Difference between revisions of "Penalties, Violations, and Offences with Employment Insurance (8:VIII)"

== A. Imposing Penalties ==

Sections 38 and 40 of the ''EI Act'' allow the Commission to impose a penalty of up to three times the rate of weekly benefits on a claimant who '''knowingly''' makes a false or misleading representation to the Commission in relation to their claim for benefits. The claimant must actually know that the statement is false or misleading, and the onus of proving this is on the Commission.

The court applies a subjective knowledge test to decide whether the claimant intended to make false statements to the commission. Following [https://www.canlii.org/en/ca/fca/doc/1995/1995canlii3601/1995canlii3601.html?autocompleteStr=Canada%20v%20Gates%20(1995)%2C%20125%20D.L.R.%20(4th)%20348&autocompletePos=1 ''Canada v Gates (1995)'', 125 D.L.R. (4th) 348], the Court in [https://www.canlii.org/en/ca/fca/doc/1998/1998canlii7566/1998canlii7566.html?autocompleteStr=moretto%20v&autocompletePos=8 ''David Moretto v AG Canada'', [1998<nowiki>]</nowiki> F.C.J. No. 438] confirmed that even if a claimant’s statement is found to be false, no penalty should be levied unless the finder of fact is satisfied that the claimant “subjectively knew” the statement was false. It is not enough to say that they should have known, or should have asked someone, or that a reasonable person would have known.

== B. Types of Penalties ==

Types of penalties include warning letters, penalties, monetary penalties, prosecutions, and violations (discussed below). Most often, the Commission chooses to issue a monetary penalty (a fine). For relatively minor cases, they may issue a warning letter.

Alternatively, a claimant could be prosecuted criminally (summarily). Section 135(3) of the ''EI Act'' sets the minimum fine at $200 for fraud relating to a person’s employment and Record of Employment. The maximum fine is $5,000 and where appropriate, twice the amount of benefits falsely obtained, or the fine plus imprisonment for a term of up to six months (s. 135(3)). The Commission need only write a decision letter to the claimant to impose a very large penalty, which is much simpler than proceeding with a court case, and the standard of proof is much higher in a criminal court than for the Commission.

=== 1. Appealing a Decision to Impose a Penalty ===

If the Commission imposes a '''penalty under s. 38''' (or s. 39 in the case of employers), '''a claimant should be advised to appeal''' in all but the clearest of circumstances. Regardless of what the Commission says, it has the burden of proving that the claimant knew that the statement was false or misleading at the time it was made. If the claimant has a reasonable explanation (e.g., confusion regarding the intent of the question), the appeal should be allowed.  

=== 2. Appealing the Amount of a Penalty ===

The SST has jurisdiction over the amount of penalty assigned. While the amount of penalty can also be appealed, a penalty cannot be reduced simply because the SST considers it a bit too high. However, they can reduce a penalty if the decision is unreasonable, e.g., where the Commission erred by ignoring relevant circumstances such as the claimant’s ability to pay, health problems, or where it took irrelevant circumstances into account. It is not necessary to prove that the Commission was unfair, just that it was not made aware of all the relevant circumstances.

== C. The Violation System ==

Section 7.1 of the ''EI Act'' outlines the increased qualifying requirements for claimants who are found to have committed fraud after June 30, 1996. These requirements increase depending on how the violation is classified (minor, serious, or very serious).  

=== 1. Increased Number of Hours Required to Qualify ===

Section 7.1(1) provides that an insured claimant must have a greater number of hours to qualify if that person has accumulated one or more violations in the 260 weeks before making their claim. This adds a significant barrier to receiving benefits. The increased hours required to qualify after a violation are outlined in the table below:

'''Section 7.1(1) Table'''

=== 2. Issuing Violations ===

Pursuant to s 7.1(4), the Commission may issue a violation notice for:

* one or more penalties imposed under ss. 38, 39, 41.1 or 65.1, as a result of acts or omissions mentioned in ss. 38, 39 or 65.1;

* a finding of guilt for an offence under ss. 135 or 136; or

* a finding of guilt of one or more offences under the Criminal Code as a result of acts or omissions relating to the application of the ''EI Act''.

=== 3. Classifying Violations ===

If a violation is found to have occurred, as determined by the above criteria, it must be classified for purposes of the '''s. 7.1(1) Table'''. The ''EI Act'' classifies violations in the following manner under s. 7.1(5)(a):

:a) '''minor violation''': if the value of the violation is less than $1,000;

:b) '''serious violation''': if the value of the violation is less than $5,000, but more than $1,000;

:c) '''very serious violation''': if the value of the violation is over $5,000.

Under s. 7.1(6), the value of a violation for purposes of classification is the amount of overpayment of benefits resulting from acts on which the violation is based. If the claimant is disqualified or disentitled, the amount is determined by multiplying the claimant’s weekly rate benefit by the average number of weeks of regular benefits.