The Paid Parental Leave Bill 2010 was passed in Federal Parliament last Thursday, 17 June 2010 and means, for the first time in Australia, from 1 January 2011, the mother of a new born child, or the primary care giver of a newly adopted child will be provided with paid leave for a maximum of 18 weeks at the minimum wage. Parental leave payments will be funded by the Federal Government.

The recent federal wage increase means that, from 1 July 2010, the federal minimum wage will be $569.90 per week.

Who is entitled to paid parental leave?

To be eligible, an employee needs to satisfy criteria which includes the following:

  • Be the primary care giver of a new born child, or newly adopted child;
  • Have an income of $150,000 or less per annum;
  • Work of at least 330 hours in the preceding 392 days (13 months) with permissible breaks. Many part-time and casual employees will satisfy this work test*; and
  • Be an Australian Citizen or permanent resident.

Eligibility will be assessed by the Family Assistance Office upon receiving an application direct from an employee seeking paid parental leave.

[*Note: an employee may also satisfy the work test if they have had multiple employers, or worked as an independent contractor over the qualifying period, however, in such circumstances payment would be received from the Family Assistance Office direct, not any employer.]

Paid parental leave is in addition to other paid leave

An employee’s entitlement to 18 weeks paid parental leave under this legislation is in addition to any other entitlement to paid parental leave that may exist in an employment contract or an enterprise agreement.  For example, if an enterprise agreement provides for 6 weeks paid parental leave, and the employee is entitled to paid parental leave under this legislation, the employee will be entitled to a total of 24 weeks paid parental leave.

 

Paid parental leave under this legislation is of course also in addition to other paid leave entitlements such as annual leave.

How do the payments from the Family Assistance Office get started?

An employee is required to make an application for paid parental leave directly to the Family Assistance Office. The Family Assistance Office will then assess the application and, if approved, it will notify the employer that they are required to make the payments.

What does an employer have to do?

1. Pay parental leave from 1 July 2011

 

From 1 July 2011 an employer who is notified by the Family Assistance Office that they are required to make parental leave payments will have to pay the parental leave via normal payroll practices, including withholding the usual PAYG tax.

The Family Assistance Office will pay the employer in advance of the parental leave being paid to the employee.

2. An employer need only make payments if the employee has been employed for 12 months

Unless an employer chooses to do so, an employer is only obliged to pay parental leave if the employee is a long-term employee. That is, the employee has been employed with that employer for at least 12 months. Otherwise, the Family Assistance Office will pay the parental leave directly to the employee.

3. The first 6 months is a transitional period

The first 6 months, that is from 1 January 2011 to 30 June 2011, will be regarded as a transitional period during which time employers can choose to administer the paid parental leave themselves, otherwise the Family Assistance Office will pay the parental leave direct to the employee.

 

From 1 July 2011, time for employers to understand their obligations to pay parental leave will have expired as the transitional period will have passed. From that time the Fair Work Ombudsman will have parental leave payments to add to the lengthy list of employer obligations it enforces.

Complispace can assist businesses to understand their obligations on paid parental leave and other recent changes. For clients subscribing to our on-line services an updated parental leave policy will be available for publication prior to 1 January 2011.

For more information, contact David Griffiths or Phyllis Peterson on (02) 9299 6105.

This blog is a guide to keep readers updated with the latest information. It is not intended as legal advice or as advice that should be relied on by readers. The information contained in this blog may have been updated since its posting, or it may not apply in all circumstances. If you require specific or legal advice, please contact us on (02) 9299 6105 and we will be happy to assist.