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Monday 25th May 2015
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Did you hear about the changes to parental leave?
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In today's Workplace Bulletin:
- What the Coalition’s budget changes mean for your business’s paid parental leave scheme
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Dear Reader,
There was a big change to paid parental leave (PPL) announced in this month’s Federal Budget. Did you feel the earth move?
Possibly not. The changes that Treasurer Joe Hockey announced will certainly affect employees – but for better or worse, they’re not actually changing your administrative obligations under paid parental leave.
So what’s the fuss about? |
Access to the public PPL scheme is changing
Currently, mothers earning up to $150,000 per annum receive $11,500 of taxpayer-funded paid parental leave. This is equivalent to 18 weeks at the national minimum wage rate.
Some businesses – though by no means all – top this scheme up by paying an additional amount of paid parental leave to their employees.
The government says it is ending what it calls “double dipping”. This means that entitlement to the public PPL scheme will be reduced, or cut off entirely, depending on what an employee already receives from her employer.
How it works
This really depends on what you have in place for your employees.
If you have no employee PPL scheme of your own, then nothing much changes. Your employees will go on parental leave, and receive their public PPL entitlement of 18 weeks’ leave. Business as usual.
If you have an employee PPL scheme of your own that is less generous than the $11,500 the government provides, then the government will only ‘top up’ what the employee receives to a maximum of $11,500.
And if your employee PPL scheme matches or is more generous than the government’s scheme, then your employees will not be able to access the government entitlement at all. It’s all down to you.
It is estimated that some 80,000 female employees will lose some or all of their Commonwealth leave payments under the changes. It’s also estimated to save the government nearly $1 billion over the next four years, and changes would take affect from 1 July 2016. |
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How to get 12+ downloadable templates for helping
you manage family issues in your workplace, including:
- A sample Parental Leave Policy
- A template Flexible Working Arrangements Policy
- A sample Home Workplace Health and Safety Checklist
- A sample Parental leave Record
- Template letters for:
- approving requests for flexible working arrangement
- confirming arrangements for parental leave
- informing employees of changes to pre-leave role
- notifying employees on parental leave of retrenchment
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What if I change my scheme?
You’re not the only one talking about doing it. The chief executive of the Australian Chamber of Commerce and Industry, Kate Carnell, warned that some employers will respond to the change by shifting payments to other employee benefits.
Many of the businesses that do offer employee PPL schemes have tried to do so as a way to compete to recruit the best employees. With this change, that competitive advantage is now gone. Your own PPL scheme will no longer act as a ‘bonus’ to employees.
Though the Treasurer might not be too happy, there is no law requiring you to retain any employee scheme you had in place. However, if this scheme forms part of an employment contract or enterprise agreement with your employees, you should always consult affected staff before altering, reducing or removing an employee entitlement.
What are my obligations in the meantime?
From an administrative perspective, things stay much the same.
Unless your PPL scheme replaces the taxpayer’s, you will receive funding from the Federal Government to make the leave payments.
You must pass these payments on via your usual payroll cycle, and deduct PAYG instalments from the payment the same way you would when paying wages.
Remember: you can claim PPL payments and any reasonable costs of complying with the PPL scheme as a tax deduction.
And your obligation under the National Employment Standards (NES) to provide 12 months’ unpaid parental leave hasn’t changed.
But if there’s one constant in the past few years of Australian employment law, it’s that nothing is constant. My team is watching what happens closely – and as the current PPL debate evolves, I’ll keep you in the know.
And remember – unpaid parental leave obligations can produce challenging questions of their own. The Employment Law Practical Handbook’s chapter on parental leave is a must if you’re wanting to better understand all of your obligations, and develop an effective policy in this area.
Until next time,
Joseph Nunweek
Editor, Workplace Bulletin
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Workplace Bulletin ISSN 1836-117X
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