The Paid Parental Leave Bill 2010 (Bill) has
now been released and seeks to provide the first government-funded
paid parental leave scheme in Australia.
If the Bill is passed, on or after 1 January 2011 parents who
can satisfy work, income and residency tests may be eligible to
receive parental leave pay of up to 18 weeks at the national
minimum wage (which is currently $543.78 a week).
Paid parental leave will complement existing parental
entitlements. Thus, permanent full-time, part-time and eligible
long-term casual employees who have completed 12 months' continuous
service with their employer immediately before the birth or
adoption of a child are still entitled to access the unpaid
parental leave provisions under the National Employment Standards
in the Fair Work Act 2009.
Eligibility
In order to be eligible for parental leave pay, claimants will
need to meet the following:
- the Work Test;
- the Income Test; and
- residency requirements.
The Work Test
The primary carer must have:
- been engaged in work for a total period spanning at least 10 of
the 13 months prior to the expected birth or adoption of the child
with a break of no greater than eight weeks between any two
consecutive work days; and
- undertaken at least 330 hours of paid work during the 10-month
period (an average of around one day of paid work a week).
A working day is calculated as a day on which the primary carer
worked for at least one hour.
Importantly, employees who have resigned from work or finished a
contract may still claim the payment, provided they meet the
eligibility requirements - the Family Assistance Office would
provide the payments instead of the employer in this situation.
The Income Test
To be eligible for parental leave pay, the primary
carer must have an adjusted taxable income of $150,000 or less
in the financial year prior to the date of birth or adoption of the
child or the date of their claim, whichever is earlier.
Residency requirements
The residency requirements are aligned with other types of
family assistance. In order to qualify for parental leave pay, the
primary carer must be living in Australia and be:
- an Australian citizen;
- the holder of a permanent visa;
- a New Zealand citizen who arrived in Australia on a New Zealand
passport; or
- the holder of a specified temporary visa.
What businesses need to know
- The role of the employer is being phased in over the first 6
months of the scheme. Employers will not be required to administer
the payments until 1 July 2011 (eligible parents until this time
are able to claim the payment from the Family Assistance
Office).
- It is anticipated that in most cases the primary carer will
receive the payment through their employer and it will be taxable.
The only other deductions permitted will be for child support
obligations and deductions authorised by the recipient.
- Employers will not be required to provide parental leave pay to
their employees until they have received a sufficient funding
amount from the Family Assistance Office (note the government has
committed to pre-pay employers to avoid causing them cash-flow
problems).
- Parents can nominate the period over which they wish to receive
their parental leave pay. However the start date cannot be before
the child's birth or date of placement for adoption. Furthermore,
parental leave pay must be taken in one continuous 18 week period
and all of the parental leave pay must be received before the
child's first birthday, or within 12 months of the date of
placement for adoption.
- Parental leave pay will complement parents' entitlements to
unpaid parental leave under the NES.
- The government-funded parental leave pay can be received
before, after, or contemporaneously with existing entitlements,
such as employer-provided paid leave including annual leave and
employer-provided maternity leave.
Failure to comply
The Bill proposes that the Fair Work Ombudsman
(FWO) will have the power to investigate employers
who fail to make parental leave payments to eligible employees. The
FWO will also be empowered to investigate delays and other issues
regarding parental leave payments.
For further information, please contact:
Louise Houlihan, Partner
Ph (direct): +61 3 9608 2273
Email: l.houlihan@cornwalls.com.au