Important News

Proposed changes to the Paid Parental Leave scheme

15 May 2015


Proposed changes to the Paid Parental Leave scheme

Baby out with the bath water?

Earlier this week as part of the budget rollout, Ministers announced the potential end of “double dipping” from the federal government’s paid parental leave (“PPL”) scheme. The legislation currently allows new mothers to receive PPL from the Commonwealth in addition to any entitlements from their employers. Starting on 1 July 2016 women whose employer’s paid parental leave benefits amount to more than $11,500 will be ineligible for any taxpayer-funded PPL. Employees who receive benefits less than this will be entitled to “top up” to $11,500. Women who do not receive any PPL from their employers will continue to receive their current entitlement. This policy amendment is expected to affect up to 79,000 women around the country.

A change such as this will have ramifications for employees and employers alike. For companies, a generous PPL benefit can attract top talent and encourages a culture which values families and flexible work arrangements. For employees, paid parental leave can be a vital step towards achieving equality in the workplace. Many who have entered into employment contracts or voted on enterprise agreements under the current scheme may be looking for alternative compensation or supplementary benefits.

While employers should be conscious of the impact on employees if the budget is passed in its current form, the answer may not necessarily be more cash. Creative solutions will allow businesses to manage costs while continuing to recruit and retain an elite workforce. For example, employers may look to allowing leave to be taken in a more flexible manner as opposed to immediately after the birth or adoption of a child.

Although the future of the PPL scheme is uncertain, it is clear from the response to the announcement that the government faces an uphill battle.

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