On 24 February 2011, the Paid Parental Leave (Reduction of Compliance Burden for Employers) Amendment Bill 2010 was voted down by Parliament. This Bill sought to reverse the requirement under the Paid Parental Leave Act 2010 (Cth) (PPL Act) that employers administer Paid Parental Leave (PPL) scheme payments on behalf of the government by passing on the PPL instalments from the government to an eligible employee.

What this means for employers

Considering that the employer's role in the government funded PPL scheme is cemented, it is important for employers to know their obligations under the PPL Act and be ready for 1 July 2011, when it becomes mandatory for them to pay PPL instalments to eligible employees.

Obligations of employers include:

  • responding to a notice of employer determination from the Secretary within 14 days of the date of the notice
  • deducting the required PAYG tax from instalments
  • notifying the Secretary if an instalment has not been paid to an employee that was required to be paid
  • notifying the Secretary if the employer has not been paid the PPL funding amount as agreed
  • notifying the Secretary if the PPL funding amounts received are more than the instalments payable to an employee.

It will be necessary for employers to keep close track of PPL instalments coming in from the government and the passing on of those instalments to employees.

Employers should now also consider and implement any changes that may be required to made to their payroll and administrative systems to ensure that the systems are ready to accommodate the receipt and passing on of PPL instalments.

Implications of the Bill being defeated

Enterprise bargaining negotiations between unions and employers may now include requests by the union for further PPL entitlements for employees.

We expect that unions will use workplace bargaining to seek further advances on the government-funded PPL scheme for employees. Unions will likely push for entitlements such as full income replacement, which would involve an employer 'topping up' the government-funded minimum wage to the employee's actual wage, increasing the length of paid parental leave to up to 26 weeks through an employer contribution and ensuring employees continue to receive superannuation contributions whilst on PPL.

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