Paid Parental Leave Law Passes
The Federal Government has passed Paid Parental Leave legislation that provides 18 weeks of pay at the minimum wage.
Who is eligible?
Most workers are eligible however there are a few provisions.
The "Primary Care Giver" which the Government identifies as "usually the mother", must have worked at least one day per week for 10 of the 13 months before the birth or adoption of the child, with no break longer than 8 weeks between 2 working days.
Also, the parent receiving the payment cannot work from the date of birth until the payments cease.
Parents employed in part-time and casual roles, as well as the self-employed will also be eligible for this payment. The salary cap for eligibility has been capped at $150K.
How much will these payments be?
The legislation states that the payments will be made for 18 weeks at the minimum wage, which is currently $569.90.
Do businesses need to make these payments?
Yes and No.
Whilst businesses do not need to come up with the funds themselves, they will be required to distribute the funds to employees.
In most cases, businesses will receive money from the Family Assistance Office (FAO) and then pass the money to the employee.
This aspect of the scheme has been the biggest point of controversy between the Government and Business.
It has been argued that businesses should not have to carry the regulatory burden of distributing payments.
The Government's argument is that this will force businesses to "Stay in touch" with their employees whilst they are on leave.
After providing a number of details to the FAO, including bank account and employee information, employers will receive the money to pass on. Businesses will not be required to pay employees until the funds have been received, and they can even pay in as few as three instalments.
Payments can be made during a normal pay cycle.
What will be required from businesses?
A business will need to provide some details to the FAO before payments can begin. This includes bank information and pay cycle details.
Whilst this scheme does allow women to resign from work before the birth of a child and still obtain payments, employers The business in question will need to only need to make payments for employees who intend to return after maternity leave.
A business will need to withhold tax from the parental leave pay under the usual PAYG requirements, and will also need to include parental leave pay in the total amounts of annual and part-year payment summaries.
Employers must also provide employees with access to a record of their pay, usually in the form of a payslip, whilst the business needs to keep written financial records of parental leave funds.
Does a business need to liaise with the Family Assistance Office?
Yes, but not often.
Businesses need to advise the FAO when an employee returns to work, when an employee is no longer employed by the business, if a business changes bank accounts or pay cycles and if the business itself has not been provided with enough funding.
SME's also need to return any unpaid parental leave funds to the FAO and en employer must notify the FAO if the business is being sold, is merging with another company or if it is closing.
Will companies need to scrap their own Paid Parental Leave policies?
This will depend on whether parental leave is written into an employee's contract or whether it is a part of a company's overall workplace policy.
Whilst a number of large companies have said that they will keep their own plans, it is emerging that others are exploring ways to drop their own schemes.
Individual businesses need to determine whether they can legally abandon their schemes before they drop them altogether.
The parental leave scheme is comprehensive and will require businesses to consider the following:
- Do employment contracts already contain parental leave policies?
- Will the business need to revise payroll systems?
- Will weekly payments be fine, or will fewer payments be preferable?
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