The Government confirmed in last night's federal
Budget that from 1 July 2016, an employee's eligibility for the
government-funded Paid Parental Leave (PPL) scheme would be removed
if the PPL payments they receive from their employer exceeds the
amount available under the government scheme.
In the lead up to the release of the Budget, Treasurer Joe
Hockey vowed to stop employees receiving government-funded PPL
payments if they would receive the same or a greater benefit from
their employer. The Treasurer referred to this process as
'double dipping', in that some employees are currently able
to receive PPL payments from both employer and government
In this In Brief, we examine this proposed change and its
implications for employers – particularly those employers
with their own PPL schemes in place.
FURTHER ELIGIBILITY REQUIREMENTS
Under the Paid Parental Leave Act 2010 (Cth), an
employee is entitled to a maximum of 18 weeks' PPL at the
National Minimum Wage. This payment is based on eligibility
criteria including caregiver status, amount of work completed prior
to leave, income, residency and when the employee returns to
The eligibility of a new parent to access the government PPL
scheme is independent of any entitlements that an employee may have
under a PPL scheme of their employer. In practice, many employers
have made their PPL schemes complementary to the government scheme,
e.g. by topping up the level of payments to the employee's
The restriction introduced by the Budget will mean that only
employees receiving less than 18 weeks' PPL at the National
Minimum Wage from their employer will receive any government
support. For employees subject to employer-funded schemes offering
greater than this amount, this represents the removal of $11,500 in
financial assistance. Where an employer offers PPL which is less
than 18 weeks' pay at the National Minimum Wage, the government
will top up the amount in order for it to reach the maximum
The change aims to significantly reduce the amount the
government requires to fund the scheme, with Treasurer Hockey
estimating a cost saving of nearly $1 billion.2
IMPLICATIONS FOR EMPLOYERS
Employers will need to closely monitor developments in this
area, especially whether this specific component of the federal
Budget is passed by Parliament.
However, if implemented as the government intends from 1 July
2016, this change will mean that employers currently offering PPL
entitlements in excess of the government scheme may wish to
consider whether to continue operating their own PPL schemes.
Employers should note, though, that it may not be possible to
end any existing PPL schemes quickly, as these are usually set down
in employment contracts, workplace policies, or enterprise
agreements. Employers will have to continue providing employees
with their PPL entitlements under those instruments, until they are
changed or renegotiated in consultation with the affected
employees; and (in the case of enterprise agreements) varied in
accordance with Part 2-4, Division 7 of the Fair Work Act
Of course in deciding whether to retain their own PPL schemes,
employers should also factor in the importance of offering PPL
benefits as part of an "employer of choice" recruitment
and retention strategy.
In advance of 1 July 2016, all employers will need to ensure
that their workplace policies and procedures are updated to ensure
consistency with any changes to the government PPL scheme.
1 Phillip Coorey, 'Federal budget 2015:
Budget to end 'double dip' on parental leave',
Australian Financial Review, 11 May 2015.
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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