Employers should be reviewing their payroll systems and
processes. employment contracts and industrial instruments to get
ready for the Paid Parental Leave Scheme.
Employers should take note of the passing of the Paid
Parental Leave Act 2010 which introduces an unprecedented
government-funded Paid Parental Leave Scheme within Australia and
will impose a number of additional employer obligations and
What is the Scheme?
Applications for paid parental leave may be made from 1 October
2010 and the Scheme will provide a maximum entitlement of 18
weeks' paid parental leave at the National Minimum Wage
Paid parental leave will be available to primary caregivers and
adoptive parents who have a baby or adopt a child on or after 1
January 2011, and who meet the requisite work test, income test and
More than one person may take a period of paid parental leave in
relation to the same child, so long as the total period of paid
leave in relation to that child does not exceed 18 weeks.
Notably, the Scheme does not provide a leave entitlement, but
complements parents' entitlements to leave, such as their
entitlement to unpaid parental leave, under the National Employment
Employees will be required to apply for paid parental leave
through the Family Assistance Office (FAO) and can
do so up to three months before the expected birth date.
When does the Scheme start?
The Scheme will be phased in over six months.
Between 1 January 2011 and 1 July 2011, employers with
employees' approval may opt to provide paid parental leave to
long-term employees whom are employees who have been employed for
12 months or longer prior to the expected birth date.
The first claims will be lodged from 1 October 2010 for children
expected to be born or adopted on 1 January 2011. If the employer
decides not to opt in, the FAO will provide the paid parental leave
pay during the phase-in period.
Importantly, from 1 July 2011, employers will be obliged to
provide paid parental leave to a long-term employee, following
notification by the FAO. Employers will be required to pay
long-term employees who have a child born or adopted on or after 1
The Scheme also imposes a number of administrative obligations
on employers. Employers under the Scheme will be required to:
provide required details to the FAO such as the employer's
bank account details and the employee's pay cycle details, and
notify the FAO if these details change;
provide paid parental leave in accordance with the
employee's normal pay cycle;
withhold tax under the usual PAYG withholding arrangements and
include parental leave pay in the total amounts on the
employee's annual and part-year payment summary;
provide the employee with a record of their payment, for
example, through a payslip;
keep written financial records of funds received from the FAO
and of the payment provided to an employee;
notify the FAO:
if/when an employee returns to work;
if/when an employee is no longer engaged with the
if the employer has been advanced an incorrect funding amount,
or if they are unable to provide the payment to the employee;
in advance, if they are ceasing to trade, selling the business,
transferring ownership or merging with another business; and
return any unpaid funds to the FAO.
Under the Scheme, funds for paid parental leave will be provided
to the employer by the FAO and employers will not have to provide
paid parental leave until they have received sufficient
What about voluntary parental leave schemes?
The current Scheme is intended to complement voluntary paid
parental leave schemes and current entitlements to unpaid parental
leave under the National Employment Standards.
Consequently, employers will need to carefully consider whether
they wish to offset any existing paid parental leave entitlements
provided under a voluntary scheme against the entitlements provided
under the Scheme.
Key issues for employers
Employers should begin considering how their business will
operate under the new Scheme.
In particular, employers should consider:
whether revisions to their payroll systems and processes will
be necessary in order to comply with the administrative obligations
under the Scheme;
whether staff employment contracts and policies require
reviewing any existing industrial instruments that provide for
paid parental leave given the advent of the new Government
Thanks to Emily Gothman for her help in writing this
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.
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