The Paid Parental Leave Act 2010 (Cth) came into effect on 1 January 2011, meaning that an employee parent may now apply for up to 18 weeks of paid parental leave (PPL) at the minimum wage.

Employers are not required to do anything to determine the eligibility of employees for government-funded PPL. Employees are required to make an application for government-funded PPL to the Family Assistance Office (FAO), which will determine whether the employee is entitled to PPL.

Planning for the PPL scheme

Employers can plan for their part in the PPL scheme by doing the following:

  • Determine your PPL obligations under any existing policy, relevant industrial instruments (including awards) and contracts of employment.

Any existing obligation to pay PPL to employees cannot be taken away because of the government-funded PPL scheme, except by lawful means (such as employees agreeing to the variation of their employment contract). 

  • Consider amending any existing policy to integrate the government-funded PPL scheme, explaining how existing obligations and the new PPL scheme interact.

The government-funded scheme is in addition to any existing policy obligating employers to pay employees PPL.  Depending on the terms of the workplace-funded PPL, employees may receive both PPL entitlements at the same time or one after the other. 

  • If you do not have an existing policy or employee entitlement to PPL, consider implementing a new policy notifying employees about the government-funded PPL scheme and their new entitlements.
  • Consider whether your company will elect into the scheme prior to 1 July 2011 (when it will become mandatory for employers to pass PPL payments received from the FAO to eligible employees).

PPL payments will be made to the employer by the FAO and then it is the responsibility of the employer to pass the payments onto the eligible employee.  It is not a cost borne by the employer.

  • If you choose to opt into the scheme, register the employer's details with Centrelink Business Online Services/Hotline.
  • Consider and implement any changes to the company's administrative systems, including payroll, to ensure they are are able to accommodate the receipt of PPL from the FAO and the passing on of the payment to the relevant employee.
  • Familiarise yourself with employer's obligations to employees receiving PPL and those to the FAO, such as notification requirements, the deduction of tax and the provision of payment advice. 

Watch this space

A bill has been introduced to parliament seeking to reverse the arrangements requiring employers to make payments on behalf of the FAO to employees receiving PPL.  Parliament is currently considering the Paid Parental Leave (Reduction of Compliance Burden for Employers) Amendment Bill 2010.  If it is passed, employers will not be required to make PPL payments on behalf of the FAO to eligible employees after 1 July 2011.

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This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances.