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How flexible will Australia be with paid parental leave?

14 December 2011

How flexible will Australia be with paid parental leave?

Maria Crabb, Senior Associate

Paid parental leave came into effect in Australia on 1 January 2011. This was the first time a national paid parental leave scheme was established.

During the first six months of the scheme employers were not required to make payments to the employee directly, as these payments were made through the Family Assistance Office. However, from 1 July 2011 employers have been responsible for making payments to the employee.

How does it work?

At present, an employee is entitled to receive 18 weeks’ pay at the Federal Minimum Wage rate if they:

  • are the primary carer for the newborn child or recently adopted child;
  • have worked for the employer at least 10 of the 13 months prior to the birth or adoption of the child;
  • have worked for at least 330 hours in that 10 month period, with no more than an eight week gap between two consecutive working days;
  • are an Australian resident; and
  • earn less than $150,000 per annum.

What if the employee’s employer offers additional paid parental leave?

Many employers had provided paid parental leave before 1 January 2011. Where the employer had an obligation under contract or an industrial instrument to provide paid parental leave, the employer has an obligation to make payments under the Government scheme and under its own scheme. Where the employer provided paid parental leave under a policy then the employer can vary the policy to absorb the Government funded leave.

Flexibility with maternity leave

The Fair Work Act 2009 (Cth) also allows employees with over 12 months’ service to take 52 weeks’ unpaid leave if the leave is associated with the birth of a child of the employee or the employee’s spouse. The period of unpaid leave must be taken as a single continuous period and while the leave may be split between parents the split periods must also be continuous periods.

Maternity leave in the UK

The paid and unpaid maternity leave provisions in the UK are more exible and generous than those currently in place in Australia. The provisions provide the following benefits:

  • 52 weeks of leave of which six weeks is paid at 90% of the employee’s base salary;
  • a further 33 weeks’ pay at the minimum wages;
  • two weeks of paid leave for fathers at the minimum wage; and
  • once the child is 20 weeks old and the mother decides to return to work, the balance of the 52 weeks leave can be taken by the father. The leave has to be taken in a continuous block.

Proposed changes

The UK Government is currently discussing changes which will allow parents to take parental leave in blocks. This will allow for a greater degree of exibility amongst working families. The proposal suggests the following:

  • mothers will be entitled to 18 weeks of maternity leave and pay that must be taken in one continuous block;
  • mothers will be given an additional four weeks of paid parental leave to be taken during the first year of the baby’s life;
  • an additional four weeks of paid parental leave for fathers that may be taken in one go, or in separate blocks throughout the year if the employer agrees;
  • 30 weeks of additional parental leave to be available to either parent of which 17 would be paid at the minimum wage. This leave can be split between the parents and taken in smaller blocks of weeks or months, subject to the employer’s approval.

Under these provisions, employers will retain the right to require that the 30 weeks’ leave is taken in one continuous block, as the parents request to take the parental leave in blocks can be declined for business reasons.

Consequences for employers in Australia

Although your organisation may already have policies in place which give parents entitlement to paid parental leave beyond the statutory minimum, many employers do not offer flexibility as to when the parental leave is to be taken. It is unlikely that any substantial changes will be made to the Government scheme in the near future. PCS, however, recommends you consider taking the following steps:

  • Discuss the aim of your organisation’s parental leave policy– is the organisation seeking to provide additional benefits, provide flexibility to employees or simply set out employees’ statutory entitlements?
  • If your organisation’s policy is out of date, or you are in the position to offer additional benefits, discuss this with your managers and get their comments on how the additional benefits would impact on their team.
  • The Fair Work Act 2009 already imposes obligations on employers to consider requests for flexible working of employees caring for a child under school age. Your organisation may wish to a offer similar system of flexibility for taking parental leave.
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