Potential Changes to Paid Parental Leave

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The Fairer Paid Parental Leave Bill 2015 (“the Bill”) proposes critical changes to the current Paid Parental Leave Scheme. These changes could have a significant impact on both employers and employees who utilise the current scheme.

What is the current scheme?

The current Paid Parental Leave Scheme offers employees who take leave for parental duties, a weekly payment of the national minimum wage (currently $656.90) for a period of 18 weeks. Employees can claim these weekly payments on top of any parental payment benefits given to them by their employer.

For example, if an employee is planning on utilising government funded parental leave, and the employer also offers $700 per week for 10 weeks as a parental leave benefit, then for the first 10 weeks that employee can receive $1,356.90 per week and a further $656.90 for the remaining 8 weeks.

The current scheme therefore offers a significant advantage to employees who are provided with paid parental leave benefits in the course of their employment.

What changes are being implemented by the Bill?

The Bill is proposing a number of changes to the Paid Parental Leave Scheme, but most notably is a change to the relationship between the government payments and payments made from the employer.

If the Bill is implemented in its current form, an employee will no longer be able to receive both the benefits from their employment and the full government payment for the 18 week period. Government payments will only be provided to an employee for the period in the 18 weeks that the employee is not receiving benefits from their employer.

It is pertinent to note that if the employee is not being provided with parental leave benefits, that she would still be able to claim the full 18 weeks of government payment as is allowed under the current scheme.

How does the Bill affect employers?

Under the current scheme, the government payments for parental leave are actually provided to the employers who then (after deducting PAYG tax instalments) pay the amount forward to the employee. The new Bill proposes to remove this administrative act for the employer, and instead have the Department of Human Services pay the employees directly. This eases the administrative burden placed on the employer when one of their employees takes parental leave.

Will the Bill come into effect and if so, when?

The Bill is scheduled to come into effect on 1 July 2016, however, for this to occur the Bill has to be passed by the Senate. On the 15 June 2015, the Bill was referred from the Senate to the Senate Community Affairs Legislation Committee for inquiry and report, which allowed members of the public to present submissions on any problems/benefits of the Bill and to suggest alternatives. The deadline for these submissions was 30 July 205 and it will be interesting to see what changes will be made to the Bill as a result of the comments by the public.

If you have any questions relating to this Bill, or employment issues in general, please contact our team.