Supreme Court of Canada dismisses challenge to allocation of EI funds

Unions wanted surplus to go towards EI but funds were part of general government revenues
|Canadian Employment Law Today|Last Updated: 09/03/2014

The Supreme Court of Canada has dismissed an appeal by two Quebec unions to force the federal government to transfer $57 billion raised through employment insurance (EI) premiums into a new fund.

Following the federal government’s reform of the EI program in 1996 by enacting a new Employment Insurance Act, two Quebec unions challenged the constitutionality of some of the provisions in the act, which allowed annual EI surpluses to be reallocated by the federal government to cover its general expenses. The unions argued this was a misappropriation of funds meant for EI.

The Supreme Court of Canada ruled on Dec. 11, 2008, that the 1996 act was constitutional, except for provisions applied in 2002, 2003 and 2005, when the premiums were set by the Governor in Council — who didn’t have tax-delegating authority. The court suspended a declaration of invalidity for 12 months to allow Parliament to amend the act.