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WORKPLACE RELATIONS & SAFETY |
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Wednesday, 23 June 2010 |
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The Paid Parental Leave Bill 2010 passed
into law last week after the Coalition voted with the Rudd Government to
back the historic legislation. The paid parental leave scheme (Scheme)
will be funded by the Government and is the culmination of over two years of
policy development and public consultation. What is the entitlement? The Scheme will provide up to a maximum of
18 weeks of government-funded paid parental leave at the Federal Minimum Wage
for eligible parents of children born, adopted or placed on or after 1
January 2011. Parental leave will be paid in instalments
at the Federal Minimum Wage during the person’s paid parental leave period. It will be paid by either the person’s
employer or the Family Assistance Office. Who will be eligible for paid parental
leave? A
person will be eligible for paid parental leave if they: a) satisfy
the work test (that is, if they have performed qualifying work during the
work test period); b) satisfy
the income test (that is, if the person’s adjusted taxable income is less
than $150,000 indexed); c) satisfy
the Australian residency test; d) are the
child’s primary carer; e) have
not have returned to work; and f) are not
entitled to a baby bonus (which is now restricted to primary carers of a
child who earn less than $75,000 per annum). When do employers have to start paying
parental leave? From 1 January to 30 June 2011, employers
have the option to choose whether or not to provide paid parental leave to
their eligible employees. This will become a requirement for employers from 1
July 2011 for eligible employees with more than 12 months continuous service.
This timing aligns with the beginning of the new financial year. In all other
cases, parents will be paid by the Family Assistance Office. Parents must apply to the Secretary of the
Department, who then makes a determination about the paid parental leave
period for which they can receive payment (up to a maximum of 18 weeks). The payments are paid in instalments to the
employer, who then pays these to the employee. Parental leave will be paid in
accordance with an employer’s normal pay practices and the employee’s usual
pay cycle. Employers will only pay employees who
intend to return to work. Women who resign, but meet the eligibility
criteria, will be paid by the Family Assistance Office. As well as establishing the basic
principles on eligibility for and mechanism for payment of parental leave,
the Scheme also addresses issues like disputes about eligibility for paid
parental leave instalments, government debt recovery and circumstances in which
parental leave payments might be paid directly to the employee. What will this mean
for employers? While this new regime will add
administrative burden to many employers, employers who currently have paid
parental leave schemes will welcome the government contribution to this
business cost. The Scheme will provide certainty to
employers who have been considering introducing or updating their paid
parental leave policy. Employers may consider: · increasing
the paid leave entitlement for employees to 18 weeks leave at full pay,
essentially offering ‘make-up pay’ beyond the government’s 18 weeks minimum
wage; · introducing
more generous entitlements (such as 26 weeks) in the competition for talented
workers; and · amending
current paid parental leave provisions to provide that employer payment will
be reduced by any amounts received under the Scheme. |
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If you have any questions, please contact one of our
partners named below. |
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Bryan Belling |
Seamus Burke |
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(02) 9334 8540 |
(02) 9334 8678 |
(02) 9334 8842 |
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If you do not wish to receive further e-Alerts from our
Workplace Relations & Safety Group, please reply ‘remove to this email. |
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hwlebsworth.com.au |
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