The Federal Government proposes to change eligibility rules for its Paid Parental Leave (PPL) scheme "to remove the ability for individuals to double dip, by taking payments from both their employer and the Government."
If this change is implemented, employees applying for PPL on and after 1 July 2016 will find their PPL benefit affected by any parental leave payments made by their employer.
The Government states that its intention is for primary carers to have access to PPL at least equal to the maximum PPL benefit (currently 18 weeks at the national minimum weekly wage - $640.90 in 2014-2015).
It's not yet clear how this change will be implemented.
For example, if the employer's policy is to pay full pay for an employee for a period less than 18 weeks will the total amount paid by the employer reduce the total PPL benefit? Or will the employee only lose PPL for the weeks that she/he also receives pay from the employer? What if the policy is to 'top-up' PPL so that the employee receives their full pay? Will this in effect reduce PPL by the amount of the top-up?
If employers are considering changing parental leave arrangements to avoid the adverse impact on PPL benefits for employees, they might consider providing benefits at other times, such as before the employee commences parental leave or upon their return to work.
The effectiveness of these alternative arrangements will depend on the legislation implementing the change. Furthermore, the employer's obligation to make parental leave payments may be enshrined in employment contracts or enterprise agreements. If the employer ceases making payments during a period where an employee is receiving PPL, the employer should be aware this will mean the employee will not accrue paid leave during that period.
The Federal Government will need to pass legislation amending the Paid Parental Leave Act to give effect to this change. The Government may not have sufficient support in the Senate to pass this legislation.
Employers need to think about their paid parental leave arrangements, current and proposed, in light of this Budget measure and await more detail of how the change is to work.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.
