The Federal Budget for 2009/2010 has introduced a number of
measures which will impact employers and employees. Highlights of
two significant measures are set out below:
Paid parental leave
From 1 October 2010, employees will be able to lodge claims for
government funded paid parental leave ("PPL") in respect
of the birth or adoption of a child that takes place on or after 1
January 2011. They will be entitled to receive payment of the
Federal minimum wage (currently $543.78 per week) for a period of
up to 18 weeks while on parental leave.
Significantly, PPL will be available to:
Fathers as well as mothers. By contrast, most employer funded
schemes only apply to mothers. This may result in an increase in
the levels of paternity leave traditionally taken in your
Casual employees, contractors and self employed people, in
addition to fulltime and part time employees.
Where a primary carer returns to work before receiving all of
their PPL entitlement, they may transfer the unused part of their
PPL to another caregiver who meets eligibility requirements.
To be eligible for the PPL Scheme, the primary carer must be in
paid work and have:
been engaged in work continuously for at least 10 of the 13
months prior to the expected birth or adoption of the child;
undertaken at least 330 hours of paid work in the 10 month
period (an average of around 1 day of paid work a week); and
an adjustable taxable income of $150,000.00 or less in the
previous financial year.
PPL must be taken within 12 months after the birth or adoption
of the child. Employees will not accrue leave entitlements during a
period of government funded PPL.
An employee may choose whether to participate in the PPL Scheme
depending on the employee's individual circumstances. Where the
employee chooses to participate in the Scheme the employee will not
receive the Baby Bonus (except in multiple birth cases) or Family
Tax Benefit Part B during the 18 week PPL period.
Employees who are eligible for PPL will also be able to continue
to access employer funded leave at the time of the birth/adoption
of a child. Therefore, government funded PPL may be taken in
conjunction with, or in addition to, employer provided paid
Payments made under the PPL Scheme will be taxable. At this
stage employers will not be required to make superannuation
contributions on government funded PPL. However, employers may be
in for an unwelcome surprise on this issue in the future as it is
stated that this will be reviewed after 2 or 3 years from the time
that this Scheme commences. Had it not been for the global
financial crisis employers may have been required to make
superannuation contributions from commencement of the Scheme.
The Family Assistance Office will administer the PPL Scheme and
is given the task of ensuring that government funds are transferred
to employers in advance of their usual payroll cycle to enable them
to make this payment to employees.
Employers will not be obliged to make PPL payments to those
employees who have less than 12 months continuous service prior to
the date of birth or adoption of their child. Those employees may
claim PPL directly from the Family Assistance Office.
The government will consult with employers and unions during the
second half of 2009 after which legislation concerning this Scheme
is expected to be introduced in 2010.
Taxation of Foreign Employment Income
From 1 July 2009 income earned by Australian residents who are
employed outside of Australia will be assessable in Australia.
However, tax paid in the foreign country on that income may be
subject to tax offsets.
The current exemption (which precludes the taxation of income
earned overseas in foreign employment that lasts for at least 91
consecutive days), will only apply to aid workers, charitable
workers, certain government employees (eg defence and police force
personnel deployed overseas) and those persons employed on overseas
projects which have been approved by the Minister for Trade as
being in the national interest.
Affected employees working in countries with taxation thresholds
that are lower than those in Australia will now have to pay
additional taxation in Australia. They may also be faced with
lengthy waiting periods before they are able to claim the foreign
tax offset because the date of lodgement of tax returns in
Australia may not correspond with the date of lodgement of tax
returns in the foreign country.
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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