Families should be pleased to learn that the Federal Government has recently announced major changes to the Paid Parental Leave Scheme (PPL), with the Government committing approximately $531.6 million over the course of 4 years to make these changes.
The Current Scheme
The Paid Parental Leave Scheme enables parents to take time off work to care for a newly born or newly adopted child by being provided income while caring for their child at the rate of the national minimum wage. The current scheme incorporates 2 payments - Parental Leave Pay (PLP) as well as Dad and Partner Pay (DAPP).
Parental Leave Pay is primarily for mothers and provides eligible working parents with up to 18 weeks of payments. Dad and Partner Pay on the other hand provides eligible working father or partners with up to 2 weeks of payments. Both of these payments are subject to an income threshold with those earning greater than $151,350 being ineligible for the scheme.
Critics have often cited the current scheme as outdated for reinforcing gender roles and called for changes to the scheme as a whole. For example, where a mother earns under the threshold limit and her partner earns more, the mother would be able to access the 18 weeks. However, if the birth mother earnt over this threshold and her partner less, the partner, usually the father would not be able to access Parental Leave Pay.
Furthermore, many reports argued that PLP and DAPP should be combined to allow parents to decide how many weeks each take off work and so that both parents would have fair access to parental leave benefits.
The Changes
From 1 July 2023, PLP and DAPP will be combined into a single 20 week payment enabling both parents to claim an equal amount of parental leave entitlements. This means that a mother could take 20 weeks of parental leave or the couple could share it between themselves with both parents being able to take parental leave at the same time. This 20 week limit will also be expanded by two weeks starting from 1 July 2024 with parental leave pay increasing by 2 weeks each year until 1 July 2026 to a total of 26 weeks or half a year.
In addition to this, a new threshold limit of $156,647 for each parent and a $350,000 family income limit was added.
Parents will be able to take Parental Leave Pay in blocks as small as one day at a time with periods of work in between. Parental Leave Pay must be taken within 2 years of the date of birth.
To incentivise both parents to take leave, the Federal Government emphasised that the 20-26 week Paid Parental Scheme would be on a "use it or lose it" approach.
The main intention behind these changes is to encourage both parents to participate in caring for their children in their early years of development. The current scheme sees women disproportionately taking up the bulk of paid parental entitlements affecting their ability to return to work. These changes aim to provide both parents the flexibility to care for their children and for mothers to return to the workforce.
Conclusion
To summarise the changes, the new parental leave entitlements will:
- From 1 July 2023 extend Parental Leave Entitlements to up to 20 weeks at the rate of the national minimum wage.
- Increase leave entitlement by two weeks every year from 1 July 2024 to 1 July 2026 to a total of 26 weeks.
- Set a new threshold limit of $156,647 for individuals and $350,000 for families.
- Be on a "take it or leave it" basis.
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