Extended Parental Leave: An Advantage or Not?

Written by on May 23, 2017 in Blog
Canadian court building

The 2017 Federal Budget presented earlier this year introduced a proposal to expand parental leave by making Employment Insurance (“EI”) parental benefits more flexible. While the Liberal government claims that it has made good on its election promise to new parents, it is unclear whether the proposal is indeed an improvement in the rights of employees with respect to their parental obligations.

Across Canada Employees are generally granted about a year of leave for the birth of a baby. Varying from province to province, mothers are given 15 to 18 weeks’ leave, followed by 35 to 37 weeks’ leave which can be split with the other parent.

The purpose of these leaves is to ensure that new parents’ jobs are still there at the end of the indicated periods of time. However, there is no requirement that the leave be paid. Accordingly, many employees apply for EI benefits to ensure some income while they are on leave.

Currently, parents can receive 55% of their income, up to a maximum of $543 per week, for a total of twelve months, being a maximum annual of $28,236 which is taxable.

The new proposed parental leave extends the period of job protection for another six months, for a total leave period of eighteen months. It does not provide extra benefits, but rather allows parents to stretch their existing benefits over a longer period.

To help working parents navigate the challenges that come with a growing family, Budget 2017 proposes to make EI parental benefits more flexible. Proposed changes will allow parents to choose to receive EI parental benefits over an extended period of up to 18 months at a lower benefit rate of 33% of average weekly earnings. EI parental benefits will continue to be available at the existing benefit rate of 55% over a period of up to 12 months.

Because the total amount of EI parental benefits to which new parents are entitled remains the same, if the length of time of leave is extended, the amount of income the parent on leave receives will be stretched out and equal 33% of his or her income.

The proposal has been lauded by those who wish to send their children to daycare once they return to work. Many daycares do not accept children under eighteen months of age, often forcing parents out of the workforce if they are unable to make other arrangements. It is also seen as an important step in encouraging fathers to take a portion of the parental leave. On the flip side, the proposal will only benefit families financially secure enough to live on $362 per week or $18,824 annual which is taxable. For the many new parents already struggling to survive on the current benefit, extending parental leave under the new proposal will not be an option at all.

The proposal will also require changes to the Employment Standards Act, 2000, which does not recognize parental leave taken after 52 weeks. Under the current provisions of the ESA, an employee who opts for extended leave may not be entitled to the rights he or she would otherwise have during such a leave, including continuous participation in his or her employer’s work benefits plan or the right to reinstatement to his or her previous position.

Lesson for Employees

While the 2017 Federal Budget may at a glance seem attractive, you may likely not be able to afford spreading your 12 months of EI over a period of 18 months. Even with the current amount of EI, many Mother’s with middle to upper income earnings cannot afford to collect EI as this does not meet the family’s usual expenses. As a result, many Mothers either return early and or work part-time during their leave, especially if their part-time earnings well exceed EI which is so in many cases. While an extra 6 months of parental leave is great given the difficulty in finding daycare for infants, you will also have to consider to what extent an absence from work of 18 months will impact your career. To determine your best course of action, as there are more factors to consider than the above, it is always wise and money well spent to seek advice from an Employment Lawyer.

Lesson for Employers

Don’t let the Federal Budget get you singing the Star-Spangled Banner with thoughts of helping Make America Great Again! While the thought of having to extend parental leave from 12 months to 18 months may have you packing up and heading south, many middle and upper income Mother’s will likely not be able to afford (or wish) to take advantage of an extra 6 months of parental leave with 12 months of EI spread out over 18 months. Many cannot even afford to cap their annuals earnings at $28,236 for 12 months of EI. The advice of an Employment Lawyer in your strategic communications with the employee is critical to obtain so that you do not inadvertently find yourself in a pitfall by breaching the Human Rights Code.

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