History of Unemployment Insurance - 1992 to 1994 Unemployment Insurance Act (Bill C-105, C-113 and C-17)
In the face of recession, a recurring theme was the impact of taxes on employment levels. Payroll taxes, such as UI premiums, were understood to be costs that led employers to avoid new hiring. In response, both Progressive Conservative and Liberal governments sought to restrain premiums. However, in order to do this and keep the UI Account in reasonable balance, it was also necessary to reduce potential expenditures. This led to a series of bills with those goals.
Bill C-105
As had been the case for almost 20 years, continued growth of the federal deficit led to pressure to restrain government spending and taxes, with effects on the UI program. The government announced in an economic and fiscal statement on December 2, 1992 that it would freeze the premium rate for 1993 at the 1992 level. However, the Minister of Employment and Immigration, the Hon. Bernard Valcourt, warned that action had to be taken to “ensure fiscal responsibility in the UI Account” as result of a growing UI deficit.
On December 10, 1992, the government introduced C-105, an omnibus bill which included changes to the UI Act. It proposed a reduction in benefits for 1993 and 1994 to 57 per cent of insurable earnings from the 60 per cent level that had been in place since Bill C-14 in 1978. It also proposed to amend the voluntary quit provisions by denying benefits altogether to claimants who quit without just cause or were fired for misconduct. There was immediate and strong criticism of both elements, but particularly the perceived limitations of the just cause criterion on the issue of sexual and other harassment and in the case of people accepting employer work-force reduction offers. Many government Members of Parliament expressed concerns about the bill, which helped lead to a government decision not to proceed.
Bill C-113
On February 17, 1993, the Minister of Finance introduced Bill C-113 in an effort to achieve the goals of C-105 while responding to concerns. On the harassment issue, eight areas of “just cause” were added to the existing five contained in the Act, together with regulatory authority to specify other areas. Boards of Referees were also to be given clear authority to protect the privacy of victims of sexual or other harassment.
For all claimants who had voluntarily quit, UI agents were now required in law to provide both the claimant and the employer the opportunity to provide information and to take this information into account when making a disqualification decision. The bill ensured that workers who quit under an employer’s work-force reduction program (with the effect of saving the employment of another worker) were to maintain UI eligibility, although they would be affected by normal earnings on separation rules.
These changes allowed quick passage of the legislation and the amendments took effect April 4.
Bill C-17
By the time the new Liberal government brought down a budget in 1994, it had already begun a process it expected would lead to a major restructuring of the entire social security system. However, the government was faced with the immediate need to follow through on its election promise to help create jobs. One of the tools chosen was to reduce UI worker premiums to at least $3.00 from $3.07 for 1995 and 1996 with the option of a lower rate if the UI Account permitted. It was estimated that this would help maintain or create 40,000 jobs. In order to accommodate this within the program, the government decided to change the eligibility criteria and the benefit rate structure to save $2.4 billion in each of the 1995-1996 and 1996-1997 fiscal years.
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Proposed New Benefit |
| Weeks of Work | 6% and under | over 6% to 7% | over 7% to 8% | over 8% to 9% | over 9% to 10% | over 10% to 11% | over 11% to 12% | over 12% to 13% | over 13% to 14% | over 14% to 15% | over 15% to 16% | over 16% |
| 12 | 26 | 28 | 30 | 32 | ||||||||
| 13 | 24 | 26 | 28 | 30 | 32 | |||||||
| 14 | 23 | 25 | 27 | 29 | 31 | 33 | ||||||
| 15 | 21 | 23 | 25 | 27 | 29 | 31 | 33 | |||||
| 16 | 20 | 22 | 24 | 26 | 28 | 30 | 32 | 34 | ||||
| 17 | 18 | 20 | 22 | 24 | 26 | 28 | 30 | 32 | 34 | |||
| 18 | 17 | 19 | 21 | 23 | 25 | 27 | 29 | 31 | 33 | 35 | ||
| 19 | 15 | 17 | 19 | 21 | 23 | 25 | 27 | 29 | 31 | 33 | 35 | |
| 20 | 14 | 16 | 18 | 20 | 22 | 24 | 26 | 28 | 30 | 32 | 34 | 36 |
| 21 | 14 | 16 | 18 | 20 | 22 | 24 | 26 | 28 | 30 | 32 | 34 | 36 |
| 22 | 15 | 17 | 19 | 21 | 23 | 25 | 27 | 29 | 31 | 33 | 35 | 37 |
| 23 | 15 | 17 | 19 | 21 | 23 | 25 | 27 | 29 | 31 | 33 | 35 | 37 |
| 24 | 16 | 18 | 20 | 22 | 24 | 26 | 28 | 30 | 32 | 34 | 36 | 38 |
| 25 | 16 | 18 | 20 | 22 | 24 | 26 | 28 | 30 | 32 | 34 | 36 | 38 |
| 26 | 17 | 19 | 21 | 23 | 25 | 27 | 29 | 31 | 33 | 35 | 37 | 39 |
| 27 | 17 | 19 | 21 | 23 | 25 | 27 | 29 | 31 | 33 | 35 | 37 | 39 |
| 28 | 18 | 20 | 22 | 24 | 26 | 28 | 30 | 32 | 34 | 36 | 38 | 40 |
| 29 | 18 | 20 | 22 | 24 | 26 | 28 | 30 | 32 | 34 | 36 | 38 | 40 |
| 30 | 19 | 21 | 23 | 25 | 27 | 29 | 31 | 33 | 35 | 37 | 39 | 41 |
| 31 | 19 | 21 | 23 | 25 | 27 | 29 | 31 | 33 | 35 | 37 | 39 | 41 |
| 32 | 20 | 22 | 24 | 26 | 28 | 30 | 32 | 34 | 36 | 38 | 40 | 42 |
| 33 | 20 | 22 | 24 | 26 | 28 | 30 | 32 | 34 | 36 | 38 | 40 | 42 |
| 34 | 21 | 23 | 25 | 27 | 29 | 31 | 33 | 35 | 37 | 39 | 41 | 43 |
| 35 | 21 | 23 | 25 | 27 | 29 | 31 | 33 | 35 | 37 | 39 | 41 | 43 |
| 36 | 22 | 24 | 26 | 28 | 30 | 32 | 34 | 36 | 38 | 40 | 42 | 44 |
| 37 | 22 | 24 | 26 | 28 | 30 | 32 | 34 | 36 | 38 | 40 | 42 | 44 |
| 38 | 23 | 25 | 27 | 29 | 31 | 33 | 35 | 37 | 39 | 41 | 43 | 45 |
| 39 | 23 | 25 | 27 | 29 | 31 | 33 | 35 | 37 | 39 | 41 | 43 | 45 |
| 40 | 24 | 26 | 28 | 30 | 32 | 34 | 36 | 38 | 40 | 42 | 44 | 46 |
| 41 | 25 | 27 | 29 | 31 | 33 | 35 | 37 | 39 | 41 | 43 | 45 | 47 |
| 42 | 26 | 28 | 30 | 32 | 34 | 36 | 38 | 40 | 42 | 44 | 46 | 48 |
| 43 | 27 | 29 | 31 | 33 | 35 | 37 | 39 | 41 | 43 | 45 | 47 | 49 |
| 44 | 28 | 30 | 32 | 34 | 36 | 38 | 40 | 42 | 44 | 46 | 48 | 50 |
| 45 | 29 | 31 | 33 | 35 | 37 | 39 | 41 | 43 | 45 | 47 | 49 | 50 |
| 46 | 30 | 32 | 34 | 36 | 38 | 40 | 42 | 44 | 46 | 48 | 50 | 50 |
| 47 | 31 | 33 | 35 | 37 | 39 | 41 | 43 | 45 | 47 | 49 | 50 | 50 |
| 48 | 32 | 34 | 36 | 38 | 40 | 42 | 44 | 46 | 48 | 50 | 50 | 50 |
| 49 | 33 | 35 | 37 | 39 | 41 | 43 | 45 | 47 | 49 | 50 | 50 | 50 |
| 50 | 34 | 36 | 38 | 40 | 42 | 44 | 46 | 48 | 50 | 50 | 50 | 50 |
| 51 | 35 | 37 | 39 | 41 | 43 | 45 | 47 | 49 | 50 | 50 | 50 | 50 |
| 52 | 36 | 38 | 40 | 42 | 44 | 46 | 48 | 50 | 50 | 50 | 50 | 50 |
The process for determining benefits was to be essentially the same as that in place after Bill C-21, but with more work weeks required for entrance and more credit for weeks worked. The 10-week minimum for high-unemployment areas rose to 12 weeks. Claimants became eligible for one week of benefits for every two weeks of work in the previous year for the first 40 weeks, then a week of benefits for each week of work from 40 to 52 weeks in that year. This formula also credited claimants with two weeks of benefits for every percentage point that the unemployment rate in their region exceeded four per cent.
One important change was a restructuring of the benefit structure. The benefit rate which had dropped to 57 per cent in Bill C-113, dropped again to 55 per cent, but with one important change: the government reintroduced the concept of a dependency benefit rate. Through this, claimants with dependants and lower incomes, less than $390 a week in 1994, became eligible for benefits at a 60 per cent rate. Claimants with incomes slightly higher than that were also to be covered on a pro-rata basis.
The government used the new legislation to change some of the voluntary-quit/fired provisions of C-113. It eliminated some elements that had been seen as particularly unfair in the application of the new rules. For example, people who quit a week or so before the date of a scheduled layoff were no longer to be disqualified indefinitely. Rather, they were to be disentitled for the period during which they could have continued to work. The Act enshrined the existing common law notion that claimants should be given the benefit of the doubt in voluntary quitting or misconduct cases, when the evidence was roughly balanced.
Although labour and social action groups were critical of the changes, organized protest was minimal and the bill passed quickly. Claims filed as of April 3, 1994 were covered by the new benefit entitlement criteria, and those filed by July 3 were provided benefits based on the new rates and new entrance criteria.
