paid parental leave scheme a reality

24 June 2010

In a previous news bulletin Associate Nigel Inglis presented details of the Paid Parental Leave Bill 2010 that was introduced into Parliament on 12 May 2010. Partner Pat Mullins now reports that the Senate passed the Bill on 17 June 2010 following some important amendments, which will impact how employers incorporate the government-funded entitlements into any existing schemes.

The scheme will come into effect from 1 January 2011, although employers need not be responsible for channelling the payments to employees until 1 July 2011 although they have the option do so this earlier if they wish.

Amendments to the Bill

The Senate made a number of amendments to the Bill to:

modify the work test to deal with situations of premature birth or pregnancy related complications or illness, and
'clarify' that an employer's obligation to pay a person parental leave under the new provisions is separate and additional to any other obligation the employer has with respect to paid parental leave.

Who is eligible?

To be eligible, a person must:

satisfy the work test;
satisfy the income test. The person's adjusted taxable income must be less than $150,000 indexed;
satisfy the Australian residency test;
be the child's primary carer;
not have returned to work; and
not be entitled to the government's baby bonus (restricted to primary carers of a child who earn less than $75,000 per annum).

Who pays the parental leave?

All employees including small businesses will be required to make paid parental leave payments for eligible carers.

Employers will receive funding from the Australian government and initial advise from the Government is this is intended to be before the employer is required to start making payments for the Paid Parental Leave scheme.
Employers will not be required to pay superannuation payments on the Government's Paid Parental Leave scheme and employees will not accrue annual leave for the period of the Government's Paid Parental Leave scheme.

Implications for Businesses:

In the lead-up to the introduction of the paid parental leave scheme, businesses should consider the following issues:

Whether your employment contracts or existing parental leave policies should be amended;
Your approach in respect of combining the entitlements under the new regime with current entitlements (if any) and communicate this to employees;
How your business will administer this entitlement, including any upgrade requirements to payroll software;
Your policy on responding to requests that the minimum payments be topped up to an employee's actual salary.
The need to ensure you understand the application process through the Family Assistance Office and provide this information to employees.

For further information, please contact:

Pat Mullins | Partner
Mullins Lawyers
t +61 7 3224 0350
f +61 7 3224 0333
pmullins@mullinslaw.com.au

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