Is one year paid parental leave the new norm?

August 14, 2015 Vey Willetts LLP Employee Relations, Employment/Labour Standards, HR Policies and Procedures, Human Resources, Payroll, Pensions and Benefits, Union Relations, Wages and Compensation

Image: www.thestar.com

On Tuesday, August 4 – the same day that Netflix stock hit a record high, the company announced a decision through its blog to provide paid maternity and paternity leave for its employees, up to one year. Netflix stated:

We’re introducing an unlimited leave policy for new moms and dads that allows them to take off as much time as they want during the first year after a child’s birth or adoption.

We want employees to have the flexibility and confidence to balance the needs of their growing families without worrying about work or finances. Parents can return part-time, full-time, or return and then go back out as needed.

The company’s decision is ground-breaking in many ways. It also reflects the desire of many new parents, in the US and Canada, for flexibility to focus on nurturing their newborn without financial stress.

While on its surface the institution of fully-paid and flexible parental leave was largely applauded in the media, some writers have questioned its practical application. In one such article, “Why Netflix’s amazing unlimited maternity leave policy terrifies me”, the author wrote:

The idea of an extended absence and letting someone else essentially replace me is a scary thought…Think of all the things that could change with your company in the time you were gone, particularly in a fast-growing company like Netflix. New team members, products, strategies – all the things that may find you irrelevant by the time you walk back into office.

Regardless of concerns that the policy may not deliver on its promise, a comparison of Netflix’s parental leave policy against Ontario’s minimum requirements highlights a significant gap.

In Ontario, new parents are entitled to unpaid leave for up to 37 weeks (with some exceptions), provided they have completed a minimum of 13 weeks’ work. On top of this, individuals can apply to Service Canada for Employment Insurance (“EI”) Parental Leave benefits. The EI system is only a partial top-up of an individual’s regular salary. In addition, EI benefits are federally administered and subject to a distinct eligibility criteria that differs from the provincial requirements to receive parental leave.

Netflix has predicated its decision to offer paid parental leave on a desire to provide its staff with flexibility, and to reduce financial pressures. However, the move may be less altruistic than it first appears. Shortly after Netflix made it announcement, both Adobe and Microsoft announced similar (though less generous) increases to their parental leave policy. There is thus a good argument that these new parental leave policies are a reflection of the competition for talent in the technology sector.

For many employers, particularly those with limited resources, funding generous parental leave policies such as that created by Netflix may well prove unviable. It can also be hard for smaller employers to lose individual staff members for extended periods when there are only a few bodies at work to begin with.

While Netflix’s new policy should be lauded, without further government direction, it seems doubtful that paid parental leave will become the new standard for employers anytime soon.

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Vey Willetts LLP

Employment and labour lawyers at Vey Willetts

Vey Willetts LLP is an Ottawa-based workplace law firm, serving individuals and employers across Eastern Ontario. They recognize that operating a business is complex and maintaining an efficient and legally-compliant workplace is a continuous challenge. The firm helps simplify legal workplace obligations so that employers can focus on what matters: their business. Learn more about Vey Willetts LLP by contacting Andrew Vey, or Paul Willetts or by visiting the firm’s website. Read more.

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EI benefits, Employment Insurance, flexibility to focus on nurturing their newborn without financial stress, individual’s regular salary, Netflix, one year paid parental leave, paid maternity leave, parental leave, parental leave policies, parental leave policy, Service Canada, unpaid leave

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2 thoughts on “Is one year paid parental leave the new norm?”

Sheryl Smolkin says:

August 15, 2015 at 8:04 am

The public sector at the provincial and federal level and some unions top up EI for up to a year. My daughter works for PSAC and got a 1 year paid maternity leave. There are also many private sector companies that top up beyond the EI period.
just anderson says:

August 14, 2015 at 10:42 pm

In Ontario Canada one year maternity / parental leave ( mother or father) is the law. Payment is through government Employment Insurance (EI) at approx 55% of the persons salary but capped at approx $ 475 cdn funds per week. Some employers top up the difference in earnings, but that is voluntary. Our EI insurance program is mandatory and contributions are taken as an at source payroll deduction. Both Employer and employee contribute. Contributions required are determined through federal income tax tables.