Compared to most industrialized nations, Canada has a better than average national parental leave program. Some countries, such as the United States, offer pathetic programs. Their Family Medical Leave Act (FMLA) only covers mothers for 12 weeks of unpaid leave with guaranteed job security (except in smaller companies). Some states do offer more comprehensive maternity leave options than others, just as some companies may offer extended benefits.
Some countries offer parental benefits that we can only dream about. In Sweden, for example, a mother is eligible for 16 months of parental leave split between herself and her partner, while still receiving 80% of her pay.
In Canada, we fall somewhere in the middle. While some companies offer top up programs for income, or extended leaves with job security, most working mothers will only receive basic maternity benefits, which fall under Canada’s Employment Insurance program. These benefits are paid to birth mothers and surrogate mothers for up to 15 weeks. To receive maternity benefits you must have worked for 600 hours (about 15 weeks full time) in the last 52 weeks or since your last claim.
Mom can begin collecting maternity benefits a few weeks before the birth of the baby, but benefits end 17 weeks after the baby is born or the expected due date, whichever is later. If your baby is hospitalized, this 17-week window may be extended – the payments are not extended, just the deadline by which they can be collected.
As with maternity benefits, to receive parental benefits you have to have worked for 600 hours in the last 52 weeks or since your last claim. Parental benefits can be collected by either the biological or adoptive parents for up to a maximum of 35 weeks. These benefits can be claimed by one parent or shared between the two partners, but cannot exceed a combined maximum of 35 weeks. Parental benefits must be claimed within the 52 weeks following the child’s birth, or for adoptive parents, within the 52 weeks from the date the child is placed with you. If your baby is hospitalized, this 35 week window may be extended.
In 2009, both maternity and parental leave payments were capped at 55% of your average insured earnings up to a yearly maximum insurable amount of $42,300. This places the current maximum payment at $447 per week. You could receive a higher benefit rate if you are in a low-income family. Your payment is a taxable income, meaning federal and provincial or territorial taxes will be deducted.
What if Something Goes Wrong?
If the mother experiences complications related to the birth of a child, she may be eligible for sick leave in addition to maternity leave. Sickness benefits may be paid up to 15 weeks to a person who is unable to work because of sickness, injury or quarantine. Mom must meet the 600 hours worked in the last 52 weeks or since her last claim requirement, and a doctor’s note will be required. She could receive up to a maximum of 65 weeks of combined sickness, maternity and parental benefits instead of the normal combined maximum of 50 weeks. Often, sick leave is used in cases where the mother is confined to bed rest for pregnancy related complications, or she has other pregnancy related issues that prevent her from working.
But I’m my Own Boss!
In 2010, the government introduced the Fairness for the Self-Employed Act. Previously, self-employed Canadians were not eligible for maternity or parental leave benefits. With an estimated 900,000 self-employed women in Canada, this was clearly an important issue. Under the new legislation, self-employed Canadians can now receive similar benefits to other employed Canadians if they opt into the program at least one year prior to claiming benefits and are responsible for making premium payments starting with the tax year in which they opt in to the program. The self-employed pay the same premium rate that salaried employees currently pay. They are not required to pay the employer’s portion of the premium rate, as they do not have access to EI regular benefits. Self-employed workers can opt out of the program at the end of any tax year, as long as they have never received benefits – if they received benefits, they are not permitted to opt out.
A Little Something on the Side
Working while on leave can be a good way to earn extra money, whether it’ll be used for making ends meet, paying for those extra baby sign language classes, starting or topping up an RESP. It doesn’t make financial sense to work while on the maternity portion of the benefit, as your earnings will be deducted dollar for dollar from your benefits. However, there might be circumstances where you benefit professionally from working a bit while receiving maternity benefits.
If you work while you’re receiving parental benefits, you’re allowed to earn $50 per week or 25% of your weekly benefits, whichever is higher. If you’re receiving the maximum $447 per week, then you can earn just over $110 a week in additional income. Any income earned above that amount will be deducted dollar for dollar from your benefits.
Until December 4, 2010 the government is running a pilot project that increases the amount you can earn while working part-time and receiving maternity and parental benefits by allowing you to earn the greater of $75 or 40% of weekly benefits.
You must report any earnings you make while collecting maternity, sickness or parental benefits, which can be done either by phone or through written reports. It’s relatively easy, and if you can work this small amount without paying childcare costs, you’re ahead of the game.
Bio: Sarah Deveau is the author of Money Smart Mom: Financially Fit Parenting. Check out her website at www.moneysmartmom.ca and join her on Facebook and Twitter!