paid parental leave scheme moves forward

13 May 2010

The Federal Government has introduced the Paid Parental Leave Bill 2010 into Parliament, with the first reading in the House of Representatives on Wednesday 12 May 2010. The Bill introduces a government-funded paid parental leave scheme, commencing 1 January 2011. Up to 18 weeks' paid leave, at minimum wage, will be available to primary carers.

Parental paid leave entitlement

The entitlement will be up to 18 weeks' paid parental leave per child, paid in instalments at the national minimum wage as prescribed under the Fair Work Act 2009 (Cth) from time to time (presently $543.78 per week) to eligible primary caregivers of children born or adopted on or after 1 January 2011.

Employers will not have to commence administering payments under the scheme until 1 July 2011.

The period of paid parental leave is not additional to the period of unpaid leave available under the Fair Work Act. The period of paid parental leave will be taken at the same time as the equivalent proportion of unpaid leave.

An absence on paid parental leave is not an absence on paid leave for the purposes of industrial laws and instruments. Thus, it may not constitute part of an employee's "continuous service" for the purposes of calculating some entitlements.

Eligibility

Workers, including full, part time and casual employees, contractors, and the self-employed who are the child's primary carer and satisfy certain requirements will be eligible.

Employees and contractors, full-time, part-time and casual, must have:

worked for 10 of the 13 months prior to the expected date of birth or adoption with a break of no more than 8 weeks between work days;
undertaken at least 330 hours of paid work during that 10-month period; and
earned less than $150,000 per annum (indexed each year) in the previous financial year.

Types of claims

A primary claim can only be made by the child's birth mother; an adoptive parent; or another person in special circumstances (for example, a grandparent in the case of the death of both of the child's parents).
A secondary claim can only be made by the partner of a primary claimant, a parent who is not the primary claimant or their partner; or another person in special circumstances.
A tertiary claim can only be made in special circumstances.

In most cases, a primary claim must be made before another type of claim may be made.

Who pays and when?

A claim for paid parental leave can be made up to 3 months before the expected date of birth or adoption to the Family Assistance Office (FAO). Applications can be made from 1 October 2010. The FAO determines eligibility and will inform the employer when they are required to provide parental leave payments.

The FAO will administer all payments until 30 June 2011, after which employers will administer payments for their employees and contractors with 12 months' or more service. The FAO will continue to administer payments for other persons.

Employers will have no obligation to make any payment until they have received sufficient funds from the FAO.

The claim for parental leave must be made in the period between three months before the expected date of birth and the child's first birthday.

Payments may commence from the date the child is born or later, depending on when the payment is applied for and the child's birth is verified, but must cease before the child's first birthday.

Payments may also be made in cases of adoption, in which case the date of placement of the child will be the key date.

For employers

Mullins Lawyers can assist employers to prepare for the introduction of the paid parental leave scheme.

A number of factors will need to be considered including:

amending employment contracts or existing parental leave policies;
determining how to respond to requests that the minimum payments be topped up to an employee's actual salary;
revising payroll systems and processes so that they can administer parental leave payments;
setting up a separate bank account to receive payments from the FAO; and
ensuring an understanding of FAO reporting obligations.

In the case of employers who currently provide paid parental leave, consideration will need to be given to whether the new scheme will alter current practices and existing documentation including employment contracts and company policies.

For further information or assistance, please contact:

Nigel Inglis | Associate
Lawyers
t +61 7 3224 0364
f +61 7 3224 0230
ninglis@mullinslaw.com.au