Designed to encourage employment continuity and workplace retention, the Australian Government has announced the introduction of a comprehensive Paid Parental Leave (PPL) scheme.

 

Main Points:

• Applies to new parents who are primary carers of children born after 1st Jan 2011
• Applies to primary carers earning less than $150,000 per annum
• Entitlement is 18 weeks’ paid leave at the minimum wage (currently $543.78)
• Applies to full time employees, casuals, contractors and the self employed

The PPL scheme will apply to new parents who are the primary carers of a child born or adopted on or after 1 January 2011. From 1 January 2011, primary care givers earning less than $150,000 a year will be entitled to 18 weeks’ paid leave at the minimum wage (currently $543.78), following the birth or adoption of a child.

PPL will cover employees, including casual workers, as well as contractors and the self employed. If a primary carer returns to work before they have received all of their PPL entitlement, they may be able to transfer the unused part of their PPL to another caregiver who meets the eligibility requirements.

To be eligible for Paid Parental Leave, a person must also be in paid work and have been engaged in work continuously for at least 10 out of the 13 months prior to the birth or adoption of the child and worked at least 330 hours in the 10 month period (an average of around one day of paid work per week).

PPL must be taken after the birth or adoption of the child, and within 12 months after that event. PPL won’t be paid for any period after an employee returns to work.

Employer Obligations
Employers will largely be responsible for delivering the payments where the employee has completed 12 months’ continuous service prior to the birth or adoption. Other parents who claim PPL will receive their payments directly from the Family Assistance Office.

Employers will not be required to make superannuation payments for PPL (although this decision will be subject to a review beginning two years after the scheme has commenced), and employees won’t accrue leave entitlements during a period of government PPL.

The Family Assistance Office will be responsible for administering the PPL scheme. It is intended that Government funds will be transferred to employers in advance of their usual payroll cycle so that they can make payments to employees, and that the Family Assistance Office will ensure employers and employees both know when payments to parents are to be made.

The PPL entitlement will be able to be taken in conjunction with, or in addition to, employer provided paid maternity and parental leave, and other employer provided leave entitlements.

Parents will be able to lodge PPL claims from 1 October 2010, so employees can make leave and pay arrangements with their employers before they start leave prior to the expected birth or adoption from 1 January 2011.

Impact on Employers
It is estimated that employers will make payments to around 100,000 employees eligible for PPL each year, mostly in larger businesses. The Productivity Commission estimated that only around 4 per cent of small businesses would make payments under the scheme in any given year.

The PPL scheme is stated to have been designed to impose minimal new costs on employers. Nevertheless, it is likely that employers will be subject to indirect labour and administrative costs, such as higher workers’ compensation premiums and payroll tax.

The Government has announced that it will consult with business organisations and employers to help make the new PPL arrangements as simple as possible for employers.

Full details of the scheme are still to be finalised with the Government committed to undertaking consultations in particular, with business organisations, employers and unions, in the second half of 2009.

It is expected that legislation for the scheme will be introduced to Parliament in 2010.

To obtain further information about this article or discuss how it might impact on your business, please contact Andrew Bland at [email protected]