There are so many challenges and opportunities that come with the joyful arrival of a baby. People become parents, single or couple units suddenly become a family, and life changes dramatically for everyone involved.
Along with all of these changes, a new parent must also choose whether or not to take time off from work in order to care for their child. This may seem like a straightforward decision, especially for mothers who give birth and are caring for a newborn child along with their own post-birth recovery.
However, there are two challenging considerations that all new parents must face. First, whether or not they can afford to the take time off from work financially; and second, whether or not they can afford to step off their personal career trajectory for an extended period time.
There is no doubt that taking time off from work to have a child is costly. As the cost implications impact both the individual employee and the employer, Canadians can access childcare related benefit programs offered by the federal government. These benefit programs provide both financial subsidies and time-related provisions that allow new parents to spend more time at home. Recently, the federal government introduced new provisions that allow parents to extend their time at home from twelve to eighteen months. There is also a new benefit offering an additional five weeks of leave for those choosing to share parental leave benefits. These are federal government programs for which new parents must apply and meet eligibility requirements order to receive the monetary benefits.
An extensive review of the impact of maternity and parental leave benefits is provided in a recent article published by Benefits Canada.
As noted in the article by Benefits Canada, with the new 18-month extended benefit for parental leave, the monetary payments are at 33% for the duration of the leave in comparison to the traditional twelve month leave during which time the parent can receive a maximum of 55% of their total salary. The article notes that the uptake for Canadians accessing the 18-month benefit is slower than anticipated, which may not be surprising if individuals simply cannot afford either the reduced benefit and/or the increased time away from work.
The additional five weeks of parental leave benefits also comes with a catch. New parents must decide whether to use it or they will lose it, based on their eligibility requirements and by determining which parent will be able to access this new benefit.
In order to alleviate some of these financial impacts, employers can choose to offer a financial top-up for employees who are in receipt of federal parental leave benefits. Again, this is a cost decision that an employer can make based affordability.
All of these considerations must be taken into account in the context of thoughtful compensation planning when determining how much support in terms of time and money can be provided for new parents.
New parents do need all of the support that they can get, so they can focus on what is truly important – their new child.
- Do you agree with the use-it or lose-it requirement for non-birthing parents eligible to take the new the five weeks of parental leave? Explain your rationale.
- In your opinion, why is the uptake for new parents taking maternity and parental leave time in Canada so low?
- Identify three barriers and three benefits to the employer who provides top-up provisions to maternity and parental leave plans.