Parental leave is an employee benefit offering parents time off from work when a child joins the family, either as a newborn, through adoption, or as a foster child.
While policies vary worldwide, parental leave may be included in a global employee benefits package and is distinct from vacation and sick leave, as well as pregnancy-related medical leave.
This benefit provides parents with job security and continued income while caring for and bonding with a new child. A primary goal of parental leave is to support employees by contributing to work-life balance and family well-being during significant life changes.
Types of parental leave
There are three main types of parental leave, and each may be paid or unpaid depending on employer policies and applicable laws:
- Maternity leave. Maternity leave is typically granted to employed biological mothers following childbirth, as well as mothers who have newly adopted or begun fostering a child. This leave gives mothers time to recover (in the case of childbirth), bond with their new child, and adapt to parenthood.
- Paternity leave. Paternity leave is traditionally granted to employed fathers after the birth, adoption, or fostering of a new child. During this time, fathers can bond with a new child, support their partner, contribute to caregiving, and adjust to parenthood.
- Adoption or foster leave. Adoption leave or foster leave is typically granted to employed parents following the placement of an adopted or fostered child. Like maternity and paternity leave, leave for non-biological parents gives families time to bond with a child, finalize arrangements, and establish new family dynamics.
Parental leave vs. maternity leave
Parental leave is an umbrella term encompassing both maternity and paternity leave, as well as adoption leave and foster leave. Whereas maternity leave is generally reserved for new mothers and paternity leave for new fathers, parental leave is a gender-neutral employee benefit covering parents of any sex. Parental leave also provides coverage for biological and non-biological parents alike.
Is parental leave paid?
Parental leave can be paid or unpaid, depending on an employee’s state or country of residence, employer, and industry. Paid parental leave is a statutory benefit in some jurisdictions, meaning that the benefit is mandated by law.
Within jurisdictions that do not require paid parental leave, employers may choose to offer paid leave as a supplemental benefit, which can serve as a competitive advantage when it comes to attracting and retaining talent.
Countries with paid parental leave
One hundred eighty-five countries within the United Nations offer some form of paid parental leave. Although more countries offer paid maternity leave than paid time off for both parents, 43% of countries in the Americas do provide parental leave.
While some countries offer extensive paid maternity leave—Sweden, for example, offers 69 weeks—the majority of maternity leave worldwide is 14 weeks or less, and the bulk of paternity leave in the 94 countries that offer it is less than three weeks.
Countries without paid parental leave
Only eight countries in the United Nations (a collection of 193 countries) do not offer paid parental leave: Marshall Islands, Micronesia, Nauru, Palau, Papua New Guinea, Suriname, Tonga, and the U.S. According to the World Bank, the U.S. is the only high-income country that does not offer paid maternity leave.
Within the U.S., the only federal regulation related to parental leave is the Family Medical Leave Act (FMLA), which requires employers with 50 or more employees to offer a minimum of 12 weeks of unpaid parental leave each year.
Why is parental leave important?
Parental leave is important for eight primary reasons:
Bonding with the child
The first months of a child’s life are a crucial time for bonding—the same holds for an adopted or fostered child’s initial period in a new household. Parental leave ensures that parents can focus on building strong connections and fostering healthy attachments with their children early on, thus establishing the groundwork for a close family relationship.
Promoting parental involvement
Whereas maternal and paternal leave focuses on a single parent’s potential contribution, parental leave encourages caretakers to participate equally in household responsibilities and child-rearing tasks. This shared experience can help parents develop closer relationships with their children and with each other during this significant time.
Supporting child development
Science confirms that parental presence has a significant impact on a child’s well-being and development. From infant brain activity to language and socioemotional outcomes, parental leave has been definitively linked to improved cognitive, social-emotional, and academic results for children.
Health and well-being
While joyful, bringing a new child into the family can also place physical and mental strain on parents. Paid leave offers families time to prioritize their health. For mothers, parental leave can support holistic postpartum recovery; for fathers and adoptive or foster parents, paid leave frees up time for supporting one’s partner, caregiving, and acclimating to parenthood.
Work-life balance
New parents often need to re-establish what work-life balance means for them. Parental leave allows employees to focus deeply on the “life” piece of this puzzle in caring for their new child, thus helping to reduce stress and burnout, boost job satisfaction, and promote wellness for families in the long run.
Gender equality
Whereas caring for new children has historically been seen as a mother’s responsibility, parental leave promotes greater equality in the home and in the workplace. Paid leave policies encourage parents to share responsibilities, thus challenging harmful stereotypes and supporting mothers in the workforce.
Retention and engagement
Paid parental leave is an attractive benefit for top talent that contributes to employee loyalty, engagement, and retention. When employees feel that an employer is invested in their personal life and family needs, they are less likely to seek other work and more likely to experience positive morale.
Economic security
For many families, unpaid parental leave simply isn’t a viable option. Through paid parental leave, employers help contribute to the financial stability and security of their workforce, which can reduce poverty and improve equality on a larger scale.
Ultimately, parental leave policies offer significant advantages for both employees and employers. They promote family well-being, support child development, encourage work-life balance, advance gender equality, and boost employee retention and engagement.
What’s included in a parental leave policy?
Key attributes of a good parental leave policy include:
Paid leave
For parental leave to include all workers, companies should cover at least a portion of an employee's time away with full pay and benefits. Global time ranges for paid parental leave are highly variable, just as they are for maternity leave. While at the top end of the range, global companies like Netflix and KPMG offer 52 weeks of paid parental leave, data indicates positive outcomes associated with at least 12 weeks of leave.
Flexibility
A good parental leave policy should prioritize flexibility, especially when it comes to leave scheduling. Allowing parents to use paid leave when it suits them best (often within the first year after their new child joins the family) might include splitting leave up or phasing back into work slowly via part-time. Companies may also choose to provide additional weeks beyond the standard allowance at half or reduced pay for parents who wish to take more time.
Inclusivity
Employees who bring a new child into the family should be entitled to parental leave regardless of sex or biological connection to the child. In addition to inclusive definitions of family, parental leave should provide some coverage for all workers, including part-time, contract, and those who are new to the company.
Strategy and security
Companies should ensure their parental leave policy is clearly laid out and that all employees know about it and understand their coverage. The policy should also include strategies for re-integrating employees into the workplace after their leave ends. A good parental leave policy should also explicitly include job protections so that parents can take advantage of this benefit without fear of losing their employment.
How offering competitive parental leave benefits global businesses
A robust parental leave policy is a competitive advantage for global businesses for several reasons:
Attract and retain global talent
Job candidates in today’s global market have choices when it comes to employment. Companies that offer exceptional statutory benefits demonstrate a level of care for employees that attracts top talent.
Not only are top-tier candidates more likely to choose the company with the strongest global benefits offering—they’re also more inclined to stay in roles with benefits like parental leave that make them feel valued personally and professionally and improve their quality of life.
Support the whole employee
It’s challenging for employees to give their best (or even want to) without financial security or regard for their mental health. Competitive parental leave benefits ensure workers have comprehensive support so they can focus on family during a major life transition with minimal work-related stress. When they return to work, these employees will likely feel more valued, engaged, and productive as a result.
Ensure compliance with international law
Given the variance of laws related to employment worldwide, it can be challenging for companies to maintain compliance everywhere they do business. Not only is paid leave for parents advantageous for employees and employers, but it’s also the law in many countries.
To ensure business longevity and avoid the negative implications of noncompliance (fines, penalties, and limits to business opportunity), global companies must successfully navigate local employment laws related to parental leave.
Build your dream team with competitive employee benefits
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As an employer of record (EOR), Velocity Global offers a full suite of global workforce solutions that makes it easy to hire, pay, and manage teams around the world while retaining the best talent with competitive, market-specific benefits plans.
Learn more about our Global Benefits solution and how to easily and compliantly provide global talent with the benefits they deserve.
Disclaimer: The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. © 2024 Velocity Global, LLC. All rights reserved.
