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The New Paid Parental Leave Scheme: Your questions answered

16 August 2010

The New Paid Parental Leave Scheme: Your questions answered

Tim Wilson

Some of PCS’ clients have been asking us for advice on implementation of the Government’s paid parental leave scheme. We answered your key legal and strategic questions below.

What is it?

On 21 June 2010, the Paid Parental Leave Bill 2010 (Cth) (“Bill”) was passed by both houses of parliament. The Bill establishes Australia’s first national paid parental leave scheme.

When does it start?

Employers will not be required to comply with the provisions of the Bill until 1 July 2011 but can choose to “opt in” from 1 January 2011.

How does it work?

Broadly, the key elements of the scheme are as follows:

  • it will be wholly funded by the Commonwealth Government;
  • the Family Assistance Office will inform employers which employees have applied and are eligible for the payments;
  • employees will be eligible if:
    • they are working mothers or initial primary carers of a child born or adopted on or after 1 January 2011 (including certain part/time, seasonal, casual and contracted employees);
    • they satisfy the “work test”
      • performing 330 hours of qualifying work within the qualifying period;
      • their income is equal to or less than the indexed income limit (currently $150,000); and
      • they satisfy the “Australian residency test”;
  • employers are not required to make payments until they have received the relevant payment from the government; and
  • employers will then be responsible for administering the making of payments (up to 17 weeks’ base rate of pay at the National Minimum wage- currently $569.90) to eligible employees.

Additional guidance and conditions of eligibility may be included in the Paid Parental Leave (“PPLR”). At the time of writing the PPLR have not been released.

What if a paid parental leave scheme is already in place?

A number of employers currently exceeded their legal obligations and already provide employees with some form of paid parental leave. How then would these two schemes interact?

The Bill (as amended) clarifies that an employer’s obligations to make payments under the Bill is in addition to any other legal obligation that an employer may have to make parental leave payments to an employee.

Where a paid parental scheme is already in place, employers should consider what the source of that scheme is. If the scheme forms part of an industrial instrument or a contact of employment, careful consideration needs to be given before any payment is reduced or offset against the government contribution as this creates at least some potential for claims to be brought (including potential claims of discrimination or breach of the Fair Work Act’s general protection provisions).

Likewise, where a policy confers disproportionate benefits in terms of paid maternity, paternity and adoption leave, consideration of any potential discrimination may be necessary.

What are the consequences of non-compliance?

If concerns are raised as to compliance, the matter can be referred to the Fair Work Ombudsman for investigation. The Ombudsman can impose various civil penalty orders, including requiring repayment to the Commonwealth and penalties of up to $6,600 for each breach.

What are the top tips?

Employers may wish to consider:

  • when industrial instruments, contracts of employment and any parental leave policies were last updated and reviewed;
  • whether paid parental leave policies provide disproportionately for maternity, paternity and adoption leave;
  • what administrative measures need to be put in place to ensure that government contributions are passed on the employees; and
  • how any change in approach may be communicated to employees so as not to impact individual or collective morale.
Posted in Strateg-Eyes.
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