Paid Parental Leave Scheme
At the end of 2014 we delivered an article on the Paid Parental Leave Scheme.
By way of summary, the Paid Parental Leave Scheme (governed by the Paid Parental Leave Act 2010) provides eligible persons with a maximum of 18 weeks’ pay at the minimum wage.
In order to be eligible for these payments (whereby Centrelink pays your employer your entitlements and your employer manages these payments by passing them on to you) the following basic eligibility requirements must be met: –
- be a primary carer of a newborn or adopted child;
- earn less than $150,000 per annum; and
- held paid employment for at least 10 of the 12 months (and has worked 330 hours or more during that period) before birth or adoption.
Proposed Changes
In May last year the Liberal Government announced a system to replace the Paid Parental Leave Scheme in order to address “double-dipping”. “Double-dipping” is where the employee obtains the benefit of both payment under the Paid Parental Leave Scheme and payment from their employer.
The main proposed changes are as follows: –
- employer-funded parental leave pay will be deduced from the government funded entitlements;
- if employer funded parental leave pay is the same or more beneficial than the government funded entitlements, then employees are not eligible for the government funded entitlements;
- employer’s will not be obliged to manage government funded entitlements;
- the new scheme will save almost $1 billion by excluding appropriate 20% of people who currently have access to government funded entitlements and reducing coverage for a further 30%.
Will the proposed changes impact employers?
Employers who have their own parental leave schemes in place will need to consider whether their policies or enterprise agreements will need to change to meet the new requirements as their current system may stop being an effective tool for retaining experienced employees and a competitive business advantage.
There is some discussion that any return to work bonuses or discretionary bonuses implemented by employers may not be deducted from the government funded entitlements however this position is still unclear and consultation in this respect is continuing.
The proposed changes are set to come into place on 1 July 2016 and employers should now be analysing how the change will affect their staff and business and consider what amendments should be made to retain key employees.
If you would like any further information on: –
- employee entitlements – either generally or with respect to parental payments
- employer obligations
please contact our office.
