Maternity Leave

Mums and dads both have legally enforceable rights to parental leave under the Fair Work Act 2009 (Cth). Our firm has a number of working mums and dads, and we are very sensitive to and aware of this issue. It matters. There are few more important times for a family to be together than when they welcome a new baby girl or boy into the fold! Companies can create a positive difference and foster enormous employee loyalty by supporting new parents.

  • Important Background Info

    The Federal Government’s Paid Parental Leave Scheme (PPLS) came into effect on 1 January 2011. The PPLS provides entitlements to all employees except State Government employees. State Government employees have had paid maternity for some time under separate provisions. The PPLS is fully funded by the Australian Government, and provides eligible working parents with a maximum of 18 weeks’ pay at the weekly rate of the national minimum wage.

  • Who is an eligible employee?

    To be eligible, an employee must:

    • Be the primary carer of a child born or adopted after 1 January 2011.
    • Be an Australian resident.
    • Have been engaged in paid work for at least 10 of the 13 months before the child is born or adopted.
    • Have worked at least 330 hours during that 10 month period; and
    • Have earned less than $150,000 per annum over that 10 month period.
    • Be on leave or not working from the time they become the child’s primary carer.

    An employee is not required to have been working on a full time basis to be eligible. An employee may still be eligible if they are a part time, casual or seasonal worker, a contractor or self-employed, have multiple employers or have recently changed jobs.

    Whilst an employee is free to choose the start date of their Parental Leave Pay at any time from the date of the birth or adoption of their child:

    1. They must receive all their Parental Leave Pay within 12 months of the date of the birth or adoption of their child; and
    2. To be eligible for the maximum 18 week payment, an employee must choose a start date that is within 34 weeks of the date of the birth or adoption of the child. If they claim after the 34 weeks, the payments are reduced.
  • Obligations and role of employer

    Employers are responsible for providing the Parental Leave Pay – funded by the Government – to their eligible employees who:-

    1. have or adopted a child from 1 July 2011;
    2. have worked in the business for 12 months or more (however this proviso only applies to the employees who do not meet the criteria above, that is, an employee who has worked for 330 hours in the 10 month period referred to above is still eligible, however employees who have not satisfied that criteria fall under this 12 month rule);
    3. are entitled to 8 weeks or more parental leave.

    If the employee does not satisfy the criteria in (b) and/or (c) above, then the employer has the option of not having to provide the Parental Leave Pay, that is, the employee will be paid directly by the Department of Human Services without the involvement of the employer.

  • How Does the Employer receive the money?

    In most cases, the Department of Human Services, will pay the money for the Paid Parental Leave to the employer’s nominated bank account before the employee’s pay cycle. The idea is that this will then enable the employer to have the money to pay the employee through the existing payroll cycle.

  • What an Employer must do:

    • Provide the information and details as required by the Family Assistance Office, such as bank account details and pay cycles, to enable the Parental Leave payment to be paid to the employer.
    • The employer has to register for the PPLS with Centrelink through the Business Online Services or by telephone through the Centrelink Business Hotline.
    • Pay the Parental Leave Pay that the employer has received from the Family Assistance Office to the employee for the Paid Parental Leave period.
    • Provide the Parental Leave Pay as part of the employee’s usual pay cycle.
    • An employer must deduct income tax from the Parental Leave Pay under the usual PAYG arrangements.
    • An employer must include the Parental Leave Pay in the total amounts on an employee’s annual group certificate.
    • Provide a record to the employee (e.g. a pay slip) of the Parental Leave Pay.
    • An employer must keep financial records of the receipt of the Paid Parental Leave funds from the Family Assistance Office and a record of the Parental Leave Pay to the employee.
    • The employer must notify the Family Assistance Office if:
      • The employee returns to work before or during the paid Parental Leave Period;
      • The employee ceases to be in your employ;
      • The employer changes its bank account details;
      • The employer changes the employee’s pay cycle;
      • The amount of Parental Leave Pay received is not correct;
      • The employer has ceased trading, or is selling the business or is transferring ownership of the business.
    • Any unpaid Parental Leave funds must be returned by the employer to the Family Assistance Office.
  • What an Employer does NOT have to do:

    An employer:-

    • Does not have to apply for PPLS for their employees: the employee is responsible for lodging the application with the Family Assistance Office;
    • Does not have to assess if their employee is eligible for the PPLS: this is done by the Family Assistance Office;
    • Does not have to pay the parental pay to their employees until after they receive it from the Family Assistance Office;
    • Does not have to pay Parental Leave Pay to Independent Contractors or to a person who ceases to be an employee of the business (this does not mean that such persons are not entitled to Parental Leave Pay), however they can deal directly with the Family Assistance Office, and the employer need not be involved;
    • Does not have to pay superannuation contributions on the Parental Leave Pay.
    • Does not have to pay any payroll tax or incur additional workers compensation premiums on the Parental Leave Pay.
    • Does not have to provide additional leave, that is, there is no accrual of annual leave or long service leave or personal/carer’s leave entitlements.
    • Does not have to have a separate bank account for paid parental leave funds, or separately identify these funds in their annual financial statements (however, an employer should be able to separately identify the parental pay for reasons of superannuation, payroll tax etc., as set out above).
    • Does not have to provide regular reports to the Family Assistance Office.
  • More Generous Paid Parental Leave

    It is open to employers to provide more generous parental leave entitlements, and many have discovered the long term benefits of doing so.

  • Guarantee of Return to Position

    Under section 84 of the Fair Work Act, the employee is entitled to return to their pre-parental leave position, or if that no longer exists, an available position for which the employee is qualified and suited nearest in status and pay to the pre-parental leave position. This provision does not mean that the employee must keep a position open regardless. Businesses are entitled to change with changing economic conditions while the employee is on leave. However the employer should not take advantage of the employee’s absence from leave to get rid of the position, or to promote another person permanently to that role.

  • Compliance and Penalties

    Employers must be aware that the Fair Work Ombudsman can enforce an employer’s obligations under the PPLS, and it will investigate any related complaints. The Fair Work Ombudsman may impose penalties on employers for breaches of these obligations. Law firms like Atkinson Vinden assist employees and companies to work through any issues of potential conflict in this area so that the best possible outcome can be achieved for all.

  • More Information

    If you would like further information on this important area, please do not hesitate to contact our employment law team of (02) 9411 4466.