The lowdown on paid parental leave

 

Thinking | 19 July 2017

Failure to launch

In May 2015, the Abbott Government proposed changes to the paid parental leave scheme which sparked much controversy. These changes sought to crack down on new parents ‘double dipping’ in light of comments that women were ‘rorting the system’ by accessing both employer and Government funded paid parental leave entitlements.

This ‘crack down’ was later introduced through the Fairer Paid Parental Leave Bill 2016 (PPL Bill) which sought to achieve a number of key things such as:

  • halt ‘double-dipping’ by limiting parents’ access to Government-funded parental leave pay according to the number of weeks of employer- provided pay. For example, where a person is entitled to less than 18 weeks employer-provided pay, the Government would provide the residual amount up to a maximum period of 18 weeks at the National Minimum Wage and
  • ease administrative burdens on businesses by removing the requirement for employers to manage the payment of Government-funded parental leave pay. Such pay would be paid to employees directly by the Department of Human Services (DHS) unless otherwise agreed.

Further changes were then introduced in February 2017 by the Turnbull Government which sought to increase the maximum paid parental leave period for which a person may be paid Government-funded parental leave pay from 18 weeks to 20 weeks.

There was speculation that these changes were going to take effect in August 2017. This was then pushed to October 2017 after suggestions that members of the Senate were close to reaching a compromise with the Government over the PPL Bill.

Almost eight months later, the Turnbull Government has formally taken the PPL Bill off the table after it became clear that it would not be passed by the Senate.

The current paid parental leave scheme

So you may be asking, what exactly is the current situation? Good question.

The key aspects of the paid parental leave scheme (for now) are as follows:

  • Parents and adoptive parents have access to 18 weeks Government-funded parental leave paid at the National Minimum Wage.
  • Government-funded parental leave is provided irrespective of whether an individual receives employer-provided pay.
  • In order to be eligible for Government-funded parental leave individuals:
    • must meet a number of work requirements. For example, individuals must have worked 10 of the 13 months before the birth or adoption of the child
    • must have received an individual adjusted taxable income of $150,000 or less in the financial year (either before child’s birth or adoption) and
    • must be on leave or not working from when they become the child’s primary carer until the end of the 18 week paid parental leave period.
  • Employers are required to:
    • administer an employee’s Government-funded parental leave pay if requested by the DHS
    • advise the DHS of any changes to an employee’s period of parental leave. For example, if an employee has returned to work during their period of parental leave and
    • comply with specific record keeping obligations if the employer has employees receiving Government-funded parental leave. For example keeping records of the amount received and the date each payment is made to the employee.

Hall & Wilcox will keep an eye on any future changes and provide an update.

Contact

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Partner & Head of UK Practice

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