pregnancy or parental leave top-up
Photo by Kelly Sikkema on Unsplash

As companies struggle to retain their talent in the midst of so many economic and health changes, many are finding new ways to attract and keep employees. A growing number of companies, for instance, are providing their employees with or extending existing pregnancy or parental leave top-up payments to assist families with caregiving responsibilities (present and/or future). 

Pregnancy vs. Parental Leave Basics

First of all, it’s important to distinguish between two commonly confused leaves: pregnancy and parental leave. In Ontario, pregnancy leave is taken by the birthing parent and typically starts before the birth of the child. Parental leave, on the other hand, can be taken by either or both new parents after the birth of the child or when a child comes into the employee’s custody, care and control. Parental leave can also be used by parents who are adopting a child. The birthing parent will typically take a combination of pregnancy and parental leave. These leaves are protected leaves under the Employment Standards Act, 2000 (“ESA”). The ESA sets out the requirements for the leaves, for example, how long an employee must be employed with the employer before they can take the leave, and the employee’s entitlements both during the leave and upon return from the leave. 

EI and Top Up Overview

Parental and pregnancy leave under the ESA are distinct from an employee’s Employment Insurance (“EI”) entitlements, other than that the timelines for taking these leaves and receiving any EI will typically match up. Though employers must ensure benefits continuation and job protection during the employee’s pregnancy or parental leave, employers are not legally obligated to continue paying an employee’s salary during this period. Instead, employees in Canada who have worked enough hours may qualify for EI. As EI covers only a percentage of an employee’s income during pregnancy or parental leave, some employers have a policy of topping up the employee’s EI payments to ensure the employee can focus more on their family and less on their financial situation. 

How Much Parental Leave EI Can an Employee Get?

Parental benefits are available to the parents of a newborn or newly adopted child. Technically, there is no minimum EI parental leave a person can take. A parent could hypothetically take 1 day of EI parental leave then return to work, at which point they will have to let EI know to put a stop pay on the file. 

Generally, the parent can choose between 2 options on an application for parental leave EI:

  • standard parental benefits (maximum: 40 weeks altogether for both parents, but one parent cannot receive more than 35 weeks of standard benefits)
  • extended parental benefits (maximum: up to 69 weeks altogether for both parents, but one parent cannot receive more than 61 weeks of extended benefits)

One parent could take 100% of the EI parental benefits, while the other takes 0 days, or they could split it down the middle, etc. 

When combined with EI pregnancy benefits (up to 15 weeks) a birth mother can receive a maximum of 50 weeks of standard benefits or 76 weeks of combined standard and extended benefits. 

Top-Ups Basics

Employer top-up plans for parental or pregnancy leave do not have to be registered with Service Canada. These payments are also not considered extra earnings and therefore are not deducted from EI benefits, as long as (1) they don’t exceed 100 percent of weekly earnings when combined with EI benefits; and (2) the payment is not used to reduce other accumulated employment benefits such as banked sick leave, vacation leave credits, or severance pay.

If you need one-on-one advice from a lawyer to assist you with navigating parental leave EI or parental leave requirements, please get in touch for a consultation. For those employers looking for general templates and guides for employment contracts, termination letters and releases, we have a great DIY toolkit – The Workplace Law Bundle!