What you need to know about proposed changes to parental leave27 October 2016
Last week the Liberal Government reintroduced an amended Fairer Paid Parental Leave Bill 2016 to Parliament. The Bill aims to reduce benefits to workers who currently receive parental leave from their employer, saving the Government almost $1.2 billion. It has been referred to as the "anti-double-dipping bill" as it brings about a range of amendments to ensure primary carers cannot claim more than 18 weeks' pay if accessing some form of government entitlement.
In 2010, when the Labor Government introduced government funded paid parental leave, the stated objectives were to improve family wellbeing, encourage workforce attachment for women and acknowledge the community value of children. The scheme provides eligible workers with up to 18 weeks' pay at minimum wage (currently totalling $11,800) in addition to any employer funded payments. Eligibility requirements include that the worker is a primary carer of a newborn, earns less than $150,000 per annum and has held paid employment for at least 10 of the 13 months—during which they must have worked 33 hours or more—before birth or adoption (the work test).
Despite an election promise to enhance Labor's scheme, on Mother's Day in 2015 the Liberal Government announced a "fairer" scheme, which would have reduced current government funded benefits for workers eligible to receive equal or greater entitlements from their employers. At the time, the Bill failed to gain support and was put to a Senate Committee review.
Last week, following further consultation, the Liberal Government introduced amendments to soften the proposed scheme, which include:
- employer funded bonuses and weekly parental leave payments will reduce eligibility for government benefits by a proportionate number of weeks (for example, if an employer provides four weeks' pay, the government contribution will be reduced by four weeks)
- preventing access to employer funded payments and government payments at the same time
- payments provided under a "top-up" scheme will be grandfathered for three years (to enable negotiations to remove the top-up, including from any current enterprise agreement)
- softening the work test for claimants who are unable to meet the test, because they cannot continue in their role due to its hazardous nature or have moved to a safer role, and
- introducing debt recovery processes to recover monies paid to primary carers that are later determined don't meet the scheme conditions.
Key impacts on employers
If the Bill passes, government funded benefits will be reduced by any enforceable employer funded parental leave entitlement to care for a child under one or due to the still birth of a child.
With a proposed start date of 1 January 2017, employers may need to act quickly to assess whether their parental leave schemes will be impacted and review their policies to reflect the amendments. If the Bill passes, this will mean that:
- enterprise agreement negotiations involving top-up pay for primary carers will need to be re-visited
- employers' paymaster role will be removed in favour of an opt-in approach
- attempts to avoid the scheme, e.g. by taking employer benefits at half pay, will not be permitted
- the right to 12 months' unpaid leave under the Fair Work Act 2009 (Cth) remains unchanged, and
- although bonuses for primary carer parental leave are captured, it appears return-to-work bonuses will continue to be excluded from the scheme.
Employers with policies impacted by the proposed amendments should be prepared to discuss the anticipated effects with any employees intending to take leave from 1 January 2017 and to implement any necessary policy amendments before the changes coming into effect. Similarly, employers considering alternative pay structures or engaging in enterprise agreement bargaining, which involve top-up payments, should keep a careful watch on the Bill's progress.