One of the biggest adjustments that US companies must make when hiring in Canada, is learning Canada’s national and provincial employment laws. Maternity and parental leave are federally protected leaves, available to all employed Canadians. Employers cannot fire or demote remote workers during these leaves, but they aren’t required to pay them. Instead, Canadian employees receive maternity and parental benefits from Employment Insurance. Employees have a variety of options in planning their parental leave. Understanding the implications of those choices and making good internal parental leave policy decisions isn’t easy!
Failing to comply with employment standards and laws can result in hefty fines, which is why so many employers partner with a PEO when hiring in Canada. Professional Employment Organizations hire and payroll your workers compliantly, so that you can focus on your business, not international employment compliance!
Canada Maternity Leave Policy
Canada’s parental leave policy is split into two parts: maternity and parental leave. Both leaves come with benefits, paid through the national Employment Insurance program. All employed Canadians contribute to EI, every payroll cycle. Self-employed individuals can register to make special contributions, which allows them to access EI benefits after one year. (If you would like to learn more about EI in Canada, read our blog!)
Canada’s maternity leave policy provides paid time off from work for expecting or new parents. Parents can choose to begin their leave while pregnant, or on the day of birth. Maternity benefits are only available to the parent carrying the child, whereas parental benefits are available to all parents, including those who are adopting. Canada’s maternity leave pay works out to 55% of earnings, up to a maximum of $638 a week, paid by EI. Some employers choose to “top up” this benefit with supplementary maternity leave pay, but this is not mandatory.
Employees preparing to go on maternity leave must inform their employers 4 weeks before they intend to go on leave and are responsible for planning and applying for their maternity benefits. Employers issue a Record of Employment to employees, after their final pre-leave payroll cycle, enabling employees to apply for EI.
Employers have several obligations when it comes to maternity leave, including holding the employee’s job and continuing to provide any company benefits they previously enjoyed, including health insurance and other medical coverage. They must provide a minimum maternity leave in Canada, of six weeks immediately after the birth and 16 weeks in total. Canadian employers cannot fire or demote parents who are on leave. Parents should provide 4 weeks of notice before their return to work.
Canada Paternity Leave Policy
Rather than specifying a Canadian paternity leave policy, there are parental leave benefits that can be shared in various ways. This gives more flexibility to families and covers all families equally, including LGBTQ couples and people who are adopting. The parental leave policy in Canada allows parents to:
- Split leave time and benefits or to concentrate them on one parent
- Take their leaves and receive benefits simultaneously, or one after another
- Opt for standard benefits for up to 40 weeks, or extend their leave at a lower rate for up to 69 weeks
Canadian parental leave laws require parents to submit their benefit applications separately and do not allow parents to change their minds after they have started receiving benefits.
|Leave Type||Maximum Weeks||Benefit Rate||Weekly Pay|
|Maternity||up to 15 weeks||55%||up to $638|
|Standard Parental||up to 40 weeks if split; up to 35 weeks if taken by one parent||55%||up to $638|
|Extended Parental||up to 69 weeks if split; up to 61 weeks if taken by one parent||33%||up to $357|
Canadian Payroll Services Handles This and More
Maternity and paternity leave in Canada can get complicated for employers, especially US companies hiring in Canada for the first time. Canadian Payroll Services makes it easy for US companies to stay compliant throughout the entire employee life cycle. We handle onboarding, payroll, and ongoing compliance so that you don’t have to. We ensure that everything from statutory holidays to protected leaves is handled correctly, and you make the best decisions for your company and team when it comes to benefits and leave policies.
Ready to learn more about how we can help? Contact us today!