There has been a considerable amount of media in recent months about the Liberal Governments proposed changes to parental leave payments. Recently the federal government introduced the Fairer Paid Parental Leave Bill 2015 into parliament. As a Bill, it still has to be passed by both houses of Parliament before it becomes law. Assuming that will be the case, what do these changes mean?

Who is eligible?

Currently, to obtain government paid parental leave, individuals have to meet certain criteria, including the following:

  • Earn below the income threshold in the financial year before the birth or adoption of a child (currently this is an individual adjusted taxable income of $150,000 or less);
  • Meet the requirements of the work test (you must have worked for at least 10 of the 13 months preceding the date of birth or adoption for at least one day a week); and
  • Not be working for the duration of the time you receive the parental leave payments.

To be eligible, you must also be the primary carer of the child – that is both parents of the child cannot obtain the payments at the same time. Parents can share the parental leave period between each other – for example with one parent taking 12 weeks of government-paid leave, and the other taking six.

The parent who is not the primary carer may also be eligible for a payment known as “Dad and Partner Pay”.

What is available?

Currently, if parents are eligible for the Government Paid Parental Leave Scheme (“Government Parental Scheme”), the primary carer receives 18 weeks pay at the set minimum wage at the time the leave is taken. Currently, the minimum wage is $640.90 per week. This payment is taxed as income.

Presently, some employers offer parents taking time off work after the birth or adoption of a child, additional payments over and above the Government Parental Scheme benefits. Often, this is made for employees who have been with employers for a reasonable period and is used to entice employees back to work after a period of leave. It also recognises the financial burdens of raising a child and the “social cost” of parental leave.

At the moment, employees may receive any amount of parental benefits from their employer, and this has no bearing on whether they are eligible for the Government Parental Scheme.

How will this be changed?

If the Bill is passed in its current form, employees who receive parental leave payments from their employers that are equal to, or more generous than, the Government Parental Scheme benefits will no longer receive any payments from the Government.

The Government has said this is to prevent “double dipping” – a contentious choice of words for parents merely seeking to obtain payments that they were entitled to claim under the current system.

What effect will it have on your business?

It will have an effect not just on the payments being made, but also on contractual entitlements that are currently found in certain employee contracts, which offer certain benefits and “top ups” to particular employees.

Additionally, the Bill has removed the requirement for employers to make the Government Parental Scheme through employer payroll systems. Employers can still choose to have the benefits paid to them and on-pay these to their workers, but most employees will be paid directly by the Department of Human Services

Currently, submissions can be made to the Senate Standing Committees on Community Affairs about this Bill, and it is expected that the Committee’s report will be handed down later this month.

Conclusion

If you need assistance understanding your employment rights and leave entitlements, get in touch with LegalVision highly experienced team of employment lawyers today.

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