Backup child care: Canada’s new employee benefit

Alternative to investing in full-time regular child-care centres
By John Marvin and Nora Spinks
|Canadian HR Reporter|Last Updated: 11/08/2004

Over the past decade, progressive Canadian employers have been providing benefits to help parents balance their work and family responsibilities.

According to Human Resources and Skills Development Canada, the number of employer-supported child-care centres in Canada nearly doubled between 1991 and 2000. Yet the majority of employers are still reluctant to get involved with child-care benefits. What can be done to improve the situation? The answer is backup child care, which offers employers the ability to effectively and affordably support working parents.

It’s an alternative to investing in full-time regular child-care centres. Backup services are available for employees when their primary or regular child care is unavailable, when schools are closed, during maternity transition or when there is an increase in work demands.

Backup child care enables employers to provide a less-expensive, high-impact service while receiving a significant return on investment. Absences due to personal and family responsibilities are two to three times higher among employees with pre-school children under six years, according to 1998 Statistics Canada figures. Backup child care is a solution to such absenteeism and the employee stress it creates.

Fledgling initiatives

Two years ago, CIBC opened Canada’s first dedicated backup child-care centre located at company headquarters in downtown Toronto. The benefit is a cornerstone in CIBC’s HR and people strategy, part of its corporate social responsibility initiative and part of the organization’s workplace mental health strategy. Recently, the backup child-care centre was identified as an innovative benefit by the Canadian Association for Mental Health and Mental Illness, which honoured CIBC with the Mental Health in the Workplace Award.

Backup child care is a concept that is new to Canada, but it is 10 to 12 years old in United States where it is one of the fastest growing work-life benefits.

But other than CIBC’s initiative there are no dedicated employer-supported backup child-care centres in Canada — at least not yet.

A consortium under development in Calgary is expected to open in 2005. A few other providers have begun to offer backup within existing full-time centres, which are almost all employer-supported centres. At Husky Injection Molding Systems in Bolton, Ont., parents needing emergency or temporary child care can contact the firm’s on-site child-care centre to access a space.

Emergency space in regular child-care centres is rare because to remain viable a centre must operate at full capacity. For example, a centre in Ontario must have a minimum of two professional staff, each with early childhood education designation, for every six infants. If you have one to five infants you still need two staff, so there’s a financial challenge in leaving a space open, and consequently most emergency or backup child care is employer-supported.

British Columbia credit union VanCity purchased a space at a child-care centre near its head office for employees to use in emergencies. The centre gets paid and the employer has “childcare insurance.” RBC Financial Group is offering a very new, partially supported option, with parents paying fees, and some Toronto law firms have a similar model. CIBC’s backup centre is free to employees.

Different models

As the new-found popularity of backup child care grows in Canada, so too do the options for employers. Employer-supported backup child-care solutions vary in terms of the investment and service models. The models determine the number of employees able to access the benefit, the quality of services and, ultimately, the ROI companies receive.

First, employers need to choose the level of investment based on their return on investment objectives. Employers can provide backup child care through two distinctly different investment models:

Employer-paid backup child care:

This employer-pay model historically has the highest employee utilization rates because of accessibility, comfort with and confidence in the quality of care and perception of fairness and equity. While employer-pay programs require more upfront investment, the payback is significant. CIBC reported more than 2,500 days of absenteeism saved by its centre in 2003. This model is a taxable benefit in Canada.

Parent-paid backup child care:

A parent-pay model offers a pay-as-you-go or per diem option, a prepaid fee for preferred access with service limits or an insurance premium option — pay a monthly fee and use it when you need it, if space is available. Employers may contribute by paying an access or insurance premium or preferred status fee for employees.

Parent-pay programs historically have a lower usage rate since the fee can be a deterrent, concerns about “non-endorsed” quality, perception of inequality (those who are willing and able to pay can use it — others can’t). Lower use results in lower employer ROI since parents are more likely to take vacation days, personal leave or sick leave to manage a child-care crisis. Thus it undermines the ability of the employer to achieve its strategic business goals of reducing absenteeism and enhancing retention.

After deciding on the level of investment, employers need to consider the service delivery model. Currently, backup child care is available in four models: regular centres with backup capabilities, specialized backup child-care centres, in-home emergency care and drop-in care (see sidebar.)

The business case for employer-supported backup child-care solutions is solid. When employees can be at work, focused, stress-free and guilt-free they are more committed, more engaged and more satisfied. When employees are happy, employers can meet rising customer and shareholder expectations, increase efficiencies and attract top talent and interested investors. Being able to fulfill corporate social responsibility through investing in quality child-care services, maximizing healthy child development and decreasing family stress by offering backup childcare is increasingly a strategic advantage in today’s competitive marketplace.

Just a few years ago, the future looked bleak for employer-sponsored child care. Employers had turned their back on the idea and employees had accepted that workplace child-care would never be an option for most of the workforce.

But today, interest in backup child care is growing in workplaces across the country, to the point where it could become a standard benefit over the next 10 years, especially in professional services, financial services and health-care sectors.

John Marvin is president and CEO of backup child-care provider ChildrenFirst, and can be reached at Nora Spinks is president of Work-Life Harmony Enterprises, an organization specializing in the work-life field. She can be reached at or 1-800-965-2414.

4 options for backup child care

Regular centres with backup capabilities:

Primary child-care options that “accommodate” emergencies or fulfill demand for backup services. The few programs that offer theses services have limited capacity (one or two children per day) and are often unable to accommodate high demand periods such as school holidays due to lack of free space.

Specialized backup child-care centres:

Licensed centres set-up exclusively for backup child care, designed for the special challenges of backup care and staffed with educators who understand the unique needs of the children, their parents and the workplace. These specialized centres deliver high-quality curriculum in a backup environment designed to maximize healthy child development and minimize parent anxiety. Since they only provide backup services, a typical centre can accommodate 40 children per day and serve up to 2,000 families per year. A regular centre of the same size would serve approximately 30 families per year. Most specialized programs also offer additional summer or school break programs to accommodate the increased demands for school age child care.

Drop-in care:

Unlicensed workplace programs located on or near the work site. Parents may be able to access these programs during emergencies or school holidays. Generally, the staff at drop-in programs are not trained early childhood educators but temporary employees either hired by the employer or provided by a community-based or private agency. They may be temporary or permanent programs. They can accommodate a maximum of 10 children at any one time.

In-home emergency care:

Licensed or unlicensed child-care providers offering backup care in the child’s home or their own homes. The cost is generally significantly more than centre-based care ranging from $110 to $200 per day. The effectiveness of these programs often depends heavily on the availability of community resources, which can vary location by location. Parent confidence levels tend be lower in in-home backup services because it is difficult to drop by to visit during the day. When choosing a regular child-care arrangement, parents have the opportunity to develop a relationship with the provider and often choose an in-home option. When they need backup care they tend to prefer a group-care solution.

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