Members

Implementing the paid parental leave scheme

Kim Haworth October 20, 2010

2 min read

Understanding how the Paid Parental Leave Scheme (PPL) interacts with employer-provided paid parental leave and the unpaid parental leave requirements of the National Employment Standards (NES), will allow employers to develop standardised policies which will ensure equity and consistency for all staff from 1 January, 2011.

The scheme, funded by the Australian government, will allow Employers to provide 18 weeks of paid parental leave to mothers and adoptive parents.

Eligibility

In order to be eligible, parents must:

Give birth or adopt a child on or after 1 January 2011
Meet a PPL work test (even for casual or part-time workers)
Meet an income test and residency requirements.

Interaction with existing arrangements

Eligible employees will receive the PPL in conjunction with employer-provided paid and unpaid parental leave. This means that any existing parental leave arrangements will remain the same and PPL entitlements will apply in addition to existing entitlements.

The PPL can be received before, during or after employer-provided leave but must be received in a continuous 18 week block within 12 months of the birth or adoption of the child.

The PPL pay rate will be in accordance with the National Minimum Wage, which is currently $543.78 per week before tax.

Leave entitlements

PPL does not give eligible employees actual leave entitlements (these are provided for under the NES) but rather provides payment during such periods.

Employees will need to arrange taking leave with their employer. Employees will also need to consider whether they receive employer-provided paid parental leave and PPL simultaneously or consecutively, as some arrangements will attract higher tax liabilities.

Implementation phase

Employers should be aware of their obligations surrounding the delivery, taxing and record keeping of PPL scheme payments.

Employer obligations will be phased-in over six months. During this transition period, payments will come directly from the Family Assistance Office (FAO) to eligible parents. Employers will have the option to pay the entitlement from the date of commencement (1 January 2010), otherwise compulsory delivery of PPL payments by employers commences fully on 1 July 2011. The FAO will notify the employer and relevant employee if the employer is required to pay the employee parental leave pay. In other cases, the FAO will make a direct payment to the parent.

Read more about implementation of the PPL at www.irgroup.com.au