty or warning letter rendered as of 1 June 2005 or later. The start or end date of the benefit period (BP) or the start or end date of the investigation are not relevant.

Quality monitoring of this policy will be performed in the year following implementation and the results will be reported to the Commission.

This policy must not be amended without the approval of NHQ Benefit Entitlement.