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Appendix VII - Review of Main Legislative and Regulatory Modifications to the Employment / Unemployment Program from 1930 to 2007

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1930

The first attempt to establish a Canadian unemployment insurance program came during the depression of the 1930s.

1935

The Employment and Social Insurance Act, passed in 1935, was found to be unconstitutional since the federal government did not have sole jurisdiction over this area.

1940

  • In 1940, the federal government consulted the provinces and received unanimous approval to amend section 91 of the British North America Act, to provide the necessary authority for the federal government to establish an unemployment insurance program. The constitutional amendment became effective on July 10, 1940. The government then introduced and quickly passed the Unemployment Insurance (UI) Act, which received Royal Assent on August 7, 1940.

  • The UI program was based on strong insurance principles and was intended to provide income protection for employees. It provided greater protection for those with below average earnings, while those with higher incomes were expected to provide a greater degree of self-insurance.

  • In addition, the program covered only those workers who faced an unpredictable risk of job loss. Industries that faced little risk of unemployment (e.g., the public service) and industries with repeated unemployment (e.g., seasonal industries) were not covered.

  • The program also included a higher benefit rate for claimants with dependants.

1955

  • In an effort to make UI more effective in providing financial support to the unemployed, a revised UI Act was introduced.

  • In broad terms, the new act contained a number of departures from the original. It increased benefit levels and eased qualifying conditions.

  • Additionally, supplementary benefits (which allowed individuals who had exhausted their regular benefits to receive benefits at a lower rate for fixed periods) were integrated with regular benefits, to form the seasonal benefit.

1970-1971

  • A major reform of the UI Act occurred in 1971, following the release of the White Paper on Unemployment Insurance in 1970. In response to the paper, the UI Act of 1971 (Bill C-229) was introduced, which incorporated many of the White Paper's recommendations. In recognition of rising unemployment rates and the increasing cost of living, eligibility requirements were reduced and benefits increased.

  • A key element of the 1971 reforms was the introduction of a uniform (eight-week) entrance requirement. Coverage was also extended to the public sector and to anyone employed for 20 or more hours per week at the applicable provincial minimum wage.

  • At the same time, UI sickness, maternity and retirement benefits were introduced for workers with at least 20 weeks of insured employment.

  • Furthermore, UI was made more sensitive to local labour market conditions through the introduction of extended benefits for regions with high unemployment. Additionally, a three-week special severance benefit, available to retiring insured workers who qualified for the Canada Pension Plan or the Quebec Pension Plan.

  • Finally, a dependency benefit rate of 75% for low income earners were introduced.

  • Reliance on the fund was to be deterred by treating UI benefits as taxable income.

1975

  • Amendments were made to the UI Act (Bill C-69) to respond to concerns that the program was reducing the incentive to work.

  • To improve work incentives, the Act eliminated a three-week advance payment provision for claimants with strong labour force attachment, and removed the dependency benefit rate.

  • In addition, the disqualification period for voluntary quits was increased from three to six weeks.

  • Furthermore, to reflect the standard working age, the maximum age at which an individual was insurable was reduced from 70 to 65.

1977

  • Another comprehensive review of the UI program took place. In response to the recommendations, Bill C-27, the Employment and Immigration Reorganization Act was introduced.

  • Among other things, Bill C-27 merged the Unemployment Insurance Commission with Manpower and Immigration to form Employment and Immigration Canada.

  • Entrance requirements were tightened and the duration of benefits was reduced.

  • At the same time, however, greater emphasis was placed on re-employment through developmental uses of UI, such as income maintenance for claimants on approved training, job creation and work sharing.

  • There was also recognition that not all regions faced the same employment prospects. As a result, variable entrance requirements, ranging from 10 to 14 weeks, were introduced to better reflect local unemployment rates.

1979

  • Further amendments to decrease disincentives to work and reduce reliance on UI under Bill C-14.

  • Benefit repayment provisions were introduced, effective for the 1979 tax year, and the benefit rate was lowered to 60% from 66%.

  • To further reduce reliance on UI, Bill C-14 included provisions requiring more work effort from new entrants and re-entrants to qualify for benefits.

  • Similarly, repeat claimants required up to six extra weeks of work to qualify for benefits.

1983

Bill C-156 introduced 15 weeks of adoption benefits, effective January 1, 1984. In addition, maternity benefits were simplified and adjusted to conform to the Canadian Human Rights Act.

1989

  • Bill C-21 made several changes to the UI program.

  • Firstly, it provided for 10 weeks of parental benefits in addition to the existing maternity benefits, payable to either men or women. These benefits replaced both paternity benefits, introduced in 1988, and adoption benefits, introduced in 1983. This bill also broadened special benefits (maternity, parental, sickness) to provide for a total of 30 weeks of combined special benefits.

  • Secondly, Bill C-21 extended coverage to those aged 65 and over and, in turn, eliminated the three-week lump sum for retirement, as claimants of any age were expected to be available for work.

  • Thirdly, a one-phase benefit structure, based on the number of insured weeks and the unemployment rate in the economic region, was introduced.

  • Fourthly, disqualifications for voluntary leaving and misconduct were expanded.

  • Lastly, Bill C-21 recognized that sweeping structural change in the economy made it less reasonable to assume that an unemployed worker would find a job in the same occupation or industry. To address this issue, a greater proportion of funds was allocated to active employment measures, such as occupational training, to help claimants return to work more quickly.

1993

The government introduced Bill C-113 to reduce program costs and avoid a greater deficit in the UI account, which would have resulted in a $0.30 increase in premium rates under the “statutory rate” provision. To achieve this, those who voluntarily left their employment were no longer eligible to collect benefits. Furthermore, the replacement rate was reduced from 60% to 57% under Bill C-113.

1994

Bill C-17 was introduced in 1994 and further reduced the replacement rate to 55%, with the exception of low- income individuals with children, who received a replacement rate of 60%. A 12-week minimum entrance requirement and reduced duration were also introduced under Bill C-17.

1996

  • The Employment Insurance (EI) Act, 1996 (Bill C-12), redesigned income benefits to promote greater labour force attachment and to introduce stronger insurance principles into the system. It also placed a greater emphasis on re-employment measures.

  • Under EI, eligibility was based on hours of work, rather than weeks, to allow more part-time workers to become eligible for benefits.

  • Changes also included a new benefit structure and new rules for frequent claimants, as well as stricter eligibility requirements for new entrants and re-entrants to the labour market.

  • At the same time, the impact on low-income families with children was softened through the introduction of the Family Supplement.

  • Furthermore, the Government of Canada made an offer to all provinces to develop federal-provincial-territorial partnerships to respond to different labour market needs and circumstances across the country.

1996-1997

The amount allocated to Employment Benefits and Support Measures was $1.575 B. Similar programs and services were provided in provinces/territories that did not establish a partnership.

2000

  • In 2000, Bill C-32 expanded parental benefits from 10 to 35 weeks, giving parents up to one year of combined maternity and parental benefits.

  • In addition, it reduced the number of hours of insurable employment required to qualify for maternity, parental or sickness benefits from 700 to 600 hours.

  • To improve flexibility, a second parent sharing parental leave was no longer required to serve a second two-week waiting period and parents were able to earn the greater of $50 or 25% of their weekly parental benefit without a reduction in their EI benefits.

2001

  • Bill C-2 introduced further modifications to EI legislation.

  • The intensity rule, which had been implemented to discourage repeat use of EI by reducing the benefit rate of frequent EI claimants, was eliminated, retroactive to October 1, 2000.

  • The benefit repayment provision (clawback), initially introduced to reduce EI use by higher income repeat claimants, was adjusted to improve targeting and reflect changing economic realities, effective for the 2000 tax year. All first-time and special benefits claimants were exempted from the benefit repayment provision. Additionally, to simplify the structure of repayment and to ensure that these provisions were appropriately targeted to higher income earners, a single threshold for repayment was set at $48,750 of net income with a repayment rate of 30%, and the maximum repayment was limited to 30% for a person with a net income in excess of $48,750.

  • Bill C-2 also introduced a new method of calculating the maximum yearly insurable earnings (MIE), effective for tax year 2001. The MIE will remain at $39,000 until the average earnings exceed this level, at which time the MIE will be based on average earnings.

  • Changes were also made to the re-entrant provision to make it more responsive to parents returning to the labour force following an extended absence caring for young children. Parents re-entering the work force who received EI maternity and/or parental benefits in the four years prior to the normal two-year “look back” period can now access regular benefits with the same number of hours as other regular claimants in their region.

  • In addition, the Employment Insurance Fishing Regulations were adjusted retroactively to December 31, 2000, to allow self-employed fishers to access the enhanced maternity, parental and sickness benefits.

  • In 2001, there were also two adjustments to the EI regulations.

  • First, effective August 12, 2001, the calculation of undeclared earnings was modified to make it more equitable for claimants.

  • Second, the Small Weeks pilot project became a national and permanent feature of the program on November 18, 2001. The Small Weeks initiative was first introduced in 1997 as a pilot project in response to concerns that accepting weeks with lower earnings ($150 or less) resulted in a lower benefit rate on a future EI claim and as a result acted as a disincentive to accepting all available work. The Small Weeks initiative intends to encourage workers to accept all available work by having these weeks excluded in calculating the benefit rate.

2002

  • Bill C-49 introduces modifications regarding access to special benefits.

  • Parents of a newborn or newly adopted child who is hospitalized for an extended period now have a window of up to two years, instead of one year, to claim parental benefits.

  • In addition, Bill C-49 changed the maximum number of combined weeks of special benefits from 50 to 65 weeks. Prior to Bill C-49, claimants could receive a maximum of 50 weeks of special benefits. Effective March 3, 2002, these provisions ensure full access to special benefits for biological mothers who claim sickness benefits prior to or following maternity or parental benefits.

2002-2003

  • There were two adjustments to the EI regulations.

  • First, effective July 21, 2002, the apprentices in approved training programs who apply for EI benefits are subject to only one waiting period.

  • Second, the Small Week threshold was increased to $225 from $150 on September 2003 recognizing that wages have increased.

2004

  • Bill C-26 introduced as of January 4, 2004 a new Compassionate Care Benefit (for up to six weeks) for employment insurance eligible workers who must be absent from work to provide care or support to a child, parent, spouse or common-law partner who has a serious medical condition with a significant risk of death within six months. To be eligible for the new benefit, workers must have worked 600 hours or, if a self-employed fisher, $3,760 in fishing income.

  • Pilot project no 6. offering seasonal workers the possibility of receiving five more weeks of EI if the claim for regular benefits starts between June 6, 2004 and June 4, 2007 and the claimant lives in one of the 24 participating EI economic regions.

2006

  • On March 1st 2006, an agreement was reached between the Government of Canada and the Government of Quebec which allows the Government of Quebec to set up, starting January 1st 2007, a Provincial Parental Insurance Plan. The final agreement between the Governments of Canada and Quebec includes a financial mechanism whereby the Government of Canada reduces Employment Insurance premiums of workers and employers in the province so that the Government of Quebec can collect premiums for its own program. The premium reduction reflects the savings to the EI Account realized as a result of Quebec's program, including benefits that are no longer paid under EI and administrative savings.

  • On February 23, 2006 the Government of Canada announced the creation of three new employment insurance pilot projects in regions of high unemployment (10 percent or higher), that will test the labour market impact.

    • Reducing the eligibility threshold for new entrants and re-entrants to the labour market (December 11, 2006 to December 6, 2009).
      enabling individuals new to the labour market or returning after an extended absence to access EI benefits after 840 hours of work (rather than 910) when linked with EI employment programs;
    • Calculating benefits based on the highest 14 weeks of earnings(October 30, 2006 to October 25, 2009).
      Calculating EI benefits based on the “best 14 weeks” of earnings over the 52 weeks preceding a claim for benefits; and
    • Increasing the working-while-on-claim threshold(December 11, 2006 to December 6, 2009). Increasing the working-while-on-claim threshold to allow individuals to earn the greater of $75 or 40 percent of benefits in an effort to encourage people to take work without a reduction in their benefits.

  • June 16, 2006, Bill C-43 was passed and amended the Employment Insurance Act and the Department of Human Resources Development Act to allow the Canada Employment Insurance Commission to set the premium rate under a new rate-setting mechanism. In setting the rate, the Commission will take into account the principle that the premium rate should generate just enough premium revenue to cover payments to be made for that year, as well as the report from the employment insurance chief actuary and any public input. On an as-needed basis, the Commission may also contract for the services of persons with specialized knowledge in rate-setting matters. If it is in the public interest to do so, and on the joint recommendation of the Minister of Human Resources and Social development and the Minister of Finance, the Governor in Council may substitute a different premium rate. In any given year, the rate cannot change by more than 0.15% ($0.15 per $100) from the previous year's rate, and for the years 2007 and 2008 must not exceed 1.95% ($1.95 per $100). Other modifications include amendments to the Employment Insurance Act, for the purpose of the implementation of a premium reduction agreement between the Government of Canada and a province, to allow for a regulatory scheme to make the necessary adjustments and modifications to that Act as required to harmonize it with a provincial law that has the effect of reducing or eliminating the special benefits payable under that Act. A consequential change is also made to the parental benefits provisions.

2007

  • June 14, 2007 an amendment to the EI regulations was put in place that modified the eligibility criteria of the Employment Insurance (EI) Compassionate Care Benefit (CCB) in order to enable additional family members and others considered as "family" by the gravely ill individual to be eligible for the benefit for the purposes of caregiving. These additional family members are siblings, grandparents, grandchildren, in-laws, aunts, uncles, nieces, nephews, foster parents, guardians and wards.

  • A new Pilot Project (No. 10) was put in place effective June 11, 2007 and ending December 9, 2008 was put in place which will test the impact of increasing EI entitlement by providing five additional weeks of benefits to EI claimants, up to the maximum of 45 weeks of benefits. The pilot will build upon the design and results of EI Pilot Project No. 6 which ended on June 4, 2007.

2008

  • Budget 2008 announced the creation of the Canada Employment Insurance Financing Board to improve the governance and management of the EI Account. The creation of this new Board will enhance the independence of premium rate setting, and ensure that EI premiums are used exclusively for the EI program.

    The Canada Employment Insurance Financing Board's specific responsibilities, as outlined in Chapter 3 of the Budget Plan, are:

    • managing a separate EI account where any excess premiums from a given year will be held and invested until they are used to reduce premium rates in subsequent years;

    • implementing an improved EI premium rate-setting mechanism that will ensure that EI revenues and expenditures break even over time and contribute to the relative stability of premium rates by limiting year to year changes in EI premiums to 15 cents; and

    • maintaining a $2 billion cash reserve as a contingency fund that will support relative premium rate stability.

      As such, the responsibilities of the new Board will pertain only to the financing of the EI program. The Government of Canada and the existing EI Commission will continue to have full responsibility related to EI benefits and program delivery, including eligibility and benefit levels.

  • In September, the Minister announced the continuation of EI Pilot Projects and Transitional Measures. Pilot Project No. 7 has been replaced by Pilot Project No. 11 and is scheduled to end on October 23, 2010. Pilot Projects No. 8 and No. 9 have been replaced by Pilot Projects No. 12 and No. 13 respectively and are scheduled to end on December 4, 2010. Transitional measures are extended to April 10, 2010.

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Date Modified:
2011-09-30