The Federal Government has introduced changes to the Paid Parental Leave scheme which will come into effect in July 2023. The Paid Parental Leave Scheme is a Government-funded scheme which provides for new parents to receive the minimum wage while taking time off to care for a child. The current scheme is really two schemes: Parental Leave Pay and Dad and Partner Pay. The changes to be introduced aim to broaden participation in parental leave, to encourage a more equal sharing of child-care responsibilities, and to address the gender-gap in wage and labour participation.

The changes to be introduced include:

• The 2 schemes – Parental Leave Pay and Dad and Partner Pay – will become one
• The new scheme will allow both parents to share up to 20 weeks’ paid leave
• Leave will be available flexibly – in one block, or in a series of periods down to one day at a time
• Parenting couples can take up to 10 days of the leave concurrently
• Dad and partners do not need to be on unpaid leave to utilise the scheme
• Employees can receive the minimum wage under the Government scheme in addition to other forms of paid leave, or employer paid leave schemes

The leave is still means-tested, although the tests have been expanded to include an individual as well as family income tests. The objective of this change is to expand the number of potential, eligible participants.

The Government wants to encourage more equal sharing of the responsibility for child-care. Commentators have pointed out that the limited pay available to partners under the scheme means that participants will often suffer a financial loss. In times of tighter family budgets, a drop in salary would be a further disincentive to the uptake of the scheme. This does not encourage partners to participate, and reinforces the role of the primary carer, which is almost always the mother. Critics have argued that the current scheme perpetuates outdated gender stereotypes, and is contributing to inequality of pay and participation in the workforce. The changes to the scheme are aimed at addressing those criticisms.

Paid leave under the scheme will be available on a “use it or lose it” basis.

The scheme is funded by the Federal Government. The Government also wants to encourage businesses to put forward their own parental leave schemes which complement the Government scheme, and which provide a real incentive for employees to utilise the leave.

Plans have been announced to further extend the leave available under the scheme to up to 26 weeks. This extension is expected to be introduced gradually, with an additional 2 weeks’ leave being added each year, starting on 1 July 2024, until a total of 26 weeks is available from 1 July 2026. This change is subject to the passage of further legislative amendment.

The bill for the current set of changes is set to pass in March 2023, so that parents giving birth or adopting after 1 July 2023 will be eligible to participate under the new rules.

Employers should be aware of these changes to the Paid Parental Leave scheme, and consider ways in which they can complement the scheme with their own parental leave policies.

If you would like to discuss these or other workplace issues, please contact Andrew Bland or call 02 9412 3077