Employers are reminded that the Federal Government's Paid
Parental Leave Scheme (Scheme) commenced operation
on 1 January 2011. This Scheme is designed to help employers retain
skilled and valuable staff.
In most cases employers will not be responsible for
administering the Scheme and distributing payments to employees
until 1 July 2011 or earlier if they opt to do so. However,
employers should immediately familiarise themselves with their
obligations under the Scheme and take steps to integrate paid
parental leave entitlements into their current workplace
What is the Scheme?
The Scheme entitles eligible employees up to 18 weeks pay at the
national minimum wage rate (A$569.90 gross as at 1 July 2010),
amounting to around A$10,260.
Who is eligible for paid parental leave?
Employees will be eligible to receive paid parental leave
entitlements provided they:
are the primary care-giver of a child born or adopted on or
after 1 January 2011
have been engaged in work for a total period of at least 10 of
the 13 months before the birth or adoption of their child with a
break of no greater than eight weeks
have undertaken at least 330 hours of paid work during the 10
month period (an average of around one day of paid work per
are Australian residents
lodge a claim with the Family Assistance Office
(FAO) for payment of paid parental leave - it is
not an automatic entitlement
have not worked between the date of birth/adoption and their
nominated start date for paid parental leave
earn less than A$150,000 taxable income (to be indexed) in the
financial year prior to the date of birth/or adoption. This amount
will include the employee's base rate of pay, any bonus
payments, foreign income as well as income earned from assets such
shares or property.
If the employee is eligible, the FAO will provide the necessary
funds to the employer who will then be required to remit them on to
the employee. Eligible employees will not be able to work from the
date of birth until they cease receiving parental leave pay, but
may "keep in touch" for up to 10 days during the period
while receiving parental leave pay.
What are my business' obligations?
Although the Scheme will be fully funded by the Federal
Government, employers will be required to act as
"paymaster" and will be responsible for the
administration of the Scheme. Employers must:
register the business with the FAO following a claim for paid
parental leave by an eligible employee
make paid parental leave payments to employees on each regular
monthly or fortnightly payday for that employee (employers will not
be required to pay parental leave payments weekly)
withhold PAYG tax from each payment.
Importantly, employers will not be required to make
superannuation contributions in respect of parental leave pay and
eligible employees will not accrue annual leave entitlements during
this period of leave.
Are parental leave payments made in addition to existing
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. For
example, if an employer has a contractual obligation to provide
paid parental leave benefits, the Scheme will be in addition to
Implications for employers
Employers should ensure they are informed of their obligations
under the Scheme before 1 July 2011, implement administrative
measures to facilitate the Scheme in their workplace including
adjustments to the payroll system and consider whether they wish to
"opt in" and administer the Scheme prior to this date.
Employers need to register online for the Scheme before 1 July
Employers should review their current paid parental leave
obligations, including contractual obligations and workplace
policies, and consider if any changes should be made. Employers who
provide paid parental leave through an industrial agreement or
other contractual agreements cannot simply reduce or cease such a
payment for the duration of the agreement, unless negotiated or
Employers must take their obligations under the Scheme seriously
as breaches of the Scheme may attract a maximum penalty of A$6,600
for individuals and A$33,000 for corporations.
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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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.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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