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Leaves of absence: Updated rules affecting pension and benefit plans

Effective December 3, 2017, the federal Employment Insurance (EI) rules were updated to permit maternity benefits to be paid for up to 15 weeks, and parental leave benefits to be paid for up to 61 weeks. At the same time, a new adult caregiver benefit is payable for up to 15 weeks, and a child caregiver benefit is payable for up to 35 weeks. The changes to maternity and parental benefits under EI affect all provinces except Quebec, which has its own parental leave insurance program. Quebec employees will be eligible for expanded EI caregiver benefits.

All jurisdictions in Canada recognize the right of an employee to take an unpaid leave from work for a specified period of time without losing his or her job. Some of these jurisdictions have already increased the leave periods in their employment standards legislation in order to correspond with the federal EI changes. In those jurisdictions that have not increased the leave periods in their employment standards legislation, it is optional for the employer to provide an unpaid leave that corresponds to the federal EI changes.

Furthermore, a number of jurisdictions, namely British Columbia, Nova Scotia, Ontario, PEI, Quebec, Saskatchewan and the federal government (in respect of federally regulated employees) have provisions requiring pension and benefit accrual to continue during a leave period, subject to the employee making the required contributions under the plan. Once the applicable leave period is extended in those jurisdictions, this will require an extension to the potential length of benefit coverage under pension and benefit plans in those jurisdictions.

Employers with plan members in other provinces will need to consider whether to extend pension and benefit accrual during extended leave periods to members, even though not legally required.

This means that employers need to review their policies and procedures, including their pension plan texts, to ensure that they comply with the extended leave periods, understand the consequences for their pension plans, and make any required changes.

As of January 1, 2018, Ontario and the federal jurisdiction have made amendments to their leave periods to correspond to the federal EI changes. These changes are summarized below, along with certain other changes that were made in Alberta. We will monitor developments in other provinces.


An Ontario employee continues to participate in pension and benefit plans during a statutory leave period unless the employee elects in writing not to do so. The employee must make his or her required contributions under the plan.

An exception to this provision exists when the employee takes a reservist leave to serve with the Canadian Forces.

A number of statutory leaves have been extended or created pursuant to Ontario Bill 148. Employees will be entitled to a continuation of pension and benefit coverage during such leaves. A summary of the changes can be found in the following table.



Federally regulated workers now have the right to take up to 63 weeks of parental leave. This is an increase from the previous maximum period of 37 weeks.

While the total amount of maternity leave will remain at 17 weeks, women will be able to commence their unpaid leave of absence up to 13 weeks prior to the child’s due date. The cap on the cumulative amount of maternity and parental leave that two employees may take with respect to the same birth or adoption cannot exceed 78 weeks, which is an increase from 52 weeks.

Federally regulated employees with adult family members who are critically ill will now be eligible to take unpaid leaves of up to 17 weeks. Family members of a critically ill child will be eligible to take unpaid leaves of up to 37 weeks. This period is unchanged, but is now available to family members in addition to adults.

Employers will be required to continue to pay contributions to pension, health and disability benefits during the employee’s leave of absence for the full duration of the leave of absence, as newly legislated. However, employers will not have to contribute if the employee does not pay their contributions within a reasonable time.

The following chart lists the legislative changes to the relevant leave periods and identifies the additional number of weeks that employers will need to contribute to pension, health and disability benefits.



Alberta has increased its compassionate care leave provisions from 8 weeks to 27 weeks. Maternity leave is extended from 15 weeks to 16 weeks. Parental leave provisions have not yet been amended to correspond with EI changes. A number of other forms of leave have also been created.

Alberta does not require pension and benefit coverage to continue during leave periods. Therefore, pension and benefit coverage during such leave periods depends on the employer’s policies and documentation.

Income Tax Act limitations on pension accrual during leave periods

The Income Tax Act and corresponding regulations (the “ITA”) permit a pension plan to provide coverage during an employee’s unpaid leave period. The amount of deemed compensation during such leave periods must be reasonable and is termed “prescribed compensation”. The maximum period of prescribed compensation for an employee with a single employer is five years, plus an additional three years in respect of periods of maternity and parental leave.

With the extended leave periods, employers will need to ensure that these cumulative leave periods are monitored and that the maximum amounts of prescribed compensation are not exceeded.


The creation and extension of statutory leave periods will have a significant impact on Canadian workplaces. As employees take advantage of extended maternity and parental leaves, as well as other forms of leaves, employers will have to ensure that their pension and benefit plan coverage complies with their statutory obligations. In addition, they should ensure that workplace policies and documentation accurately reflects the employer’s intentions and the benefits provided to employees.

News & Views - January 2018 (PDF)