Employment Insurance Overpayment and Collections (8:XI)

A. Overpayments

If the Commission pays a claimant more than that claimant is entitled to, whether through the claimant’s fault or the Commission’s, the Commission is entitled to recover the overpayment (EI Act, s 43). The Commission may deduct the overpayment from any benefit payable to the claimant, or Commission’s Collections Branch may contact the claimant to recover the overpayment (EI Act, s 47). The Commission must send written notice, stating the existence of the overpayment and why it occurred, as well as explaining the right to appeal within 30 days.

If the overpayment results from a reconsideration of a decision involving an element of judgment or discretion by the Commission (often as part of a random “audit”), an appeal should be filed. Umpires have ruled that the Commission does not have the right to second-guess its previous determination of such questions (such as just cause, misconduct, and availability) unless there are significant new facts it could not have learned about when the initial decision was made.

1. Interest Regulation

EI claimants are required to pay interest on outstanding overpayments and penalties arising from what the Commission considers fraud or misrepresentation.

No interest will be charged on debt that arises from the Commission’s errors in benefit payments. Where the claimant has appealed the decision that establishes the overpayment or penalty, no interest will be charged during the appeal process, and claimants will be reimbursed interest payments made before the appeal if the Referees or Umpire decide that there was no fraud or misrepresentation.

B. Time Limits

The statutory limitation on collection of overpayments is six years after declaring the overpayments, excepting the periods during which an appeal is pending. The Commission has three years to discover the debt. Periods of appeal do count in this assessment. If an overpayment is due to fraud, the Commission has six years to discover and six years to recover the amount. However, the Commission is not allowed to impose a penalty more than 36 months after the offence.

C. Write-off of Overpayment or Other Amounts Owed

Section 56 of the EI Regulations specifies various circumstances in which a benefit wrongly paid may be written off. The most useful provision allows a write off when in all circumstances:

the sum is not collectable; or
repayment would result in undue hardship to the claimant (s 56(1)(f)(ii)).

EI Regulation s 56(2) provides for an almost automatic write-off of amounts paid more than a year before notification of the claimant and resulting from the Commission or employer’s error.

Claimants seeking information about the amount of repayment debt may contact Service Canada.

Service Canada Information Line

1-800-206-7218

For information about collections and repayment, claimants can contact the CRA:

CRA

1-866-864-5823

Section 112.1 of the EI Act was amended in 2014 to disallow reconsideration of decisions concerning the write-off of debt.

According to the Digest of Benefit Entitlement Principles, the claimant or their representative may ask for an appraisal of the situation when a write-off is not granted, or a further appraisal at a higher level in the case of further complaint (20.9.0). This does not amount to a formal reconsideration and the decision cannot be appealed to the SST.

D. Benefit Repayment

Under s 145(1) of the EI Act, a claimant whose income for the taxation year exceeds one and one-half times the maximum yearly insurable earnings is liable for the repayment of the lesser of:

30 percent of the total benefits paid to the claimant in the year; or
30 percent of the amount by which the claimant’s income exceeds one and one-half times the maximum yearly insurable earnings.

The benefit repayment scheme is administered and enforced by the Minister of National Revenue (s 148). A claimant will estimate on his or her tax form the amount of benefit repayment payable by him or her (s 147).