In recent years, and since the COVID-19 pandemic struck in 2020, the Government of Canada has updated specific guidelines for employment insurance and parental leave. As a result, employers and employees need to familiarize themselves with these maternity and parental benefits updates to ensure they gain the most out of their paid leave.
This article will discuss these temporary government changes to employment insurance benefits and what that means for maternity leave, paternity leave, and parental leave.
What is Employment Insurance?
Employment insurance, or EI, is the government program that provides income support and regular benefits to individuals that lose their job. However, EI benefits also cover other instances, such as sickness benefits, caregiving benefits, as well as maternity, paternity and parental benefits.
Employers, employees, and self-employed individuals pay into this program each pay period to use the benefits should they be needed. These EI premium deductions come from your wages or salary until you reach the maximum yearly insurable amount of $56,300. Everyone pays the same rate for EI premiums; however, that rate changes annually.
Employers will need to know how to calculate employment insurance premiums that they must pay for their employees’ EI contributions.
Employment Insurance and COVID
In light of the ongoing COVID pandemic, the Canadian government has made COVID-related employment insurance improvements. These improvements, or temporary changes, are in effect until September 2021.
Typically all EI benefits will come into effect after a two-week waiting period. These temporary changes allow for the waiting period to be waived. Further alterations have been made to the maternity leave benefits and parental level benefits.
At the start of the pandemic, the government offered assistance to self-employed and employed Canadians through the Canada Emergency Response Benefit, also known as CERB. However, CERB is no longer being offered at this time. Instead, individuals who need income support must rely on their Employment Insurance or other recovery benefits.
When filing your income taxes this year, here is what you need to know about CERB, your taxes, and COVID-19.
What is Maternity Leave?
Maternity leave is an employee benefit that allows pregnant individuals to take a specific amount of time off work. Such benefits can only be payable to the biological mother who must prove they are pregnant. Birth mothers can do this by signing a statement declaring their expected due date or date of birth.
For individuals to receive EI maternity leave benefits in Canada, you must first apply for them, meeting all necessary requirements. Service Canada will then determine whether or not you are entitled to receive such benefits based on your application details.
Pregnant workers that are self-employed can access special benefits by voluntarily opting into the Employment Insurance program. It is important to note that Québec’s maternity benefits differ from the rest of the country.
How much maternity pay will I get?
Maternity leave benefits entitle the birth mother to a benefit rate of 55% of their average insurable earnings, up to a weekly maximum of $595.
How long is maternity leave in Canada?
A pregnant worker that has been approved for maternity leave in Canada is entitled to 15 weeks of paid leave.
In 2017 the Government of Canada made improvements to these maternity leave benefits. As a result, pregnant workers can gain earlier access to their leave, starting 12 weeks before the expected due date and up to 17 weeks after.
COVID-related changes for maternity leave benefits
Due to the pandemic, the government has made temporary changes to this EI program. These alterations are in effect until September 25, 2021 and include:
- The ability to waive the waiting period.
- Individuals now only need to work 120 insured hours to qualify for benefits, as the government offers a one-time credit of 480 insured hours, allowing individuals to reach the required 600 insured hours of work previously needed to qualify.
- The ability to receive $500 per week before taxes, with the possibility of receiving more.
- If the individual has collected CERB, an extension will be made on the standard 52 week period required to accumulate insured hours.
What is Paternity Leave?
Paternity leave is the instance where the father of a newborn child takes time off work. The only employees able to claim paternity leave, are those that work in Québec. Québec is the only province in the whole country that distinguishes this type of leave from parental leave.
Quebec’s paternity leave benefits are exclusive to the father and cannot be shared between parents. In the case of two-woman couples, if the spouse of the woman not giving birth is registered on the act of birth, they are entitled to these paternity benefits.
However, paternity leave benefits for the rest of the provinces do not work the same way maternity leave does. There is no ‘paternity leave’ per-say. Instead, individuals that work and pay into EI benefits can receive paid time off through the parental leave benefits only.
How long is paternity leave in Canada?
In Québec, paternity leave benefits last for a maximum of 3 weeks or 5 weeks, depending on the plan. In all other provinces in Canada, paternity leave, or parental leave, allows individuals who receive this benefit to take a maximum of 35 shared weeks, plus 5 weeks known as ‘daddy days’, of paid leave from work.
What are Parental Benefits?
Maternity and paternity benefits refer to the individual parent’s benefits; parental benefits refer to benefits shared between the parents. Parent benefits can be used by parents of a newborn or a newly adopted child.
Parental benefits are only payable to the biological, adoptive, or legally recognized parents. Those who wish to receive these benefits must provide proof in the form of a signed statement declaring the newborn’s expected or actual date of birth, the adoption date, or the child’s date of placement within the home.
How Parental Leave Can be Shared
The parental sharing benefit allows parents to receive extra weeks of leave to share between the two. In 2019 the Canadian government made improvements on parental benefit sharing to allow new families more time off together.
Where one parent might receive 35 weeks of leave, a shared parental benefit could obtain additional weeks on top of what is already available. However, to be approved for these extra weeks, parents must share the allotted time between the two; no one party is entitled to all of it.
The government guidelines dictate that new parents can choose between two options for shared parental benefits:
- Standard Parental Benefits: Parents receive 5 extra weeks of benefits, 35 weeks becomes 40, and 55% of your average weekly insurable earnings.
- Extended Parental Benefits: Parents receive 8 extra weeks leave, 61 weeks becomes 69, and 33% of your average weekly insurable earnings.
That being said, Québec has its own Parental Insurance Plan that offers:
- Basic Plan: Parents receive a maximum of 32 weeks, with 70% of their average weekly earnings covering the first 7 weeks and 55% of the average weekly earnings for the following 25 weeks.
- Special Plan: Parents receive a maximum of 25 weeks, with 75% of their average weekly earnings covering the whole 25 week period.
COVID-related changes for parental leave benefits
The Canadian government has also extended the same temporary changes for parental benefits as they did for maternity benefits. These include waiving the waiting period, requiring only 120 insurable hours worked instead of 600, and CERB extension.
However, those who take parental benefits will able to receive $300 per week before taxes, with the possibility of receiving more, instead of the designated $500 for maternity leave.
What this Means for Employers
These EI benefit premiums are payroll deductions that are part of a business’s expenses and payroll requirements. As an employer, it can be confusing to keep track of employment insurance premiums and deductions when managing the whole team.
The business owner or HR department should oversee any EI maternity and parental leave-taking of employees, providing them with a record of employment, employment contract, and any other documents needed for their application process. They will also need to make arrangements for temporary coverage of duties if needed.
Small businesses can use tools and software to help them manage these tasks successfully. Accounting software like QuickBooks Online can help small companies track expenses, process payroll, and maximize tax deductions to make maternity and parental benefits less stressful.
Why not start a free trial today and join the millions of users who have kept track of their finances and employee benefits with this comprehensive tool.