Paid Parental Leave – Employer Obligations from 1 July 2011

The Paid Parental Leave scheme is governed by the Paid Parental Leave Act 2010 (Cth). The Act creates a number of obligations on employers and from 1 July 2011, employers must comply with the Act or risk civil penalties of up to $33,000 per breach. We outline some key questions and answers in relation to the scheme below.

Who is Eligible for Paid Parental Leave?

Full-time, part-time, casual, seasonal, contract and self-employed workers may be eligible. A person must have worked at least 330 hours, (just over one day a week) for 10 of the 13 months before the baby is born or adopted to be eligible. A person must also satisfy the income test, be an Australian resident, be the child’s primary carer, not have returned to work and not be entitled to the baby bonus to be eligible.

Eligible working parents may get up to 18 weeks government funded pay at the National Minimum Wage, currently $569.90 a week before tax. An employer is not required to determine whether an employee is entitled to Paid Parental Leave, Centrelink will determine whether a person meets the eligibility requirements.

How does an Employer know if an Employee is Entitled to Paid Parental Leave?

If Centrelink has determined that a person is eligible for Paid Parental Leave it must then make a determination as to whether the person’s employer will be required to make payments to the person. Centrelink must require the employer to make payments to an eligible parent if it is satisfied that, amongst other things:

• the person has worked in the employer’s business for 12 months or more immediately before the expected date of birth of the child or the actual date of birth of the child; and
• the person is entitled to eight weeks or more of Paid Parental Leave.

If Centrelink determines that the employer must pay the employee Paid Parental Leave, Centrelink will give the employer written notice of the determination.

What should an Employer do if it receives a Determination from Centrelink?

Within 14 days of receiving the notice, the employer must either give Centrelink an acceptance notice or apply for a review of the determination. Failure to comply with this requirement is subject to a civil penalty of up to $33,000.

The acceptance notice must include the employer’s bank account and pay cycle information.

How are the Parental Leave Payments Made?

The Parental Leave Pay is provided by Centrelink to the employer fortnightly, or an employer can choose to receive the payments in three six weekly installments.

Subject to Centrelink providing the funds to the employer before the employee’s usual pay cycle, employers will be required to provide the payments to employees in their usual pay cycle throughout the Paid Parental Leave period. Failure to do so is a breach of the Act and is subject to a maximum $33,000 fine.

Does an Employer have any other Obligations?

Yes. The employer must withhold the usual PAYG tax from the payments and provide employees with written notification of payment within 1 day of each payment being made. Employers can use an employee’s usual pay slips to notify them of the payment and it can be provided electronically.

There are other record keeping requirements that also apply under the Paid Parental Leave scheme.

National Workplace Lawyers has developed a practical training and information package on the scheme. If you are interested in having us deliver training to your organisation please contact us on +61 2 9233 3989. 

National Workplace Lawyers

Note — this is for information purposes only and does not purport to be comprehensive or to render legal advice.