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EI - Penalties. Canada (Attorney General) v. Emamifar
In Canada (Attorney General) v. Emamifar (Fed CA, 2026) the Federal Court of Appeal dismissed the AG's JR, this brought when the Social Security Tribunal (SST) "Appeal Division decided that the Canada Employment Insurance Commission (Commission) could not reconsider [a] claim for parental benefits under the Employment Insurance Act ... more than 36 months after those benefits had last been paid to her", and thus upheld the respondent's claim.
Here the court considers the difference between the EI Commission issuing a penalty [under EIA s.38(1)(a) 'Penalty for claimants, etc.'], and of a time-extended 'reconsideration' of a claim [under EIA s.52(5) 'Extended time to reconsider claim']:[1] The applicant, the Attorney General of Canada, seeks judicial review of the decision of the Appeal Division of the Social Security Tribunal (SST) in Canada Employment Insurance Commission v. Z. E., 2025 SST 855 (the Decision). The Appeal Division decided that the Canada Employment Insurance Commission (Commission) could not reconsider Ms. Zahra Emamifar’s claim for parental benefits under the Employment Insurance Act, S.C. 1996, c. 23 (the Act) more than 36 months after those benefits had last been paid to her. The Commission may only extend the reconsideration period beyond 36 months to 72 months where it is of the opinion that a false or misleading statement or representation has been made in connection with the claim: subsection 52(5) of the Act. ....
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[13] The General Division allowed Ms. Emamifar’s appeal (Z. E. v. Canada Employment Insurance Commission, 2025 SST 856 (GD Decision)). It found that the Commission had relied on paragraph 38(1)(a) of the Act to reconsider her claim. That provision empowers the Commission to impose a penalty on a claimant in certain circumstances, including where the claimant made a representation that the claimant knew was false or misleading, or knowingly failed to declare earnings for a period in which the claimant claimed benefits. As the Appeal Division later recognized in the Decision, the Commission did not impose a penalty on Ms. Emamifar.
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[16] The Appeal Division agreed with the Commission that it had not imposed a penalty on Ms. Emamifar, and that the General Division had thus erred in concluding that the Commission had relied on paragraph 38(1)(a) of the Act to extend the period for reconsideration of Ms. Emamifar’s claim to 72 months. Rather, the authority to extend the reconsideration period beyond 36 months is in subsection 52(5) of the Act. Having found an error of law, the Appeal Division decided to substitute its own decision for that of the General Division rather than sending the file back.
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[16] The Appeal Division agreed with the Commission that it had not imposed a penalty on Ms. Emamifar, and that the General Division had thus erred in concluding that the Commission had relied on paragraph 38(1)(a) of the Act to extend the period for reconsideration of Ms. Emamifar’s claim to 72 months. Rather, the authority to extend the reconsideration period beyond 36 months is in subsection 52(5) of the Act. Having found an error of law, the Appeal Division decided to substitute its own decision for that of the General Division rather than sending the file back. . Molchan v. Canada (Attorney General)
In Molchan v. Canada (Attorney General) (Fed CA, 2024) the Federal Court of Appeal considers some case doctrine on EI penalties:[49] The issue in Schembri was whether the Commission was bound to take into account the claimant’s financial circumstances when determining the penalty to impose. The claimant in that case had failed to report his earnings and collected unemployment benefits for several months. The Commission had calculated that the claimant had received a benefit overpayment of $4,130, which it sought to recover. It had also assessed a penalty under section 38 of the EIA, because the claimant had received unemployment benefits by knowingly misreporting his income contrary to paragraph 38(1)(c) of the EIA. In determining the amount of penalty payable, the Commission considered the claimant’s gambling addiction and his efforts to deal with it, and reduced the penalty by 25% to $3,097. The Board of Referees later exonerated the claimant from any penalty. The Umpire then found that the Commission had erred when it failed to undertake, on its own initiative, an inquiry into the claimant’s financial circumstances and whether it would cause the claimant undue hardship to pay the proposed penalty. The Umpire reduced the penalty imposed by the Commission from 75% to 10% of the amount of the overpayment.
[50] On judicial review, this Court held that the Commission was not required to initiate its own inquiries into a person’s financial circumstances before it imposed a penalty, noting that claimants have ample opportunities to request a reduction of the penalty on the ground of financial hardship at various stages of the process: before the penalty is imposed, on request for reconsideration and on appeal to the Board of Referees (Schembri at para. 14). Since the claimant had not raised the issue with the Commission and the Board of Referees, this Court decided that the Umpire should have held that the Board had no basis to interfere with the penalty.
[51] In my view, this Court’s findings in Schembri do not extend to the reconsideration of a claimant’s entitlement to benefits. The overpayment in Schembri was not in dispute, only the amount of penalty the claimant would have to pay. Subsection 38(1) of the EIA specifies the acts or omissions for which a claimant may be subject to a penalty and subsection 38(2) sets the maximum penalties the Commission may impose. Under section 41 of the EIA, the Commission may rescind the imposition of a penalty or reduce it, on the presentation of new facts or on being satisfied that the penalty was imposed without knowledge of, or on the basis of a mistake as to, some material fact. Furthermore the Commission may issue, under section 41.1, a warning instead of setting the amount of a penalty for an act or omission under subsections 38(2) and 39(2) of the EIA. The Commission thus enjoys a wide discretion in assessing the amount of penalty and may consider financial hardship to the claimant as a mitigating factor.
[52] This is consistent with the Commission’s policy regarding penalties, which mentions financial hardship as a possible mitigating circumstance when determining penalties (Digest of Benefit Entitlement Principles, section 18.5.2.2). It appears from the record that the Commission did not apply a penalty in Ms. Molchan’s case despite her false statements (Applicant’s record at 130, 173, 178).
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[55] In my view, the Appeal Division’s comments regarding Ms. Molchan’s ability to seek a write-off of her debt are consistent with the legislation, which sets out a specific procedure, a write-off, for undue hardship cases. Subparagraph 56(1)(f)(ii) of the Employment Insurance Regulations explicitly provides the Commission with the authority to write off an amount payable under section 43 of the EIA if repayment of the amount due would result in undue hardship to the claimant.
[56] That said, I am nonetheless of the view that the Appeal Division was clearly cognizant of and empathetic to the financial hardship to Ms. Molchan in having to repay her debt. Like the General Division, the Appeal Division implored the Commission and the Canada Revenue Agency to consider any request by Ms. Molchan to write off her debt, given the circumstances in which the overpayment arose. The Appeal Division even went as far as providing in a footnote the telephone number where she could call to seek relief.
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