Self-Employed Maternity Leave in Canada

Canadian employees who are planning to start a family are lucky enough to benefit from sound maternity leave and parental benefits program. But what about the self-employed?  If you are self-employed in Canada, keep reading to learn how you might qualify for parental and maternity benefits.

Can you get maternity leave if you are self-employed in Canada?

Self-employed Canadians may be able to receive maternity leave benefits under Canada's special benefits employment insurance (EI) program. More specifically, if you are planning on starting a family or recently found out you are expecting a child, you can elect to make employment insurance contributions on your income.  Before you can start collecting maternity leave benefits, you need to pay into Canada's EI fund for at least 12 months. Many self-employed mothers only decide to pay into this fund when they discover they are pregnant. This doesn't disqualify you from benefitting from the program. It just means you won't be able to collect payments until your baby is a few months old.  For example, if your baby was born in August 2018 but you only started paying EI premiums in October 2017, you have to wait until October 2018 to start receiving benefits. In fact, you can only claim standard benefits in the first 52 weeks of your child's life. So joining the program late will have a direct impact on your benefits.

Do the self-employed get maternity leave benefits?

To receive maternity leave benefits when you're self-employed, you need to register for access to EI special benefits. You can do this through your My Service Canada Account.  Keep in mind that there is a minimum income threshold to be eligible to receive EI special benefits. To make a claim in 2018, you need to have earned at least $6,947 in self-employed earnings in 2017.  Once you register for EI special benefits, you will begin paying premiums. In 2018, the EI premium rate is $1.66 per $100 of insurable earnings, with a maximum insurable earnings threshold of $51,700.  This means that the maximum amount a self-employed individual will pay in premiums is $858.22 per year. If your annual income is less than $51,700, your premiums will be lower.

Self-employed maternity leave: How does it work?

If you become pregnant and qualify for EI special benefits, you could be eligible to receive maternity benefits for up to 15 weeks. The program provides new mothers with 55 percent of their regular pay up to $51,700.  To calculate what your benefit payments could be, take your average weekly income and multiply that amount by 55 percent. For example, if you make $30,000 per year, the formula will look like this:  (30,000 √∑ 52) x¬†55% = $317.31 per week x 15 weeks = $4,755.  If you make $51,700 or more per year in self-employed income, you will receive a maximum of $8,205 over the 15-week period.  Note that your tax return for the previous year determines your stated annual income used in the calculation. So, if you are making a claim in 2018, your benefits will reflect your average weekly income in 2017 according to your income tax return.  

How do you qualify for EI special benefits?

Biological and surrogate mothers who can't work due to pregnancy or recent birth can receive EI maternity benefits. The benefits are available for a maximum of 15 weeks. A pregnant woman can start receiving EI maternity benefits as early as 12 weeks before her due date, and as late as 17 weeks after her actual delivery date.  If you are self-employed and caring for a newly adopted newborn, child, or multiple adopted children, you may also qualify for EI parental benefits. These benefits are also available for men who wish to take paternity leave.  To qualify for EI special benefits, you need to prove that a reduction of earnings by more than 40 percent took place because of your pregnancy or need to take care of a newborn or newly adopted child. You also need to have accumulated at least 600 hours of insurable employment during the qualifying period.

What's the difference between maternity benefits and parental benefits?

There are two types of parental insurance benefits you can receive as a new parent. Eligibility for either one requires payment into Canada's EI fund for at least 12 months.  Biological mothers who are unable to work due¬†to pregnancy or a recent birth can receive maternity benefits. These benefits are also available to surrogate mothers.  Parents who must care for a newborn or newly adopted child can also receive parental leave benefits. Claimants must sign a statement attesting to the child's date of birth. In the case of an adoption, when the child was officially up for adoption and the name and address of the adoption authority.  Biological and legally recognized parents can start receiving EI parental benefits as soon as the child is born. On the date adoptive parents begin caring for their child, they can start receiving benefits right away.  In cases where the child is not legally adoptable, parents can receive benefits as of the date they attest that the placement is permanent. Just like regular adoption, parents must sign a statement to this effect.

Standard benefits vs. extended benefits

There are two parental benefit options: Standard benefits (up to 35 weeks), and extended benefits (up to 61 weeks).  Standard benefits claimed must fall within a 52-week period after the birth of the child. Or the week the child was up for adoption. The weekly benefit rate for standard benefits is 55 percent of the claimant's earnings up to a maximum amount. Both parents can share these 35 weeks of standard parental leave.  Payment of extended benefits, claimed within 78 weeks (18 months) after the child was born or put up for adoption, can go up to 61 weeks. The weekly benefit rate for extended benefits is 33 percent of the claimant's earnings up to a maximum amount. Both parents can share these 61 weeks of extended parental leave.  In 2018, the maximum weekly benefit is $547 per week for standard parental benefits and $328 per week for extended benefits.  If both parents are sharing parental leave, they must choose the same parental benefits option. The option selected by the parent who first completes their EI application gets it automatically applied to the second parent. You cannot switch from standard benefits to extended benefits once you start receiving parental benefits.  

Can you continue to work while receiving EI special benefits?

Thinking of working while receiving benefits? The rules allow you to keep 50 cents for every dollar you earn, up to 90 percent of your previous weekly earnings. Above this limit, your benefits get reduced dollar for dollar. In other words, you cannot use your parental leave to increase your income. Doing so constitutes EI misuse.  If you work a full week during your maternity or parental leave, you will not be eligible to receive benefits for that week. This is true no matter how much or how little you earn. However, working for one week won't reduce the number of weeks that entitles you as part of your claiming period.  For a list of additional income sources that may affect reduction your benefits, consult the CRA.

Quebec Parental Insurance Plan (QPIP)

If you live in Quebec, parental leave benefits get issued as part of the Quebec Parental Insurance Plan (QPIP), which is set up a bit differently. For one, all wage earners, including self-employed workers, pay into the QPIP on their taxes. This means that if you pay taxes in Quebec, you don't need to register to join the plan.  The QPIP pays benefits to all eligible Quebecers who take maternity leave, paternity leave, parental leave, or adoption leave. QPIP payments are a bit more generous than in the rest of Canada. In fact, the basic plan covers up to 70 percent of a wage earner's income, and the special plan covers up to 75 percent. For additional information about the QPIP, consult this Revenu Quebec table.

Can you cancel or opt out of the EI special benefits program?

Once you start making EI contributions as a self-employed worker and start collecting employment insurance benefits, you will need to keep paying into the fund for the rest of your self-employed career. As such, it can be a good idea to make sure that paying into the employment insurance fund is really worth it.  To make this decision, consider that the maximum amount you will pay into the Canada Employment Insurance fund is $858.22 per year. If you plan on working for another 30 years, you will be contributing at least $25,746 into the EI fund. Maybe more to account for inflation.  Next, consider that the maximum amount you can expect to claim is $547 per week for 35 weeks. This adds up to a maximum total payout of $19,145 per child if you make more than $51,700 per year. If you make less than that amount but expect to make more money later in your career, you will continue to pay more into the EI fund. Regardless of what you receive during your parental leave.

There's more to the program than parental planning

That said, Canada's EI special benefits program isn't just valid for child-rearing purposes. Paying into the fund can also provide you with sickness benefits if you are ever unable to work due to illness or injury. The program can also allow you to receive caregiver benefits if you ever need to stop working to take care of a loved one.  You can cancel your EI participation without paying any premiums if you terminate your participation within 60 days of registering. After 60 days, you can still cancel participation, but only if you have never received EI benefits as a self-employed worker. To cancel your participation, you will need to fill out a notice of termination with the Canada Employment Insurance Commission.