Under the new legislation, eligible working parents who have a
child born or adopted after 1 January 2011 will be entitled to be
paid up to 18 weeks pay at the national minimum wage rate, which
will be A$569.90 gross from 1 July 2010.
The scheme will be available to persons who are the primary
carer of the child, have satisfied attendance requirements and who
have a taxable income of A$150,000 or less in the previous
Employers will be "paymaster"
The payments will be funded directly by the Government and not
employers, but employers will have administrative responsibilities.
Employees who wish to access the regime will need to lodge a claim
with the Family Assistance Office (FAO). The FAO will then send a
notice to the employer advising them if they are required to
provide the employee with parental leave pay. If the employee has
an entitlement, the FAO will provide the necessary funds to the
employer which will then be required to act as a
"paymaster" and forward them onto the employee.
Parental leave pay will need to be treated in the same way as
other taxable income, that is PAYG amounts will need to be withheld
from the payments at the appropriate rate. However, employers will
not be required to make superannuation contributions in respect of
parental leave pay.
Parents will be able to lodge their claims up to three months
before the birth or adoption of the child, although payments will
not begin until after the birth or adoption. The first claims for
paid parental leave may therefore be lodged from 1 October 2010 for
children expected to be born or adopted on 1 January 2011.
A six month transitional period will apply whereby employers
will not be required to administer payments until 1 July 2011
unless they elect to "opt-in" with respect to
administering the scheme prior to this date. If an employer does
not "opt-in", employees may claim directly from the FAO
during the transitional period.
Scheme is in addition to existing entitlements
Importantly, any parental leave payments made under the scheme
are in addition to and not in place of any other existing legal
obligations an employer may have to provide paid parental leave
entitlements. This means that employers cannot use the statutory
scheme to off-set any paid parental leave benefits they are legally
required to provide employees. For example, if an employer has a
contractual or award obligation to provide paid parental leave
benefits, the Government scheme will be in addition to those
entitlements. However, if an employer has a non-binding policy
regarding paid parental leave, it will be open to the employer to
vary that policy to take into account the statutory scheme.
The Fair Work Ombudsman will have the power to investigate
employers that have allegedly failed to make parental leave
payments to eligible employees or otherwise do not meet their
obligations under the scheme. Breaches of the scheme may attract a
maximum penalty of A$6,600 for individuals and A$33,000 for
Implications for employers
Employers should consider whether they wish to
"opt-in" with respect to administering the scheme prior
to 1 July 2011 and take steps to inform themselves of their
responsibilities under the new legislation.
Given that parental leave payments made under the scheme are in
addition to and not in place of any legal obligations, an employer
may have to provide paid parental leave entitlements. Employers
should consider their current obligations with respect to paid
With respect to non-binding obligations, such as an entitlement
under a workplace policy, employers should consider reviewing such
arrangements in light of the new paid parental leave scheme. For
example, employers may wish to scale back their obligations under
their existing workplace policies. Employers may also wish to
review any paid parental leave entitlements provided by their
standard contracts of employment for new employees in light of the
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Treasurer Scott Morrison recently announced changes to a number of 2016 Budget superannuation contribution measures.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).