18-month parental leave rollout raises questions for Canadian employers

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New parents in Canada have been eligible for an extended parental leave of 18 months since last December.

But the rules surrounding the new federal government provision — which allows parents to take either 12 or 18 months off work to care for a child — are still slightly up in the air.

A new report by law firm Siskinds LLP highlights some questions still to be addressed.

Here’s a reminder of how the changes work

For parents sticking with 12 months of leave, the system mostly remains the same. New birth moms and surrogates are eligible for 15 weeks of maternity benefits, with federal employment insurance (EI) providing them with 55 per cent of their average weekly salary (up to a maximum $543 a week).

After those 15 weeks of maternity leave, any parent or caregiver (adoptive or birth) opting for the old 12-month system can take 35 additional weeks of parental leave. The government will provide 55 per cent of their average weekly earnings during that time, up to $543 a week.

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For those taking 18 months, the maternity benefits and the rules surrounding them stay the same: 15 weeks at 55 per cent, and the benefits can start as early as 12 weeks before baby arrives.

But once those 15 weeks are up and you switch over to parental benefits, the government will pay out just 33 per cent of the average weekly salary (to a maximum of $326 per week) over the longer time span of 61 weeks.

Employers’ top-up policies

One point of confusion, according to the report, is about employers and how they are managing their top-up policies for those taking a leave.

Many employers offer a top-up to workers, in addition to the money they get from the government during their time off. The amount of money they provide each week, and for how long, is determined by company policies.

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Nora Spinks, CEO of the Vanier Institute of the Family, told Global News there are numerous variations for how companies top-up the money.

“The most common is to top-up high-income earners up to the 55 per cent of earnings,” she said. “So in other words, so if you’re only getting about $500 a week [from the government], and your normal salary is $2,000 a week, then the employer would top-up that by $1,500.”

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But with workers now able to take extended leaves of 18 months, employers may be feeling the pinch in providing the top-up they did prior to the changes.

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Their options then, include putting a cap on the number of weeks they provide a top-up, or lowering the amount paid each week. They may also follow in the government’s footsteps and give the same amount of money, but spread over a longer period of time.

Factors for employers to consider

Spinks said that many employers are still mulling how to update their policies. What they decide depends on several factors such as their industry, company size and the nature of the job.

“There’s lots of conversation about what the industry is doing, what the sectors are doing, what competitors are doing.”

She added that employers should also be weighing how they’ll factor the newly announced five-week paternity leave into the equation, which goes into effect later this year.

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One concern flagged by Ashley Ziai, a senior policy analyst at the Canadian Federation of Independent Business (CFIB), was about reintegrating workers who take 18 months off from work.

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“If someone is out of the workforce for a year-and-a-half, it might be a bit misleading to think that they wouldn’t require any retraining,” she told Global News.

“You would also have to spend time training their [temporary] replacement that you bring in.”

Ziai added that many small- and medium-sized businesses don’t offer top-ups anyway, which means the changes are a moot point. Even if companies do offer top-ups, the 18-month leave likely won’t be in high demand, she predicted.

“The take-up is going to remain low, we suspect, because I don’t know of many middle-class families that can live off 33 per cent of one spouse’s salary for a year-and-a-half.”

Confusion over provincial labour codes

Also causing confusion is that most provinces haven’t yet updated their corresponding parental benefits laws, meaning not all Canadians can take advantage of federal rules.

Ontario and Alberta are the only provinces which have legislation that explicitly allows for residents to take 18 months off.

READ MORE: What does an 18-month parental leave mean for Canadian employers?

Ontario’s Employment Standards Act now allows parents to take up to 63 weeks off work, and Alberta’s Employment Standards Code enables them to take 62 weeks.

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Spinks explained that some other provinces have purposely vague wording to accommodate the federal government’s changing rules.

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Overall, Canadians who want to take advantage of extended parental leave have a few factors to consider when it comes to how much money they’ll receive.

“You have to look at three elements: federal benefits, provincial job legislation, and third, your employer policy. And you have to keep those separate because they don’t move and evolve together.”

— With files from Global News reporters Monique Scotti, Erica Alini

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