Welcoming a new addition is an exciting—and sometimes financially stressful—time. Even before your child is old enough to ask for money (it happens sooner than later), you have the financial responsibility to care for them and pay the bills—which can get complicated when you need time off work to settle into the whole parenting thing.
Luckily, we have access to maternity and parental leave benefits in Canada. Understanding how these benefits work and who is entitled to them can help you figure out your finances when you’re planning to expand your family.
First things first, what are maternity and parental leave benefits?
In short, they’re payments from the Canadian government to support new parents. Often these benefits are lumped together when talking about maternity leave, but in actuality they’re different.
Maternity leave benefits are only available to biological mothers, including surrogate mothers, who need time off work towards the end of their pregnancies or after giving birth. These benefits can last 15 weeks, starting as early as 12 weeks before the baby is due (good news for those experiencing third-trimester troubles or for when those nesting instincts kick in). You can receive 55 percent of your usual income, up to a weekly maximum of $595.
Parental leave benefits apply to all parents, whether biological or adoptive. In 2019, the Canadian government introduced a change to these benefits where parents can choose what suits them. They can apply for standard parental leave benefits, which allows for more benefits over a shorter time period, or extended parental leave benefits, which provides a lesser amount over a longer period of time.
Let’s say you choose the standard parental leave benefits. You’ll get 55 percent of your usual income—just as you would with maternity leave—up to a $595 weekly limit. These benefits are available for 40 weeks and shared between parents, although one parent can’t claim more than 35 weeks.
If you’re a new mom, for example, you can take 35 weeks of parental leave and your partner can take five weeks. Or, if you choose to split those weeks up differently, you can do that too.
With extended parental leave benefits, you’ll get 33 percent of your usual income, to a maximum of $357 weekly for up to 69 weeks—with the caveat that one parent can’t use more than 61 weeks of benefits.
That might look like Mom taking 61 weeks of parental leave benefits, leaving eight weeks of benefits for Dad. Again, how you divide that time is up to you.
These rules apply no matter how you or your partner identify, making them inclusive of all families.
Do I qualify?
Maternity and parental leave benefits are provided through Employment Insurance (EI), which many Canadians pay into through their workplace. It’s a deduction you likely don’t even notice coming off your paycheque, acting as a kind of rainy-day fund that can help you get by if you’re laid off from your job or you have a new family member.
Assuming you pay into EI, you’ll need to put in 600 hours of work in the year before you claim maternity or parental leave benefits to qualify.
What if I don’t pay into EI?
If you don’t pay into EI, you’re not eligible for maternity or parental leave benefits.
Those who are self-employed and don’t automatically pay into EI through their workplace can participate in EI’s self-employed program, which gives you access to benefits 12 months after registering. If you go this route, you’ll get the same maternity and parental leave benefits as anyone making regular contributions to EI.
How do I apply?
It’s easy to apply online, though you’ll need a record of employment (ROE) from your employer. You can often get the process started without it, and either you or your employer can provide the ROE at a later date.
A few things to consider
The COVID-19 pandemic has thrown us all for a loop, benefits included.
Normally there is a one-week waiting period where you won’t be paid benefits before they actually kick in.
With COVID-19 in mind, the waiting period may be waived. You might also only need 120 hours of work to qualify for benefits, with a one-time credit of 480 hours helping you reach the 600-hour threshold.
It’s worth checking into current regulations, as well as what your employer offers to new parents. Some provide a top-up for at least a few months, giving your income a boost as you adjust to your new family life.
A financial advisor can help you sort through the latest regulations and figure out how to make your finances work for your family. With financial worries out of the way, you’ll have more time to enjoy those new-parent days.