Employer Obligations Paid Parental Leave

Paid Parental Leave has been a hot topic of reform in Australia in recent years. The Paid Parental Leave Amendment (More Support for Working Families) Act 2024 introduced further changes that employers need to take into account to fulfil their legal obligations. This article looks at employer obligations when it comes to paid parental leave in Australia.

Paid Parental Leave Scheme

The federal government introduced the Paid Parental Leave (PPL) scheme through the Paid Parental Leave Act 2010. The PPL scheme is a welfare measure, intended to provide a taxable payment at the rate of the National Minimum Wage to eligible employees. With the PPL, the federal government signals support and normalises parents taking time out of work to care for a child, and promotes gender equality and work/life balance. Additionally, the PPL is intended to assist employers to:

• retain experienced and valuable staff by keeping a connection to the workplace while on parental leave
• improve workplace culture without the requirement for employers to fund parental leave themselves and
• increase workforce participation amongst parents of young children.

Depending on the particular circumstances, full-time, part-time, contract, casual, seasonal and self-employed workers can all be eligible for paid parental leave. The Parental Leave Pay (PLP) is separate from an employee’s existing parental leave entitlements provided by their employer. The employee may have entitlements under their employment contract, award or enterprise agreement for paid or unpaid parental leave. The financial support provided under the PLP is designed to supplement these entitlements.

Employers play no role in assessing whether an employee is eligible for PLP, as Services Australia makes the decision. In fact, the onus is on the employee to apply for PLP and arrange with their employer to take this leave. Services Australia will contact the employer if the employee is eligible for PLP, give them the details (including the pay start date) and provide the funds to pass on to the employee. To receive PLP under the scheme, the employee must meet certain requirements, including a work test (unless they qualify under an exception). The employee must request evidence from their employer to verify that they would have continued working if not for the parenting responsibilities, and the period they are unable to work due to these responsibilities.

Employer Obligations

The employer’s role in the scheme is to retain skilled staff by enabling parents to remain connected to work and their careers, even as they take time away from the workplace to have a baby or adopt a child. Employers only provide PLP once per child, and only to eligible employees who meet the following criteria:

• the employee has worked for the same employer for at least 12 months
• they intend to return to their employment at the end of the leave term
• they anticipate taking at least 8 weeks continuous PLP
• this leave block is within a year of the expected date of birth or adoption and
• they live in Australia.

The employer does not have to provide PLP to an employee who does not meet these criteria. However, with mutual agreement, the employer can still provide the employee with PLP if they do not meet the criteria. In that case, the employer needs to register with Services Australia and indicate that they choose to provide PLP before the employee submits their claim.

For children born from the date 1 July 2023, the block of leave must be composed of consecutive weekdays Monday through Friday, with no breaks, or weekends. The employee may want to take their PLP in multiple blocks, and if they qualify, the employer only delivers the first block, with Services Australia delivering subsequent payments directly. The employee’s block of PLP may alter with their circumstances, in which case Services Australia will update the employer on the exact dates they need to deliver the PLP.

Employers have obligations under the Paid Parental Leave Scheme to:

• provide Services Australia with pay cycle and bank account details for deposit, and update the department if these details change
• inform Services Australia if they cease to trade, transfer ownership or merge with another business, or sell the business
• keep records of PPL funds received and dispersed
• withhold appropriate tax from the PLP
• provide the employee with pay slips and summaries
• inform Services Australia if an employee works on any day when they receive PLP
• inform Services Australia if a payment is incorrect or they are unable to provide PLP to an employee and return any unpaid funds.

Employers have no obligation to:

• provide PLP to independent contractors, short term employees, or anyone who is no longer their employee
• provide PLP to an employee who is already receiving an income support payment from Services Australia.
• provide PLP to an employee before receiving government funds
• pay additional workers’ compensation premiums
• pay additional payroll tax
• accrue additional leave
• make additional superannuation contributions
• create special bank accounts or separately identify PLP in the annual financial statements or
• provide regular reports on the scheme.

Go To Court Lawyers can provide clarification on employer obligations when it comes to paid parental leave. Please call our experienced solicitors on 1300 636 846.