Wednesday, September 25, 2013

Maternity Leave

I work for a medium sized corporation that is doing well. My maternity leave is based on how long I've been with the company. I will get 4 weeks off paid at 100% of my salary plus outstanding commissions. Assuming a natural delivery, I will get an additional 2 weeks paid at 80%. I can take up to 12 weeks off.

I'm okay with my benefits. I've heard much talk about how the United States has a terrible maternity leave policy. I don't think its right that the government pays people to have kids. I think our income tax system is skewed by giving a monetary benefit to those with more dependents. It doesn't take a genius to pop out kids and we don't need to increase our population, so why pay people to have kids?

Since there are a number of Canadians who read my blog, I'm sure they will comment on how they can't believe how little time off we get. I prefer our system because we're not subsidizing everybody else. You just pay for yourself. I prefer to pay lower taxes and take care of myself.

12 comments:

  1. I agree. I don't particularly like paying for other people's kids and it seems like the people having the most kids are the ones who shouldn't be reproducing. I have a family full of those types.

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  2. Wow, you have a generous company for maternity leave. I was able to take the full 12 weeks off for each of my girls but my company didn't pay me anything. I did get paid for 6 weeks from a short term disability policy I had.

    I'm all for paying for myself and not having to be responsible for other peoples' choices.

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  3. Canada has an excellent system for new mothers, and it is not "welfare" or the like, the funds are from wages that the mother has already worked for and paid for. So she's only dependant on herself to qualify and earn those wages. So yes, they are taxed, but it still allows the mother (and/or father) a full year off with their new baby to heal, and adjust to life with a new baby in the home while still receiving 55% of their wages. Then when they are ready to go back to work, they go back to their own job with the same pay, same benefits, etc... The support here for new mothers is outstanding and I think worth every penny that goes into it.

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    1. Apologies that this is a bit long; I'm an HR professional and couldn't help but jump in with some thoughts.

      Exactly! Another Canadian here. New parents are eligible to apply for Employment Insurance while on maternity or parental leave which both employees and employers pay into, the government's responsible is to invest the money we contribute to EI so that there's always a fund available to pull from. If new moms or dads haven't paid EI premiums (worked for cash under the table, or have never worked outside the home) - they would not get EI. For this type of leave (which is job protected - your employer cannot let you go while on or upon returning form leave), you can get approved for 55% of your previous wages but up to a maximum of an income of $47,400. This means that you can receive a maximum amount of $501 per week (which is then taxed as income). What is also great about this system is that both moms and dad's have access to it. Maternity leave (mom's only) is up to 17 weeks and Paternity Leave (for moms or dad's) is up to 35 weeks for a total of 52. So if mom wants to go back to work after say 8 months, dad can then stay at home for 4! This is also awesome if mom and dad have different employer 'top up' benefits.

      Some employer's choose to 'top up' EI premiums as an additional benefit - so for example at my work; if I am approved for EI, my employer 'tops up' the EI benefit to 70% of my salary for 15 weeks. This is huge because it helps new families prepare financial for less money while on leave as it drops in stages. My company also allows parents to continue to accrue vacation while on this type of leave.

      Here's more info on Service Canada's Site: http://www.servicecanada.gc.ca/eng/ei/types/maternity_parental.shtml

      tl; dr: Canadian's pay for the benefits they receive.

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  4. Here in Barbados, I think you get 12 weeks off for maternity leave. It is paid for through our national insurance scheme which also pays you a percentage of your income if you took sick leave. The scheme also funds the government run pension. Anyways, you don't get 100% of your salary for maternity leave, I think it is somewhere around 80%. Also you can only file for it if you have been working for at least a year.

    I think our system is a pretty fair system but after reading your post, I can side with you on the case you make but there are always good counter arguments. I'm not here to get into a debate though, just to say I can agree with you and mostly because I truly believe that people should put a lot of thought into family planning. Choosing to have a child or children isn't a small issue.

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  5. So in Canada does everyone pay into the fund that supplies income to the new mothers/fathers or can you opt out? If you can't opt out of the tax then indeed childless people are paying for other people's children. Maybe this makes me heartless but I don't want to contribute to a woman's (or man's) pay for a year because she choose to have a child.

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    1. All employees/employer's contribute to Employment Insurance - but the fund is accessible for more then just maternity and parental leaves. You can also apply for employment insurance if you are laid off from a job (not fired for misconduct); if you cannot work (but you previously employed for a period of no less then 600 hours) due to sickness; to proved care for a family member who is gravely ill with a significant risk of death as well as parents of critically ill children.

      Depending on why you are applying, the rules vary with how much $$ you can get access to and for how long.

      Here's more info on the types of applications for Employment Insurance that are considered:
      http://www.servicecanada.gc.ca/eng/sc/ei/index.shtml

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  6. It might not be welfare but it's no different than other things we pay taxes for and potentially never get a dime from such as unemployment tax or taxes I pay for schools when I have no kids to use the school system. It's just another avenue where you give money to a select group of people while making everyone else pay for it. I doubt the woman who takes a year off will ever pay enough in family leave taxes over her career to pay back the 55% of her pay she got for that year.

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    1. I'm a bit passionate on this topic, so am going to throw my two cents in here....

      People also pay for house insurance, car insurance, etc. that they will hopefully never have to draw from - but just in case, we all pay it anyways.

      A women who is eligible for maximum EI benefits would (this year) receive $501/week. There is a mandatory 2 week waiting period for benefits, so we'll multiply that number by 50 and assume she took the entire period of leave. That gives us a total benefit of $25,050 (which is taxed).

      Continuing in our assumption that the women was eligible for the entire benefit, we can also assume she and her employer contributed the maximum required (http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/ei/cnt-chrt-pf-eng.html). In 2013, that combined contribution is $2,138.69. We can see from the tax man's website that each year these premiums increase, and we also know that the government is investing this money - so they are earning money on the money we contribute to the programme.

      So, even though we know that's true - let's put it aside and just divide the annual benefit she receives, by the annual contribution.

      We get 11.71 years....

      Do we really think a women won't work at least 12 years in her lifetime? Even 24 years if she had two?

      Assuming she started work at 25, and plans to work until she retires at 65 - that's a heck of a lot of contributions in her lifetime which more then pays for the leave she takes.

      If we take into account a spouse that is also working and contributing - because this type of benefit actually benefits the entire family, not just the person taking leave. The family is actually contributing $4,277.38 - which means that they have to work just under 6 years to 'pay back' the benefit.

      /rant

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  7. All I know is I already pay a crap ton in taxes a year and get nothing back. Maybe people in Canada are more appreciative of what they receive from the government unlike in the U.S. where people's expectations of handouts keep going up and up.

    I wonder how much our taxes would have to increase if a maternity leave was set up here similar to Canada. It Is hard to compare the true cost to a Canadian when the EI tax that pays for the leave is lumped into all EI benefits.

    Also what's to stop a woman from collecting EI insurance for a year and then never going back to work and instead becoming a stay at home mom?

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  8. I admit that I'm super biased here. My mom had 6 unplanned children. I'm against any parent profiting, which in my mind off work with partial pay is, by having children. The way we get tax breaks for having more and more kids does not seem right to me.

    Jessie, I think you have a more European mindset on this subject than most of us here in the States. That's why it hasn't changed here and likely never will.

    I think we should move on to the next subject.

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