Having children is a huge life change. It can affect every aspect of your life, including your financial life. Understanding the benefits available to you as a new parent is an important part of preparing to start a family. Canada offers maternity and parental leave through the EI program. All Canadians who are employed in insurable employment and whose salary would be reduced by at least 40% due to a new child are eligible to apply for the benefits. Below is a quick guide to these benefits and how they can work for your family.
There are two types of benefits available to new parents in Canada: Maternity Leave and Parental Leave.
Maternity leave is only available to biological or surrogate mothers who have or will be giving birth. The maximum amount of maternity leave available to new mothers is 15 weeks. This time can be taken up to 12 weeks before birth or until 17 weeks after.
Parental leave is available to new parents caring for newborn or newly adopted children. Parents have two options when determining the amount of time that they will be on parental leave: Standard or Extended.
The standard maternity leave in Canada is 35 weeks. This time must be taken within 52 weeks of the birth or adoption of a child. Claimants are eligible for 55% of their average salary up to the maximum amount. The current maximum (2021) is $595 weekly. Extended parental leave is available for up to 61 weeks. The benefits must be paid within a 78-week period after the child is born or places the child for the purpose of adoption. The weekly benefit is 33% of the average salary up to the maximum amount.
While maternity is exclusively reserved for birth mothers, parental leave offers a flexible option for both parents. There are many ways that new parents can share their parental leave benefits. One parent may take the entire parental leave, or the time may be split between two parents. Below are some examples of how this could work for families:
If a birth mother chooses to take her 15 weeks maternity leave and then wishes to return to work, the other parent has the option of taking the 35 weeks of parental benefits to stay home with the child.
If one parent takes 15 weeks of parental leave, then the other parent would be eligible to use up the remaining 20 weeks.
If a parent takes 10 weeks of parental leave and decides to go back to work, they may find they regret their decision and wish to stay home with the child longer than anticipated. The parent would then be eligible to go back on parental leave, given that they do so within the 52-week time periods for standard leave or 78-week period for extended leave.
Canadians are lucky to have access to a flexible and comprehensive leave program. Understanding the time periods and financial benefits can help you and your family plan for a new addition.