The Quebec Court of Appeal ruled Tuesday that the federal government's parental and pregnancy benefits under the Employment Insurance Act are unconstitutional because they infringe upon provincial rights to manage social welfare policy.

A three-judge panel of the court ruled in favour of Quebec in its eight-year-long struggle to set up its own parental benefits program.

"[This] constitutes an incursion by the Canadian Parliament in a domain reserved for the provinces, which no constitutional amendment made since 1940 allows," the judges wrote.

A Quebec court has struck down a part of the federal EI program that gives pregnant women benefits.

Provincial Employment Minister Claude Béchard said he now wants to negotiate with Ottawa to obtain between $600 million and $700 million from the federal program as Quebec's share of the money at stake.

There's no word on whether Ottawa will appeal the Quebec Court of Appeal ruling to the Supreme Court of Canada. It has 60 days to decide.

Human Resources and Skills Development Minister Joseph Volpe said Tuesday night that the federal government is reviewing the decision, and benefits will continue to be provided in the meantime.

Quebec had wanted the federal government to reduce the contributions Quebec workers and employers had to make to the federal EI pot so that it could channel those funds to a provincial program that would improve benefits for Quebec parents taking time off work.

When negotiations failed, the argument went to court.

The nub of the matter involves what the employment insurance system was designed to do. Ottawa's first attempt to help the jobless through a national insurance program funded by regular contributions dates back nearly 70 years.

At that time, prime minister William Lyon Mackenzie King's government brought in a law establishing such a program, without the authorization of the provinces.

The province of Ontario objected and went to court. The legislation was later struck down by the Privy Council in England, which ruled that insuring workers against job loss was within the exclusive jurisdiction of the Canadian provinces.

Mackenzie King then began a round of consultations with the provinces that led to a constitutional amendment in 1940 to allow the creation of a jobless benefit program.

Over the decades, Ottawa has amended the legislation to reflect societal trends and offer wider coverage so that it now includes parental and pregnancy leave for workers.

None of the provinces had objected until Quebec's National Assembly decided to go it alone eight years ago.