How to Take Parental Leave If You’re Self-Employed

Marie Chevrier Schwartz is the founder and CEO of Sampler, the Toronto-based product-experiences firm with main shoppers like L’Oréal and Nestlé. After constructing the business for eight years, she gave start to her son in March of 2023 and deliberate to take a three- to six-month maternity go away. But when the CRA unexpectedly denied her parental advantages, she was pressured again to the workplace solely eight weeks after giving start.

“Before applying, I had no doubt that I would get the benefits,” Schwartz says. “I’ve been contributing to EI since I was 15.” She describes how, within the weeks following her labour and supply, the CRA performed an investigation and decided she wasn’t eligible. “I was in total disbelief, but with a newborn in my arms, I just didn’t have the strength to push back.”

Sampler usually tops up worker advantages as much as 75 per cent of their wage, however an worker (even the CEO) has to obtain authorities advantages within the first place for that to activate. Schwartz was successfully left with zero per cent of her revenue, which might have been untenable for a six-month go away. She posted about her scenario on LinkedIn, which garnered dozens of feedback from different business house owners who’d encountered comparable situations.

Ricardo Chejfec, lead knowledge analyst at Montreal’s Institute for Research on Public Policy (IRPP), has spent the previous few years researching EI laws. “The process of applying for EI can be extremely demoralizing,” he says. “The sheer complexity of the program makes it difficult to maneuver, both for people applying and those administering it.”

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Schwartz says the CRA didn’t present an in depth rationalization of its ruling, however that crux of the difficulty was that, of their eyes, she didn’t have an “arm’s length” relationship with the business—that’s, she wasn’t technically an worker by their definition, and thus didn’t qualify for EI. Schwartz doesn’t know the way they reached that conclusion, however was advised that her voicemail (which recognized her because the CEO of Sampler) and the shortage of an “out of office” response to her business e-mail performed a component. “They never asked me about my meticulous preparation plan, which would have shown I absolutely could and would step back from my role,” she says. “It seemed like the audit was all about catching me in a mistake, when a conversation would have told them what they needed to know,” she says.

In Canada, there are two streams for accessing EI—one for workers, and one for individuals who are self-employed. The CRA’s web site states that the latter is for individuals who “run their own business or own more than 40 per cent of a corporation’s voting shares.” But how “running your own business” is outlined is one thing of a gray space and, based mostly on the CRA’s audit of Schwartz’s case, appears to be decided case-by-case.

Unlike full-time workers, self-employed people must voluntarily decide into this system. But Schwartz says that there was no motive for her to consider she’d fall into the self-employed class earlier than making use of, since she owns lower than 40 per cent of the business and had at all times been thought of an worker by Sampler’s board. Chejfec says he isn’t stunned that Schwartz didn’t know which profit program she qualifies for, contemplating this system’s complexity. “I can’t comment on the specifics of Marie’s case, but I can tell you that even people working closely with the program aren’t always clear on how it works.”

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If it seems one has been paying into the incorrect advantages program, there’s an choice to claw again a few of that cash—however in Schwartz’s case, the accounting charges have been larger than the refund itself. She’s stopped paying into EI and writes off the quantity she’s contributed as a loss. Meanwhile, Chejfec is advocating for simplified EI laws by his analysis with the IRPP.

His recommendation for business house owners trying to take parental go away? Crucially, discover out should you’re paying into the right profit program, which isn’t at all times simple. If you suppose you may fall into a gray space, get in contact with Service Canada and discover out whether or not you might be, from their perspective, self-employed or an worker. If the previous, you’ll have to decide in to their particular advantages program—and pay into it for at the very least twelve months earlier than taking cash out. “I think they need to make it much clearer who isn’t or isn’t eligible, so entrepreneurs like me can plan for their leave,” says Schwartz. “It shouldn’t be a guessing game.”