Canadian Parental Leave Laws: Employer's Obligations and Employees' Rights

Has one of your employees come to you with some exciting ‘news’ recently? Are the excited squeals and congratulations of coworkers floating around the office?  

Even if you have never dealt with the realities of a pregnant employee before, the odds are that sooner or later, someone will request time off to be with a new baby. 

As an employer, it’s imperative that you are aware of the regulations that protect the rights of new mothers and fathers. Any mistake on your part can result in costly litigation, undue stress, and loss of company reputation. 

But don’t worry! We know parental leave laws can be a bit complex, so we created this cheat sheet to help simplify the information. In addition, if you are uncertain about any aspect of maternity and parental leave, we strongly suggest you consult with an experienced benefits advisor.

Understanding Maternity and Parental Leave in Canada

During maternity and parental leave, your employee takes time off work while you hold their job for them. Employees taking time off may also qualify for Employment Insurance (EI) parental benefits. 

Maternity leave is for biological mothers only. It is taken while pregnant and after the baby is born. Your employee can also take parental leave after their maternity leave.

Parental leave is for both parents, whether they are biological or adoptive. Both parents can take a parental leave, at the same time or at different times, even if they are both employed by the same company.

Adoption leave allows new adoptive parents to take time off to care for their child. The government is currently preparing a new parental benefit that will provide additional time off for parents who adopt or use a surrogate to expand their families, allowing them to spend more time at home with their newborn.

As an employer, what are my responsibilities? 

• You are not required to pay wages during your employee’s leave, unless stated in an employment contract or collective agreement. 
• You may be required to continue employee benefits depending upon a number of factors. Further details are provided below. 
• You cannot discriminate, lay off, or terminate an employee, or require them to resign because of pregnancy or childbirth.
• You must allow eligible employees to take maternity or parental leave without risk of losing their job, and give them their same, or equivalent, job back when they return to work.
• Employees on maternity or parental leave are considered to be continuously employed, for the purposes of calculating years of service.

The leave may be extended, depending on the province, if the birth mother is unable to return to work for reasons related to the birth or termination of the pregnancy. 

Maternity, parental, and adoption leave by province

Each province has minor variations regarding the length of leave which are outlined below.

What does my employee need to provide before taking maternity or parental leave?

Each province also has minor variations regarding what the employee requires at the start and end of the leave. 

For example, according to the BC Employment Standards Act an employee in British Columbia must submit a request for leave in writing at least 4 weeks before the first day of leave. In case of unforeseen problems with the pregnancy or pregnancy termination, employers can extend the leave by up to six weeks. You also may ask for a medical or nurse practitioner's certificate stating the expected birth date or the date the pregnancy terminated.

What does my employee need to know about EI parental and maternity leave benefits? 

EI Maternity Benefits can be paid for a maximum period of 15 weeks and must end 17 weeks after the week your employee is expected to give birth or the week she actually gives birth, whichever is later.

EI Parental Benefits are pretty straightforward. Parents may choose between two options:

• Standard parental benefits
• Extended parental benefits

Employees can choose the number of weeks of leave and the weekly amount of money they receive. The standard parental leave is 40 weeks, but one parent can only take up to 35 weeks. Extended parental leave is 69 weeks, but one parent can only take up to 61 weeks. Leave can be split between parents.

Leave must be taken within a specific timeframe. Standard parental leave must be taken within 52 weeks of the child being born or adopted. Extended leave must be taken within 78 weeks.

The weekly amount of money received is adjusted by the length of the leave. Employees on standard parental leave may receive up to $650 per week or 55% of their salary. Employees on extended parental leave may receive up to $390 per week or 33% of their salary. 

Employees should choose their benefits carefully, as they cannot be changed once a payment plan has been made. Some employers may offer to top-up the salary of their employees on parental leave.

In order to receive Employment Insurance (EI) maternity or parental benefits each parent must:

1.  Have previously worked 600 hours in the last 52 weeks or since their last claim. 
• Meeting these hourly requirements entitles them to 55% of their weekly insurable earnings to a maximum of $543.00 a week.  

2.   Agree to have their earnings reduced by more than 40%. 
3.   Sign a statement declaring:

• • the newborn’s date of birth or, in the case of adoption, the child’s date of placement.
  • the name and address of the adoption authority.
  • for maternity benefits -  the expected due date or the actual date of birth.

4. Provide the name and SIN number of the other parent if they are sharing the benefits.

What about adding a Supplementary Unemployment Plan?

The first year with a new child is important for bonding and building a strong family foundation. As an employer you can support your team by offering top-ups while on maternity or paternity leave to ensure employees take the time they need. 

For many moderate-income employees, the amount paid by EI is considerably less than the 55% of their earnings. This is where the Supplementary Unemployment Plan (SUB Plan) comes in. SUB is a program that allows an employer to subsidize an employee’s weekly earnings while they are receiving EI benefits.  

Important things to know:

• The subsidy may not exceed 95% of the employee’s regular employed weekly earnings. 

• To supplement maternity or paternity leave, an employer does not need prior approval by Service Canada. Instead, a note on the Record of Employment will suffice. 

What about working while on a claim?

Working while on a claim (WWC) allows employee insurance claimants to earn income while receiving employee benefits and helps them to transition back to employment. WWC rules are extended to both employee insurance maternity and sickness benefits. You can keep 50 cents of your benefits for every dollar you earn, up to 90% of your previous weekly earnings (roughly 4 and a half days of work). Above this cap, your EI benefits are deducted dollar-for-dollar.

For example; Maia is on parental leave. Her weekly standard parental rate is $650 (55% of her earnings up to $650). She has found a part-time job at a marketing company, where she works 1 day a week and earns $160.

Automatically under the default earnings rule, Melissa's benefits are reduced by $80 or 50 cents for every dollar earned ($160 ÷ 2 = $80). This brings her total EI sickness benefits to $730 ($810 – $80 = $730).

This change will likely benefit both businesses and new parents as it allows employees on maternity or parental leave to gradually return to work prior to the official end of their leave without the financial penalty that existed under the old rules.

Do I still need to provide regular employee benefits?

When an eligible employee has decided to take parental leave, they are entitled to continue extended health, dental benefits, and retirement benefit programs. Life and disability insurance benefits should also continue. 

In a cost-sharing situation, the employer must inform the employee of their right to continue benefits. If the employee chooses to continue paying their portion of the monthly premium, the employer must continue to pay the company’s portion of the cost-shared premium.  

In the situation where the employer pays 100% of the premium, the employer must continue all benefits while the employee is on leave.

The role of an employee benefits advisor

An experienced employee benefits advisor is always up-to-date on changes in benefit and insurance law. They can help you stay on top of your responsibilities as an employer, keep your business running smoothly, and avoid potential litigation issues.