New Employment Insurance Regime Effective December 3, 2017
Changes to Employment Insurance Maternity Benefits and Parental Benefits
Changes to the Employment Insurance (EI) regime with respect to maternity and parental benefits for eligible employees will come into force on December 3, 2017 pursuant to Bill C-44: Budget Bill Implementation Act, 2017, No. 1.
Current System. Currently, EI maternity benefits are payable to a maximum of 15 weeks and EI parental benefits are payable to a maximum of 35 weeks. Together, the maximum number of weeks of EI maternity and parental benefits that an employee may receive is 50 weeks. Both of these benefits are to be paid at a rate of 55% of weekly insurable earnings. The current system will continue to apply to benefit periods that began before December 3, 2017.
New Option. The current system of 50 weeks of combined maternity and parental benefits will continue to be offered at a rate of 55% of weekly insurable earnings but, as of December 3, 2017, there will be another option. While EI maternity benefits will remain payable to a maximum of 15 weeks at a rate of 55% of weekly insurable earnings under the new option, employees may elect to receive EI parental benefits for a maximum of 61 weeks at a rate of 33% of weekly insurance earnings. The employee must make an election between the two options at the time of application and the election is irrevocable. Where the employee is sharing the benefits with another parent, the first to elect determines the chosen option. The maximum number of weeks that an employee could receive benefits under the new system is 76 weeks.
Employment Insurance Benefits vs. Leave. It is important to distinguish between employment insurance benefits and employment leave because one does not dictate the other. Employment insurance is a monetary assistance program that is available to employees who become eligible to receive such assistance when they take leave from work to attend to their newborn child(ren). Leave must be requested from an employer by an employee who wishes to take time off from work to attend to their newborn child(ren). An employee who has worked for the same employer for at least 20 consecutive weeks is entitled to 17 weeks of pregnancy leave and/or 35 weeks of parental leave under the NL Labour Standards Act. The combined maximum number of weeks of leave that an employer is required to provide an eligible employee is 52 weeks.
Potential Issue. Currently, the NL Labour Standards Act entitles employees to sufficient leave in order to receive the maximum weekly payable benefits under the current EI system but not sufficient leave to receive the maximum weekly payable benefits under the new EI parental benefits option. The new option allows for employees to choose an additional 26 weeks of parental benefits. However, the NL Labour Standards Act does not require employers to give an additional 26 weeks of parental leave. Therefore, if an employee elects the new EI parental benefits option and is not granted sufficient leave by his or her employer, it could result in a significant monetary loss to the employee. The issue will not affect federally-regulated employees.
Advice for Employers. Employers ought to reconsider their current maternity and parental leave policies in light of the changes to the EI regime. One option available to employers is to amend policies to grant maternity and parental leave up to 76 weeks, allowing an employee who wishes to avail of the 15 weeks of EI maternity benefits at the rate of 55% and the 61 weeks of EI parental benefits at the rate of 33% to do so. The other option is to make it clear to employees that they will receive the maximum amount of maternity and parental leave that they are entitled to under the NL Labour Standards Act, which is 52 weeks. This should indicate to employees that the practical option for receiving the maximum amount of EI benefits available to them would be 50 weeks of EI maternity and parental benefits at the rate of 55%. Additionally, any employer who offers supplemental or top-up payments during periods of maternity or parental leave should reassess and reconsider the effect that the increased leave periods and reduced rate of EI parental benefits may have.
The comments contained in this eCaseNote provide general information only and should not be construed as legal advice or opinion. For more information or specific advice on matters of interest, please call our offices at (709) 579-2081.