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Posted by Skye Engwerda, Solicitor The Australian Government Paid Parental Leave scheme commenced on 1 January 2011. At this stage it is voluntary for employers, becoming compulsory on 1 July 2011. It was introduced to assist new parents in spending more time with their new child and to assist employers to retain their valuable staff. It is important to note that the scheme does not give employees an entitlement to leave. Instead, it complements existing leave entitlements such as the 12 months unpaid parental leave as provided for by the National Employment Standards and paid maternity leave. Paid Parental Leave is paid in accordance with the National Minimum Wage (currently $570.00 per week before tax) and eligible employees are entitled to a minimum of 8 weeks and a maximum of 18 weeks paid leave to be taken over one continuous period. Leave may however be taken at any time within the first year after birth or adoption. A family can only receive one 18 week period of Paid Parental Leave per birth or adoption and families who receive payments under the Scheme will not receive the Baby Bonus unless there have been multiple births.

For employees:

To be eligible for the scheme you must be the primary carer of a newborn or recently adopted child, generally the birth mother or the initial primary carer of an adopted child. Furthermore, you need to pass:

• A work history test – you must have worked continuously for at least 10 of the 13 months prior to the birth or adoption OR worked for at least 330 hours in the 10 month period preceding the birth or adoption (approximately 1 day per week)
• An income test – you must have an adjusted taxable income of less than $150,000.00 in the financial year prior to the birth or adoption or the date of claim
• A residency test – you must be an Australian resident

Your eligibility for the scheme will be determined by lodging your claim with the Family Assistance Office which will require you to provide supporting documentation confirming that a child has been born or adopted.  You can decide whether you want to claim Paid Parental Leave or the Baby Bonus. The following table illustrates the differences between the two:

A Paid Parental Leave Comparison Estimator is available on the Family Assistance Office website to assist you further in making a decision. Your Parental Leave Pay will stop when you return to work, however you can still ‘keep in touch’ with your workplace. This means that you are free to participate in workplace activities for up to 10 days until the end of the Parental Leave Pay period and you must be paid for your time at work in addition to Parental Leave Pay. These days must not be taken in the first two weeks following the birth of adoption of the child. However, until the Government’s proposed amendments to the Fair Work Act are passed, if you use a keeping in touch day, your entitlement to 12 months unpaid parental leave under the National Employment Standards may be affected because it must be taken in a single continuous period. If you are self-employed you may still be eligible to receive Parental Leave Pay so long as you are on leave or not working from the time of becoming your child’s primary carer until the end of the Paid Parental Leave period. You can still oversee business operations or perform the occasional administrative task without being regarded as having returned to work. If you do decide to return to work before the end of your Paid Parental Leave period you need to notify the Family Assistance Office. Unused Parental Leave Pay may be transferred to your partner as long as they meet the eligibility requirements.

For employers:

You should also use this time before the scheme becomes compulsory to review payroll and record-keeping systems to ensure that they are capable of adequately processing payments. Leave policies and procedures should also be updated to include references to the scheme and to confirm that payments made under the Scheme are in addition to any paid parental leave provided by the employer. The Family Assistance Office will let you know if you have an employee eligible for Parental Leave Pay and will ensure that there are funds available in advance of your obligation to provide Parental Leave Pay – there is no obligation to provide Parental Leave Pay until the funds have been received. You can choose whether to receive these funds as 3 payments of 6 weeks each or 9 fortnightly payments. However, payments under the scheme must occur in accordance with the employee’s normal pay cycle with their payslip indicating the amount that is paid parental leave. You will need to notify the Family Assistance Office when your employee returns to work before or during the Paid Parental Leave Period or if they cease to be your employee. For more information you can visit the Paid Parental Leave scheme section of the Family Assistance Office website at www.familyassist.gov.au.