Time is running out for employers to put their paid parental leave (PPL) systems in place, according to Hall & Wilcox partner Alison Baker, with employers' obligations under the Government's new scheme becoming mandatory from 1 July 2011. From this time, employers will be required to provide the government-funded parental leave pay to eligible long-term employees who bear or adopt a child on or after that date.
Ms Baker said those employers who have been putting off or who are not on top of the paid parental leave scheme needed to finalise their PPL systems in the next two months. She said it was also important for them to note that any existing obligations they have to provide employer-funded PPL must still be met with the government-funded parental leave pay generally considered to be an additional benefit for employees.
"If employers currently provide PPL purely on a discretionary basis, there may be some options for them to use government-funded payments to offset their own existing scheme. However, employers are not able to offset in cases where they are bound by awards, enterprise/collective agreements or employment contracts that set out an entitlement to employer-funded PPL.
"Where organisations have a written paid parental leave policy in place or where they have a practice of providing PPL to employees, they will need to determine whether such schemes amount to obligations they must comply with or are applied on a discretionary basis. For example, some organisations may have had an ad hoc arrangement in place for providing PPL. Such organisations will need to decide whether they are required to keep these arrangements together with providing the Government-funded payments, or whether they can modify or change these arrangements. This may be difficult to determine and I strongly recommend that they seek legal advice prior to making any modifications or changes," she said.
Ms Baker said organisations should update their existing schemes to refer to the Government's new PPL scheme. She said employees will have to go to the Family Assistance Office and can make claims up to three months before the expected date of birth or adoption. They will then need to go back to the Family Assistance Office to provide evidence that the baby has been born or adopted for their claims to be fully processed.
"If employers are required to provide the government-funded PPL to employees, they will be advised in writing by the Family Assistance Office, and will only be obliged to pay after the Family Assistance Office provides the necessary funds in advance to the employer. Employers will need to respond to a notice from the Family Assistance Office within 14 days to indicate their acceptance of their obligations, and to provide details of their bank account and payroll cycle.
"Parental leave payments will normally be paid in employers' usual payroll cycles. These payments will need to be treated as salary and wages, and typical PAYG withholding arrangements will need to be adhered to. Employers will need to provide records of payments to employees, usually in the form of pay slips, and the payments should be included in annual payment summaries. Employers should also keep for seven years written financial records of funding received from the Family Assistance Office and parental leave payments to employees.
"Eligible workers will be paid by the Family Assistance Office, not by an employer, where they do not fit in the category of long-term employees − continuously employed for longer than 12 months. Employees eligible for payment by their employer are those who were continuously employed for 12 months or longer prior to the expected date of birth or adoption of the child, and who will be the primary carer of the child. They must also pass a work test, an income test and a residency test.
"Eligible workers must have, as well as meeting other criteria, worked for at least 330 hours in 10 of the 13 months prior to the birth or adoption of the child without a break of more than eight weeks between two consecutive working days. They are then entitled to up to 18 weeks' parental leave pay at the national minimum weekly wage, currently $569.90," she said.
Ms Baker said the right to parental leave pay under the PPL scheme applies to all employees, the self-employed and independent contractors who meet the PPL scheme's eligibility requirements, ie most workers in Australia, not only employees.
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Karin Krueger
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