Business

Parental leave changes prompt questions of affordability, cost to businesses

Vast majority of workers not covered by new changes

CBC News

November 10, 2017

New federal rules allowing for extended parental benefits for workers in federally regulated sectors will kick in on Dec. 3. (Nicky Loh/Reuters)

New parental leave options that will allow some Canadians to spread their federal benefits over a longer period of time are leading to questions about how many people will benefit and whether small businesses will be able to adapt.

Under changes that will come into effect on Dec. 3, parents of a newborn or a newly adopted child will have the choice to spread their employment insurance benefits over the normal 12-month period or an extended 18 months.

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"The flexibility will mean that each family will decide on what is best for them," Minister of Families, Children and Social Development Jean-Yves Duclos said in announcing the measures. "That is exactly the key objective...to make each family be better able to make those decision that better work for them."

However, the change will be limited to employees who work in federally regulated sectors of the economy, such as banking, telecom, transportation and the public service.

Critics stress limited access

Employment lawyer Jill Lewis told CBC News that the change will affect only about eight per cent of the Canadian population.

"So the vast majority of employees are going to have to wait a little longer to enjoy this type of advantage," Lewis said.

The federal government estimates up to 20,000 parents may use the new extended parental leave guidelines.

Under the new provisions, people who opt for the extended parental leave won't see any more money. They can choose 12 months of EI benefits at 55 per cent of their average weekly earnings or 18 months at 33 per cent, meaning there is no extra money in the system for those who choose the longer leave.

"There are very few families that can live off 33 per cent of their income, and that percentage is capped...at $362 a week," said Lewis. "There's very few families who can live off of that type of income."

"The minister talks about flexibility and choice. There's not a lot of choice given to families who can't live off a reduced income like that."

Roughly one in five new mothers in Canada who worked in the year before they gave birth or adopted a child doesn't qualify for benefits, said Jennifer Robson, an assistant professor at Carleton University.

"It's not real actual choice if you can't afford to avail yourself of the system," she told Peter Armstrong, host of CBC News Network's On the Money.

Changes will 'gum up the works'

Dan Kelly, president and CEO of the Canadian Federation of Independent Business (CFIB), said the organization is watching for whether an employee would be allowed to divide their leave. It doesn't seem to be the case, he said.

"Small firms really feel like this is a solution in search of a problem, but we do know that this is going to gum up the works for a lot of business owners over the next little while and probably not help out too terribly many families," Kelly told CBC News' Meegan Read.

Kelly said CFIB, which represents more than 100,000 members, doesn't expect the uptake by workers to be large. Employers of those who do take extended leave it will be pressured to find replacement workers for longer periods, he added.

He noted there will be added costs of training replacement workers, and then retraining costs when a worker returns from leave.

Job protection

Angella MacEwen, a senior economist with the Canadian Labour Congress, said the changes also extend job protection for those on parental leave to 18 months — but again, only for federally regulated workers.

"Almost 90 per cent of workers are covered by the provinces, and so that won't come into effect until the provinces decide to extend the job protected leave as well," MacEwen said.

The government's changes don't add child care spaces or make child care more affordable, she added.

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