In a historic decision and a watershed moment in Australia’s workplace laws, the senate passed into law the Rudd Government’s Paid Parental Leave Bill which will bring Australia in line with other western countries. This scheme will provide primary carers with parental leave of up to 18 weeks, paid at the National Minimum Wage ($569.90 per week, effective 1st July, 2010). Recipients will be taxed on this benefit and the scheme will commence on 1st January 2011.
Paid parental leave will be available to eligible primary carers who, on or after 1st January 2011, have or adopt a child. Those eligible can include casual employees, contractors and the self-employed. Claims can be made through the Family Assistance Office from October 2010.
Depending on the circumstances, any existing parental leave entitlements currently provided voluntarily by employers in a contractual arrangement must be maintained. This means that employers who currently offer paid parental leave, as part of an industrial agreement (e.g. Enterprise Agreement or pre Fair Work Act AWA/Collective Agreement) or employment contract will need to maintain this entitlement and the Government Paid Parental Leave will be in addition to the voluntary employer benefit. Employers who currently provide paid parental leave via a non-binding company policy may not be required to maintain any voluntary employer paid parental leave where the policy is applied in a purely discretionary way that is not part of an employment contract/industrial agreement.
Recipients of the Paid Parental Leave scheme will not be eligible for the Government’s baby bonus or receive family tax benefits Part B for the period of Paid Parental Leave.
Who is eligible?
The Paid Parental Leave scheme is only available to primary carers of a newborn child or a recently adopted child and includes full time, part-time and casual employees along with contractors and the self-employed.
A person is the primary carer of a child if:
a) the child is in the person’s care in that period; and
b) the person meets the child’s physical needs more than anyone else in that period.
The scheme also allows more than one person to claim the payment if the primary carer changes. This may occur if one parent is the primary carer and returns to work, the other parent could then become the carer and claim remaining paid parental leave owing.
Employees who have resigned from work or finished a contract can still claim the payment, provided they meet the eligibility requirements, with the Family Assistance Office to provide the payments instead of the employer.
A parent or primary carer may be eligible for Paid Parental Leave if they:
· are the primary carer of a newborn child or the initial primary carer of a recently adopted child; and
· have met the Paid Parental Leave work test before the birth or adoption occurs; and
· have an individual income of $150,000 a year or less; and
· are living in Australia and you are an Australian citizen or permanent resident.
A parent or primary carer meets the Paid Parental Leave work test if they:
· worked continuously for at least 10 of the 13 months prior to the birth or adoption of child
· worked at least 330 hours in that 10 month period (just over one day per week).
A parent or primary carer may be regarded as working continuously even if they:
· work part-time or casually
· have multiple employers, or
· have recently changed jobs.
As long as they did not have more than an eight week break between working days, they will be regarded as having worked continuously. A working day is a day on which they worked for at least one hour.
The scheme also allows more than one person to claim the payment if the primary carer changes. This may occur if one parent is the primary carer and returns to work, the other parent could then become the carer and claim remaining paid parental leave owing.
Employees who have resigned from work or finished a contract can still claim the payment, provided they meet the eligibility requirements, with the Family Assistance Office to provide the payments instead of the employer.
Who pays the paid parental leave?
All employees including small businesses will be required to make Paid Parental Leave payments for eligible carers.
· Employers will receive funding from the Australian government and initial advise from the Government is this is intended to be before the employer is required to start making payments for the Paid Parental Leave scheme.
· Employers will not be required to pay superannuation payments on the Government’s Paid Parental Leave scheme and employees will not accrue annual leave for the period of the Government’s Paid Parental Leave scheme.
Considerations for Businesses:
Businesses are advised to consider the implications for their business:
· If you currently pay paid parental leave, we recommend you get professional advice as to your contractual obligations.
· Consider your parental leave policies and employment contracts – will they need updating
· Consider how your business will administer this entitlement, including any upgrade requirements to payroll software