Employers and Paid Maternity Leave: ExplainedTeam
In Canada, employers are not currently obligated to provide wages to their employees on maternity or parental leave. Employees are able to take however much pregnancy or parental leave that they would like to, within a maximum amount, but that leave will be without pay if they don’t claim employment insurance benefits.
So should employers be required to provide paid maternity or parental leave to their employees? What would that look like? Is there a precedent for companies doing this? Would there be any benefit to the employer?
These questions are great to ponder and to help guide us to a future that might look a little different if workplace laws were to change.
What Do Maternity Leave Benefits Look Like Now?
Currently, Canada’s employment insurance program offers benefits for both maternity and parental leave. Maternity leave is reserved for the person giving birth, while parental leave can be taken by any new parent, including adoptive parents.
While parental benefits can be shared between parents, maternity benefits cannot. Parental benefits can either be claimed as standard or extended benefits, depending on how many weeks the parent wants to be on leave for.
For both maternity leave and standard parental leave, individuals can claim 55% of their usual salary, up to $638 a week. For maternity leave, these benefits last up to 15 weeks, and for parental leave, the benefits can last up to 40 weeks. For the extended benefit parental leave plan, 33% of the parent’s usual salary can be claimed for up to 69 weeks, for up to $383 per week.
By claiming employment insurance during parental and maternity leave, new parents take a cut to their regular pay. As well, in Ontario, maternity (or pregnancy) leave can last up to 17 weeks, and parental leave can last up to 63 weeks. Parents may need to choose to take weeks off of work without pay if they need to take the full amount of leave and do not want to take a reduced rate for the full number of weeks.
To qualify for benefits, an individual must first accumulate 420 insured hours of work in the 52 weeks before the start of their claim, or since their last claim. That means that new employees who have not met those hour requirements may not be able to claim these benefits when going on leave.
It should also be remembered that there may be a delay of 4 to 6 weeks before individuals receive their employment insurance benefits. For people who are relying on weekly pay cheques, this might mean that they need to plan their finances well during this period of their lives. For low-income families, there are options to supplement their benefits.
These benefits are also taxed at the end of the year.
What Would Employers Providing Paid Maternity Leave Look Like?
Under the current guidelines for employment insurance, employers can offer to top up their employee’s income while they are on pregnancy or parental leave. This top-up is up to the employer’s discretion in terms of how much they will offer and for how many weeks.
Recent reports have shown that over half (58%) of Canadian employers offer top-ups for maternity benefits and 33% offer top-ups for parental leave benefits. Some of these employers offer to top-up benefits to 100% of what the employee’s regular income is, while others offer slightly less. Each employer can decide how long they will choose to offer this.
If Canada were to introduce legislation requiring employers to provide paid maternity leave, companies would need to be prepared to get ready to cover the cost of doing so. Currently, depending on how the pay is structured, some employees may choose to use cost-sharing plans to meet the demand of paying an employee who is off work. Others may use payroll deductions when the employee returns to work.
What is the Benefit of Providing Paid Maternity Leave?
Since there is no requirement to provide this service in Ontario, it is entirely at the employer’s discretion, but there are advantages to doing so.
Offering fully paid maternity leave or a top-up of benefits for their employees can make employers more appealing to employees who would like the option to take a leave. It may increase employee loyalty, retention, and morale, and help attract new talent. It can also ease the burden on employees who are starting their families by improving their mental health and benefiting the child by allowing the parents to be around for the early stages of their development.
However, if employers do plan to take on paid maternity leave for their employees, they will need to consider how they plan to do so, and in what format. They will need to consider how they will afford to cover the pay of their employees who are on leave, whether that is through a cost-sharing system, by employees taking pay cuts when they return to work, or finding other methods to manage the costs.
They also need to consider how long they will top-up benefits, and to what degree they will do so. In these cases, employers may benefit from discussing the matter with their employees to find out more about their needs and how much time they plan to take. However, it is always a good idea to speak with an employment lawyer to help set up consistent, beneficial policies.
Ontario does not currently require employers to top-up maternity or parental leave benefits, but there are advantages to doing so in Ontario. Employers may be able to improve their employees’ home lives while increasing their attractiveness to their current and future employees by offering the possibility.
If you are an employer with questions about paid maternity or parental leave or how to set up policies to address them, our team of experienced workplace lawyers at Achkar Law can help. Contact us by phone toll-free at 1 (800) 771-7882 or email us at [email protected], and we will be happy to assist.
If you are a small or medium-sized company looking for full-service support with a same-day response, visit our Chief Legal Officer Program page for our strategic solutions.