Federal Budget 2017: How Parental Leave Increase Affects Employers

The unveiling of the Liberal Party of Canada’s 2017 budget on March 22, 2017 brings change for Canadian employers.

In keeping with their campaign promise, the Federal Government announced that parental leave and benefits would be extended to 18 months, up from the maximum 12 months that parents are currently provided.

Under the new plan, parents can opt to receive a lower Employment Insurance (“EI”) rate of 33 per cent of average weekly earnings for 18 months, instead of the current 12-month leave at an EI benefit rate of 55 per cent.

The extended parental leave may pose difficulties for Canadian employers in a number of ways:

  • Re-integrating employees after a longer leave will require employers to invest more in re-training costs.
  • Employers may have to rely increasingly on replacement workers where extra responsibilities cannot be spread out among staff for greater periods of time.
  • The 18-month leave will also mean greater periods of time off where a parent chooses to have multiple children in quick succession.
  • Employers who provide a top up in addition to EI benefits will face a choice as to whether to extend their compensation accordingly.

The anticipated parental leave extension will bring changes to the Employment Insurance Act and Canada Labour Code, and provincial employment and labour legislation will likely respond with similar amendments. Employers will be required to review and amend to their policies accordingly.

The anticipated changes are not expected to be enacted until 2018 or later, but employers would be wise to start thinking about policies changes well in advance of this date.

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.