Canada should be considering the feasibility of a portable benefits plan for employees across the country, according to the Public Policy Forum.
A portable benefits plan would fill the needs of transient employees engaged in part-time or temporary work who have limited or no access to benefits and pensions, noted the report. It would also provide employees with flexibility because it would be tied to them individually, rather than to one employer.
The nature of work has changed rapidly over the past two decades, says Sunil Johal, co-author of the report and policy director at the University of Toronto’s Mowat Centre. “What we’re seeing is that more people are engaged in part-time, temporary work and we’re also seeing the advent of the so-called gig economy. As a result of those trends, fewer people have access to workplace or employer-provided pension and benefits plans. That’s creating a gap in the social infrastructure of Canada for workers who are engaged in these non-standard forms of employment.”
Indeed, a 2017 workplace review by Ontario’s Ministry of Labour said workers with standard employment such as full-time, permanent jobs have medical insurance (74 per cent), dental coverage (76 per cent), life or disability insurance (68 per cent) and a pension plan (54 per cent). In comparison, less than a quarter of workers with non-standard employment have health benefits such as medical insurance (23 per cent) and dental coverage (23 per cent). Only 18 per cent have life or disability insurance and 17 per cent have an employer pension plan.
Besides helping transient employees, portable benefits would encourage those receiving social assistance to gain employment, noted the report. It said marginalized groups such as single parents and people with disabilities are likely to be dissuaded by employment because they lose government-provided benefits like drug and dental. And while Ontario offers a transitional health benefit for those who are no longer eligible for disability support payments and don’t have comparable benefits, a similar program isn’t available in other provinces, according to the report. So a portable benefits system would offset those disincentives to employment, it said.
“This is really a newer idea,” says Johal. “We’re seeing it adopted in certain sectors and states. We’re seeing some organizations look at this type of model for the non-profit sector here in Canada.”
There are various questions to be addressed, he adds, including who would qualify for portable benefits, what would be covered and how entitlements are tracked. “Obviously, the other big question is who pays for this? What’s the share contribution between employers, workers and potentially the government?”
The government should consider running a pilot project and look at other instances when something similar has been implemented, said the report.
In Canada’s non-profit sector, several organizations are looking at whether employees would be interested in participating in a plan that would deliver lower fees than mutual funds, portability between jobs, flexible contribution rates and optional employer contributions, the report noted. And on a more macroeconomic level, the state of Washington implemented a portable benefits system for independent contractors who work in customer service industries in 2017.
While the concept of a portable benefits plan is worth discussing, there would be implications for employers if they were asked to contribute directly to the plans or pay indirectly through tax, says Dan Kelly, president and chief executive officer at the Canadian Federation of Independent Business. “That would be the worry from an employer perspective.”
Employers are starting to look at providing employees benefits through health-care spending accounts, but any mandates on benefits is still a testy topic, says Kelly.
For instance, he notes employers in Saskatchewan pushed back when the province proposed legislation 20 years ago requiring them to offer proportional benefits to part-time workers if they provided benefits to full-time workers. “Employers went nuts when that was proposed,” he says. “There was a huge protest. So this a hot button [issue].”
While employers would undoubtedly be concerned about whether portable benefits would increase costs on their part, they may actually benefit in the long run, says Johal. “That’s one of those things we need to track over the longer term. Might this be actually beneficial for businesses because they may have less turnover of their employees, employees may be healthier, less stressed out and that’s really where we need to have a longer term evaluation of the program.”