What you need to know about parental leave

Compensation & Benefits See all Employee taking parental leave

When the federal government’s changes to maternity and parental leave went into effect last month, they immediately had a direct impact on many workplaces across Canada. And while these changes might seem to target only federally-regulated sectors, they will eventually impact all workplaces – in ways that might not be immediately obvious.

Here’s what you need to know about parental leave.

The recent changes

The changes to maternity and parental leave are simply this: in addition to the option of taking 12 months of leave, Canadian workers now also have the option to take 18 months. While it sounds simple in principle, it’s surprisingly complex in its details.

For starters, these changes at the federal level only apply to federally regulated workplaces – primarily banks, telecom, transport, and the public service sector, all of which employ about nine per cent of all Canadian workers. However, provincially regulated workplaces may still choose to offer employees an 18-month leave option as well.

While all provinces will likely amend their labour codes to align them with the new federal system, so far only Ontario has promised to do so – and until provincial labour codes are updated, the guarantee of employment beyond 12 months is not legally enforceable in provincially regulated sectors. (Quebec, with its system of civil law, lies entirely outside both systems, and is unaffected by the changes at either the federal or provincial level.)

While the provinces are updating their labour codes, it’s crucial that employers and workers agree on whether parental leave includes a guarantee of employment beyond 12 months.

The guarantee of employment is just one area affected by longer leave times. According to the most recent statistics, 15 per cent of women who were employed full-time before getting pregnant reported receiving some form of salary from their employer during their maternity or parental leave – this is better known as a “top-up.” This figure jumps to 39 per cent for women working unionized jobs.

EI law allows employers to top up an employee’s wages to a maximum of 97 per cent during some or all of the leave. Usually, this is offered as an incentive to attract talent, or is obtained through union negotiations in collective agreements.

It goes without saying that any company offering additional benefits or provisions to workers on or following leave should pay very close attention to how those agreements will be affected by increased leave times – but more on that later.

Maternity and parental leaves and benefits: a primer

While closely related, maternity leave and parental leave are two distinct things: maternity leave is offered to women giving birth, while parental leave is offered to parents of either gender who are either having a baby or adopting a child of any age. It’s possible for a worker to take one without the other, if they’re adopting, giving a baby up for adoption, or turning their leave over to a spouse.

The different types of leaves are allotted differently, too. The traditional 52 weeks of leave actually comprise 17 weeks of maternity leave (granted only to the mother), followed by 35 weeks of parental leave that can be split between both parents.

Leave grants parents two things: the promise of employment when their leave is up, and payments from the government to replace lost salary. Thus, companies in federally regulated sectors (and soon, in provincially regulated sectors as well) are now legally required to hold a position open for up to 18 months, with a guarantee of employment at the end of leave. The payments, on the other hand, are provided to qualifying workers by the federal government under the Employment Insurance program, and are not the employer’s responsibility.

How the recent changes affect parental benefits

Maternity leave benefit payments, applicable to the first 17 weeks of leave, will remain unaffected by the changes. It’s in the remaining 35 weeks of parental leave – now joined by a 61-week option – that will affect benefits payments.

For workers taking 35-week parental leave, benefits are paid out at 55 per cent of a worker’s average weekly salary, up to a maximum amount that changes annually, just as before.

But for those who opt to take 61-week leave, benefits payments are reduced to 33 per cent of their salary. Because it’s paid out over a longer period of time, the total EI benefits collected remains the same (more on that here).

Since parental benefits are paid out by the government, not by the employer, will these changes affect the employer? The answer depends on your company’s policies.

How the benefits changes affect employers

Any company offering their employees an 18-month leave option will need to adjust any policies that affect parental leave, including salary top-ups.

Because salary top-ups are not legally required, the new laws don’t offer much guidance in how to accommodate both 35- and 61-week options. Still, you should review any agreements that refer to leave – either collective or individual – for any language that refers to top-ups or guarantee of employment.

For instance, if the language of your agreements offers an employee a top-up to 97 per cent of their full salary for the duration of their leave, you’ll pay far more to the worker who opts for a longer leave.

As an employer offering an 18-month leave, your options are to pay out a top-up for an additional six months, or to change the agreement, limiting the number of weeks the top-up will be paid. Or, you could follow the example of government benefits, and lower the weekly top-up such that the total payout remains the same.

You’ll also want to scour your agreements for any other language that addresses parental leave – for instance, provisions that stipulate new mothers are not required to work in front of video display terminals or lift heavy objects, or provisions that allow breastfeeding new mothers to take additional breaks.

If your agreements specify a period that these provisions apply – such as six months from the first day back at work – you may want to take into account whether the time off was already six months longer than the conventional 12-month leave.

See also:
What Canada’s 2017 federal budget means for employers
5 ways to help new parents return to work

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