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Parental Leave: Changes, insights and opportunities

31 May 2016


Parental Leave: Changes, insights and opportunities

Lyndall Humphries, Senior Associate

The workforce of today is one in which both male and female workers balance competing priorities of work and family life. This article looks at what support the Government provides to primary carers and working parents, how this responsibility can be shared by employers and what opportunities this may present in the context of the current legal framework.

Paid Parental Leave

Prior to 2011, while Australia provided some financial assistance for costs associated with newborn or adopted children, it was one of only two OECD countries without a national paid parental leave scheme (“PPL Scheme”). This changed with the introduction of the Paid Parental Leave Act 2010 (Cth) (“PPL Act”) in January 2011.

The PPL Act provides for Australia’s PPL Scheme which currently consists of the following Government-funded payments:

  • Parental Leave Pay: an 18-week payment at the national minimum wage for eligible primary carers (most commonly birth mothers) of newborn and recently adopted children; and
  • Dad and Partner Pay: a two-week payment at the national minimum wage for eligible dads or partners caring for newborn or recently adopted children.

Payments under the PPL Scheme are currently made irrespective of whether an individual receives employer provided parental leave payments and regardless of the amount of such payments. This means that individuals can receive parental leave payments from both the Government and their employer.

Proposed changes

Last year the Government proposed changes to the PPL Act as part of its 2015-16 budget measures and the Fairer Paid Parental Leave Bill 2015 was introduced in the House of Representatives on 25 June 2015. Under these proposed changes, an employee who is eligible to receive Parental Leave Pay must notify the Government of any employer-provided parental leave payments. If any such payments are being received, the employee’s Parental Leave Pay would be reduced by the amount of those payments. This could mean that an individual would not be entitled to receive any Parental Leave Pay under the PPL scheme.

The proposed changes were originally scheduled to take effect on 1 July 2016 but did not pass through the House of Representatives by this date and have now been stood over indefinitely pending changes to Government policy in the lead-up to the next federal election. This is welcome news for unions, industry and equality groups and non-Government parties who, on the whole, did not support the proposed changes. However, it has been reported that the Government remains committed to making changes to paid parental leave in the event the Coalition wins the next election but the detail is unclear. We anticipate that the proposed changes may change again. Watch this space.

A competitive edge

It is against this backdrop that Australian employers are increasingly seeing paid parental leave as a way of attracting and retaining talent, addressing skill shortages and lower levels of female workforce participation, and differentiating their business from competitors.

It also has the effect of promoting diversity and inclusion in the workplace and supporting gender equality and non-discrimination.

Unpaid Parental Leave

Paid parental leave is complemented by the entitlement to unpaid leave under the National Employment Standards (“NES”) in the Fair Work Act 2009 (Cth) (“FW Act”). Twelve months’ unpaid parental leave is available to employees (including eligible casual employees) with 12 months’ continuous service if the leave is associated with the birth or adoption of a child under 16 years of age.

Return to Work Guarantee

The NES also provides a return to work guarantee at the end of unpaid parental leave so that an employee may return to their pre-parental leave position, or, if the job no longer exists, to an available position for which the employee is qualified and suited, nearest in status and pay.

The fact that an employee is pregnant, intends to take or takes parental leave and/or has a return to work guarantee does not prevent an employer from making a position redundant if the redundancy is genuine. The employer must be able to prove that these factors were not the reason or part of the reason for making the employee’s position redundant. In the case of Schultz v Scanlan & Thodore Pty Ltd [2013] FCCA 1096 the employer produced evidence of a significant downturn in the employer’s business, the requirement to cut costs (including by reducing the number of staff) and the consideration given as to why a particular role ought be made redundant, and the Court found that this demonstrated that the employer did not take adverse action against the employee.1

Right to Request Flexible Working Arrangements

The entitlement under the NES to request flexible working arrangements is intended to assist parents (and others with caring responsibilities) to balance working arrangements with family and caring responsibilities. Employees (including eligible casual employees) with 12 months’ continuous service who are parents, or who have the responsibility for the care of a child of school age or younger, have a right to request flexible working arrangements to assist them to care for a child.

A request for flexible working arrangements may only be refused on “reasonable business grounds” and, if refused, details must be provided in writing. The NES provides guidance on what constitutes “reasonable business grounds” by providing a non-exhaustive list of factors including if the new arrangements would be too costly, if there are limitations on changing the arrangements of other employees or if the new arrangements would be likely to result in a significant loss in efficiency or productivity or have a significant negative impact on customer service.

Anti-Discrimination Obligations

Whether or not an employee is covered by the above NES entitlements, it may, in certain circumstances, amount to discrimination under anti-discrimination legislation or adverse action under the FW Act to refuse to return an employee to their pre-leave position or to allow flexible work arrangements. In this regard, an employer must ensure that an employee’s sex or family responsibilities do not unfairly influence its decisions.2 In the case of Heraud v Roy Morgan Research Ltd [2016] FCCA 185 the Court found that the employer’s decision to make an employee redundant was linked to the employee’s scheduled return from parental leave and the employer therefore took adverse action against the employee by not returning her to her pre-parental leave position, even if that position was only available for her return to for less than two months.

Opportunities

In the context of these legal obligations employers are encouraged to see working parents as an asset and the abovementioned NES entitlements as opportunities. When an employee returns to work or flexible working arrangements are successfully implemented, it can:

  • reduce costs related to recruitment and restructuring;
  • minimise the need for retraining as knowledge and experience is retained within the business;
  • widen the talent pool; and
  • increase organisational productivity and performance because flexible workers need to be organised and effective.

The provision of support to primary carers and working parents may increase employee job satisfaction, motivation and loyalty to their employer. Significantly, it is also likely to improve an employer’s reputation, enhance goodwill and create a positive team culture.

Leading practice 

In addition to employer-provided parental leave payments some employers are going above and beyond their minimum legal obligations to provide other initiatives that support primary carers and working parents. Some examples3 are set out below:

  • ANZ and Dexus Property Group provide continuity of superannuation contributions during parental leave.
  • NAB and Stockland have childcare facilities at their offices in Sydney (and North Sydney).
  • Laing O’Rourke provides support during parental leave, including keeping in touch programs and return to work coaching.
  • Goldman Sachs focuses on communication during parental leave, including one-on-one meetings with the CEO and business updates before, during and upon return from leave.
  • Caltex has implemented measures to support employees returning to work and increase retention rates. This includes a 3% a quarter bonus up until the child is 2 years old.
  • Telstra has mainstreamed flexibility by rolling out “All Roles Flex”, an initiative whereby every role in the company can be undertaken flexibly and where the focus is on productivity and outcomes rather than face time.

Key Takeaways 

  • Paid parental leave in Australia is a relatively new and evolving notion – employers are encouraged to embrace the opportunities it presents.
  • The National Employment Standards set out various protections for primary carers and working parents (including a return to work guarantee and a right to request flexible work arrangements).
  • Anti-discrimination legislation protects parents and carers from discrimination in the workplace.
  • Organisations should maintain the confidence to make necessary business decisions in relation to the positions of employees on parental leave, so long as those decisions can be justified objectively.
  • Employers are implementing leading practice initiatives which support primary carers and working parents to gain an advantage over their competitors.

(1) See for example Schultz v Scanlan & Thodore Pty Ltd[2013] FCCA 1096 at [144]-[159].

(2) See for example Heraud v Roy Morgan Research Ltd [2016] FCCA 185 at [192], [197]-[198].

(3) Australasian Human Rights Commission, Successful Strategies to Support Working Parents, 2016.

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