17 March 2016


Employer Funded Paid Parental Leave – Top 5 Things to Consider

Beverley Thomas, Associate

Despite lingering uncertainty about the future of the Government’s Paid Parental Leave Scheme, many organisations continue to develop and implement their own unique Parental Leave Policies to entice to job applicants, encourage diversity and improve the work-life balance of their employees.

Globally, we have seen companies, particularly in the tech space, making waves with their policies. For example, online e-commerce company, Etsy, offers a half year’s paid leave to its employees and Netflix provides its employees with “unlimited” paid leave during the first year after the birth or adoption of a child. Regardless of where your organisation draws its inspiration from, there are a few things to keep in mind when designing your Paid Parental Leave Policy. Here are our top tips:

  1. Remember that paid leave equals service: Some employee entitlements are determined by years of “service”. While periods of unpaid leave do not count towards service, paid periods of leave usually do. This means that employees will accrue annual and personal leave during periods of employer funded paid parental leave, so it is worth factoring in this cost when designing a policy.
  2. Foster a culture of acceptance: There’s no use in implementing generous family friendly policies if the culture of the workplace is such that an employee would be frowned upon if they accessed the policy’s benefits. Acceptance is something that should filter from the top down in order to have the most influential impact. Recently, Facebook founder Mark Zuckerberg, took two months off to spend time with his wife and new daughter after her birth. This sent a powerful message to employees of this social media network that equally grants new mums and dads four months of paid parental leave.
  3. Benefits are best kept discretionary: Business environments, governments and legislation can all change and affect your organisation’s ability to provide benefits in excess of its obligations. For this reason, it is generally recommended that a Paid Parental Leave Policy is contained in its own policy document as opposed being drafted into contract of employment or enterprise agreement. Provided it is made clear that it is not an entitlement and subject to change, this will assist you organisation to alter its policy from time to time with less exposure to a legal claim.
  4. Keep diversity at the forefront: Surrogacy, adoption, fostering and same-sex relationships are just some of the features of today’s diverse society. Avoid directly or indirectly discriminating against particular groups by taking a gender neutral approach to policy drafting and extending benefits to less commonly considered scenarios.
  5. Think outside the square: Providing employees with paid leave is only one way that employers can take a family friendly stance. Consider other options that might be more suitable for your organisation, such as providing employees with a bonus upon their return to work after taking parental leave. Other options include continuing to make superannuation contributions to an employee during periods of unpaid parental leave or facilitating flexible work arrangements upon a parent’s return to the workplace.
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