Passed but not yet enacted, Quebec’s new parental insurance law offers coverage for the self-employed and for adoption.
The Quebec government has passed a new law that, once in effect, will provide eligible workers in the province with maternity, paternity, parental and adoption benefits similar to the maternity and parental benefits offered under the federal Employment Insurance (EI) program.
Bill 140, An Act respecting parental insurance, was assented to on May 30, 2001. It has not yet come into force. Quebec Minister of Child and Family Welfare Linda Goupil has stated that the province would first like to reach an agreement with the federal government to recover the EI premiums Quebec employees and employers pay before enacting the legislation.
Section 63 of the Employment Insurance Act gives the Canada Employment Insurance Commission, which administers the EI program, the authority to enter into agreements with provincial governments to pay full or partial costs for provincial benefits/measures that are “similar to employment benefits or support measures” provided under EI.
The Canadian Payroll Manager contacted Human Resources Development Canada for its response to the new Act. The department was vague on whether or not an agreement could be negotiated, choosing, instead, to focus on its improvements to parental benefits under EI.
Once in effect, the parental insurance plan would cover both eligible employees and self-employed workers. It would be funded through premiums paid by employers, employees and the self-employed. For employers and employees, premium payments would be similar to other source deductions, in that employers would be responsible for deducting the employees’ premiums at source and remitting them to Revenu Québec, along with the employer portion of premiums, at the same time that they remit Quebec Pension Plan (QPP) contributions and income tax deductions.
The plan would be managed by the Conseil de gestion de l’assurance parentale. Its job would include ensuring that the plan is properly funded and that benefits are paid to those who are eligible to receive them. It would have a board of directors appointed by the government that would include employer and employee representatives, as well as a representative for the self-employed, a government representative, and a president and director general. While the Conseil would manage the plan, the Régie des rentes du Québec would administer it. This is the body that administers the QPP. Revenu Québec would be charged with collecting premiums and remitting them to the Conseil each month.
Eligibility
To be eligible for the benefits, individuals would have to:
•be Quebec residents at the start of the benefit period (self-employed individuals would have to be provincial residents on December 31 of the year before their benefit period begins);
•pay premiums to the parental insurance plan or to the federal EI program, although the extent to which participation in the federal program would apply would be defined by the new Act’s regulations and would be contingent upon the two levels of government reaching an agreement;
•have insurable earnings of at least $2,000 during the qualifying period (52 weeks before the benefit period, or the calendar year before the benefit period for self-employed individuals); and
•have an interruption of earnings as defined by the Act’s regulations (at press time, the regulations had yet to be published).
Benefits
The Act would provide four types of benefits: maternity, paternity, parental and adoption. The number of weeks of benefits and the rate at which they would be paid would depend on which of two benefit options an individual selected:
Under the first option:
•maternity benefits would be paid for up to 18 weeks;
•paternity benefits would be paid for a maximum of five weeks upon the birth of a child;
•parental benefits would be paid for up to 32 weeks; and
•adoption benefits would be provided for a maximum of 37 weeks.
Eligible individuals would receive 70 per cent of their average weekly earnings for the 18 weeks of maternity benefits, the five weeks of paternity benefits, the first seven weeks of parental benefits, and for the first 12 weeks of adoption benefits. The remaining weeks of parental and adoption benefits would be paid at 55 per cent of average weekly earnings. The Act would allow for the amount of benefits to be increased up to a specified limit if family income fell below a specific threshold.
Average weekly earnings would be based on the employee’s average insurable earnings in the last 26 weeks of the qualifying period, up to a maximum amount (determined by dividing the annual maximum insurable earnings by 52). For the self-employed, average weekly earnings are calculated in a different way. The maximum insurable earnings for the plan would be the same as the maximum insurable earnings for the Commission de la santé et de la sécurité du travail and would be set for January 1 each year.
Insurable earnings for an employee would include all wages on which a person must pay a parental insurance plan premium (likely to be defined by regulation) or insurable earnings as defined in the federal Employment Insurance Act. (Insurable earnings would differ for self-employed individuals.)
Under the second option:
•maternity benefits would be paid for up to 15 weeks;
•paternity benefits would be paid for a maximum of three weeks upon the birth of a child;
•parental benefits would be paid for up to 25 weeks; and
•adoption benefits would be provided for a maximum of 28 weeks.
Individuals who selected this option would receive 75 per cent of their average weekly earnings for the benefit period. To qualify for this option, individuals would have to meet specified conditions that would be set out in the Act’s regulations.
To qualify for this option, individuals would have to meet specified conditions that would be set out in the Act’s regulations.
Regardless of the option selected, the Act sets out specific timelines for starting and ending benefits. Maternity benefits would begin no earlier than 16 weeks before the expected due date and end no later than 18 weeks after the week of birth, although they could be extended if the baby remained in hospital.
Paternity and parental benefits would begin no earlier than the week of birth and they could not go beyond the benefit period. The earliest that adoption benefits would start would be the week the child came into the parents’ care, or two weeks before for adoptions outside Quebec. They could not exceed the benefit period.
The parental and adoption benefits could be split a number of ways, with one parent applying to receive the payments, the benefits being divided between the parents or the benefits being allocated to both parents at the same time.
(Editor’s note: Remember that the weeks discussed in this section refer to the weeks of benefits paid under the new Act, not to the job-protected unpaid leaves that eligible employees are entitled to take under the province’s labour standards legislation.)
Employer Reporting — Another ROE?
To qualify for benefits, the Act would also require employers to provide employees who wish to take a maternity, paternity, parental or adoption leave with documentation to verify that they are entitled to the benefits.
The Act does not provide many details on the documentation, stating instead that it will be determined by regulation; however, employers might have to complete something similar to the federal Record of Employment form. The Act states that the documents would have to include information such as the reason for the interruption of earnings and the amount of the person’s insurable earnings during the qualifying period, and that the employer would have to give them to the employee within a specified time period (possibly within five days of the beginning of the leave). It further states that employers would be required to provide the Régie des rentes du Québec with the same information and documentation.
Paying Premiums
The scope of the Act is wide reaching when it comes to paying premiums. Not only do the premiums apply to “every employee resident in Quebec on the last day of a year”, they would also apply to every Quebec resident who reports for work at a place of business in another part of Canada, and to those who are not required to report for work at the business establishment but who are paid from a place of business in Canada but outside Quebec. Every employer would be required to pay premiums for each employee subject to the legislation. The Act states that all types of work would be covered, although regulations may later define what is included and excluded.
To determine how much to deduct from an employee’s earnings, employers would multiply the employee’s annual wages or the annual maximum insurable earnings, whichever is less, by the employee premium rate. To calculate the employer’s premium, the employer would do the same using the employer premium rate. The government has not yet announced the premium rates.
The Act would provide special rules for calculating premiums for employees who live in Quebec, but who work at a place of business in another part of Canada (or who are paid from a place of business in another part of the country, if the are not required to report for work at the employer’s establishment). In such cases, the employees’ premiums would be calculated by multiplying the premium rate by the lesser of the employee’s annual wages or “the amount by which the person’s maximum insurable earnings for the year exceeds the quotient obtained by dividing the deductions at source from the person’s wages for the year… by that rate”.
Employers who fail to remit the parental insurance plan premiums would be liable to pay the amount owing to Revenu Québec, although the Act does allow employers to make the deduction from the employees’ wages within 12 months of failing to make the original deduction. (As with EI premiums and QPP contributions, employers would only be allowed to deduct one extra premium at a time.)
The Act also contains penalties, ranging from fines of $200 to $2,000, for various offences, including contravening the section of the legislation that requires employers to provide interruption of earnings information to an employee and to the Régie and providing false information on any documents.
Many questions about the plan remain unanswered, as many aspects of the legislation will be defined by regulation, including:
•the employee and employer premium rates (for example, will employers be given the option of reduced rates if they have a disability plan, as is the case under the EI program?);
•more detailed information on employer reporting;
•what items will be included in the term “wages”; and
•when does a week begin and end.
It also remains to be seen how the Quebec and federal governments would resolve the complexities involved in both jurisdictions providing employment benefits and requiring premium payments.
Will Quebec employers and employees pay premiums to both governments, since the provincial plan covers only parental insurance, while the federal program is for all types of unemployment?
Will employers be required to report an interruption of earnings to both levels of government when it involves a parental-related leave? How much extra work will this mean for payroll departments? And, if Quebec cannot get Ottawa on side, will it proceed with the legislation?
How much advance notice will employers be given before the law is enacted?
For now, all that payroll managers with Quebec payrolls can do is familiarize themselves with the new Act and wait for the province to provide more information on the many issues that still need to be addressed.
Sheila Brawn is the editor of the Canadian Payroll Manager, a Carswell publication. For subscription information, call 1-800-387-5164.
Bill 140, An Act respecting parental insurance, was assented to on May 30, 2001. It has not yet come into force. Quebec Minister of Child and Family Welfare Linda Goupil has stated that the province would first like to reach an agreement with the federal government to recover the EI premiums Quebec employees and employers pay before enacting the legislation.
Section 63 of the Employment Insurance Act gives the Canada Employment Insurance Commission, which administers the EI program, the authority to enter into agreements with provincial governments to pay full or partial costs for provincial benefits/measures that are “similar to employment benefits or support measures” provided under EI.
The Canadian Payroll Manager contacted Human Resources Development Canada for its response to the new Act. The department was vague on whether or not an agreement could be negotiated, choosing, instead, to focus on its improvements to parental benefits under EI.
Once in effect, the parental insurance plan would cover both eligible employees and self-employed workers. It would be funded through premiums paid by employers, employees and the self-employed. For employers and employees, premium payments would be similar to other source deductions, in that employers would be responsible for deducting the employees’ premiums at source and remitting them to Revenu Québec, along with the employer portion of premiums, at the same time that they remit Quebec Pension Plan (QPP) contributions and income tax deductions.
The plan would be managed by the Conseil de gestion de l’assurance parentale. Its job would include ensuring that the plan is properly funded and that benefits are paid to those who are eligible to receive them. It would have a board of directors appointed by the government that would include employer and employee representatives, as well as a representative for the self-employed, a government representative, and a president and director general. While the Conseil would manage the plan, the Régie des rentes du Québec would administer it. This is the body that administers the QPP. Revenu Québec would be charged with collecting premiums and remitting them to the Conseil each month.
Eligibility
To be eligible for the benefits, individuals would have to:
•be Quebec residents at the start of the benefit period (self-employed individuals would have to be provincial residents on December 31 of the year before their benefit period begins);
•pay premiums to the parental insurance plan or to the federal EI program, although the extent to which participation in the federal program would apply would be defined by the new Act’s regulations and would be contingent upon the two levels of government reaching an agreement;
•have insurable earnings of at least $2,000 during the qualifying period (52 weeks before the benefit period, or the calendar year before the benefit period for self-employed individuals); and
•have an interruption of earnings as defined by the Act’s regulations (at press time, the regulations had yet to be published).
Benefits
The Act would provide four types of benefits: maternity, paternity, parental and adoption. The number of weeks of benefits and the rate at which they would be paid would depend on which of two benefit options an individual selected:
Under the first option:
•maternity benefits would be paid for up to 18 weeks;
•paternity benefits would be paid for a maximum of five weeks upon the birth of a child;
•parental benefits would be paid for up to 32 weeks; and
•adoption benefits would be provided for a maximum of 37 weeks.
Eligible individuals would receive 70 per cent of their average weekly earnings for the 18 weeks of maternity benefits, the five weeks of paternity benefits, the first seven weeks of parental benefits, and for the first 12 weeks of adoption benefits. The remaining weeks of parental and adoption benefits would be paid at 55 per cent of average weekly earnings. The Act would allow for the amount of benefits to be increased up to a specified limit if family income fell below a specific threshold.
Average weekly earnings would be based on the employee’s average insurable earnings in the last 26 weeks of the qualifying period, up to a maximum amount (determined by dividing the annual maximum insurable earnings by 52). For the self-employed, average weekly earnings are calculated in a different way. The maximum insurable earnings for the plan would be the same as the maximum insurable earnings for the Commission de la santé et de la sécurité du travail and would be set for January 1 each year.
Insurable earnings for an employee would include all wages on which a person must pay a parental insurance plan premium (likely to be defined by regulation) or insurable earnings as defined in the federal Employment Insurance Act. (Insurable earnings would differ for self-employed individuals.)
Under the second option:
•maternity benefits would be paid for up to 15 weeks;
•paternity benefits would be paid for a maximum of three weeks upon the birth of a child;
•parental benefits would be paid for up to 25 weeks; and
•adoption benefits would be provided for a maximum of 28 weeks.
Individuals who selected this option would receive 75 per cent of their average weekly earnings for the benefit period. To qualify for this option, individuals would have to meet specified conditions that would be set out in the Act’s regulations.
To qualify for this option, individuals would have to meet specified conditions that would be set out in the Act’s regulations.
Regardless of the option selected, the Act sets out specific timelines for starting and ending benefits. Maternity benefits would begin no earlier than 16 weeks before the expected due date and end no later than 18 weeks after the week of birth, although they could be extended if the baby remained in hospital.
Paternity and parental benefits would begin no earlier than the week of birth and they could not go beyond the benefit period. The earliest that adoption benefits would start would be the week the child came into the parents’ care, or two weeks before for adoptions outside Quebec. They could not exceed the benefit period.
The parental and adoption benefits could be split a number of ways, with one parent applying to receive the payments, the benefits being divided between the parents or the benefits being allocated to both parents at the same time.
(Editor’s note: Remember that the weeks discussed in this section refer to the weeks of benefits paid under the new Act, not to the job-protected unpaid leaves that eligible employees are entitled to take under the province’s labour standards legislation.)
Employer Reporting — Another ROE?
To qualify for benefits, the Act would also require employers to provide employees who wish to take a maternity, paternity, parental or adoption leave with documentation to verify that they are entitled to the benefits.
The Act does not provide many details on the documentation, stating instead that it will be determined by regulation; however, employers might have to complete something similar to the federal Record of Employment form. The Act states that the documents would have to include information such as the reason for the interruption of earnings and the amount of the person’s insurable earnings during the qualifying period, and that the employer would have to give them to the employee within a specified time period (possibly within five days of the beginning of the leave). It further states that employers would be required to provide the Régie des rentes du Québec with the same information and documentation.
Paying Premiums
The scope of the Act is wide reaching when it comes to paying premiums. Not only do the premiums apply to “every employee resident in Quebec on the last day of a year”, they would also apply to every Quebec resident who reports for work at a place of business in another part of Canada, and to those who are not required to report for work at the business establishment but who are paid from a place of business in Canada but outside Quebec. Every employer would be required to pay premiums for each employee subject to the legislation. The Act states that all types of work would be covered, although regulations may later define what is included and excluded.
To determine how much to deduct from an employee’s earnings, employers would multiply the employee’s annual wages or the annual maximum insurable earnings, whichever is less, by the employee premium rate. To calculate the employer’s premium, the employer would do the same using the employer premium rate. The government has not yet announced the premium rates.
The Act would provide special rules for calculating premiums for employees who live in Quebec, but who work at a place of business in another part of Canada (or who are paid from a place of business in another part of the country, if the are not required to report for work at the employer’s establishment). In such cases, the employees’ premiums would be calculated by multiplying the premium rate by the lesser of the employee’s annual wages or “the amount by which the person’s maximum insurable earnings for the year exceeds the quotient obtained by dividing the deductions at source from the person’s wages for the year… by that rate”.
Employers who fail to remit the parental insurance plan premiums would be liable to pay the amount owing to Revenu Québec, although the Act does allow employers to make the deduction from the employees’ wages within 12 months of failing to make the original deduction. (As with EI premiums and QPP contributions, employers would only be allowed to deduct one extra premium at a time.)
The Act also contains penalties, ranging from fines of $200 to $2,000, for various offences, including contravening the section of the legislation that requires employers to provide interruption of earnings information to an employee and to the Régie and providing false information on any documents.
Many questions about the plan remain unanswered, as many aspects of the legislation will be defined by regulation, including:
•the employee and employer premium rates (for example, will employers be given the option of reduced rates if they have a disability plan, as is the case under the EI program?);
•more detailed information on employer reporting;
•what items will be included in the term “wages”; and
•when does a week begin and end.
It also remains to be seen how the Quebec and federal governments would resolve the complexities involved in both jurisdictions providing employment benefits and requiring premium payments.
Will Quebec employers and employees pay premiums to both governments, since the provincial plan covers only parental insurance, while the federal program is for all types of unemployment?
Will employers be required to report an interruption of earnings to both levels of government when it involves a parental-related leave? How much extra work will this mean for payroll departments? And, if Quebec cannot get Ottawa on side, will it proceed with the legislation?
How much advance notice will employers be given before the law is enacted?
For now, all that payroll managers with Quebec payrolls can do is familiarize themselves with the new Act and wait for the province to provide more information on the many issues that still need to be addressed.
Sheila Brawn is the editor of the Canadian Payroll Manager, a Carswell publication. For subscription information, call 1-800-387-5164.
