Paid Parental Leave

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employee learning about paid parental leave

Parental leave is leave an employee can take when they give birth, an employee’s spouse or de-facto partner gives birth, or if an employee adopts a child under the age of 16. The employee must have worked for their employer for at least 12 months prior and be the person primarily taking care of the child. Employees are entitled to 12 months unpaid leave, though some employers offer paid parental leave.

The Australian Government also offers paid parental leave to eligible employees as part of the Australian Government Paid Parental Leave Scheme.

What Is The Paid Parental Leave Scheme?

The Australian Government provides financial support to eligible parents through the Paid Parental Leave Scheme, so they can take time off work to care for a newborn or newly adopted child.

If they are the primary carer, the birth mother of a newborn child or the adoptive parent of a child, they can claim Parental Leave Pay for up to 18 weeks from Services Australia (Centrelink), provided they meet certain conditions.

What Is The Paid Parental Leave Scheme Pay Rate?

Parental Leave Pay is based on the national minimum wage weekly rate, which from 01 July 2020 is $753.80 per week before tax. The employee can get paid for up to 18 weeks, and the money is paid either directly to the employee or to the employer to pay to the employee.

Employees can use Parental Leave Pay before, after or at the same time as their paid and unpaid entitlements such as annual leave, long service leave and unpaid parental leave.

Who Is Entitled To Paid Parental Leave?

Full-time, part-time, casual, seasonal, contract and self-employed workers who meet the following requirements are entitled to Parental Leave Pay:

  • Employees must have a newborn or recently adopted child
  • They must have worked for you for at least 12 months before the expected date of birth or adoption (work test)
  • They will remain employed with you until at least the end of their Paid Parental Leave period but won’t work during that period
  • They must be Australia-based (residency rules)
  • They must have earned less than a certain amount in a year (income test)

Besides having to meet an income test and the residency rules, parents must usually have worked at least 10 of the 13 months prior to the birth or adoption of their child in order to qualify for paid parental leave. This means they need to have worked a minimum of 330 hours, which is around 1 day a week, in that 10-month period.

If the employee is on unpaid leave it does not count towards the work test, but for parents with children born or adopted between 22 March 2020 and 31 March 2021 the work period will be extended to 10 months out of the previous 20 months, in order to provide access to Paid Parental Leave for parents whose children were born or adopted during the COVID-19 Pandemic.

How Is Paid Parental Leave Taken?

As of 01 July 2020 the Paid Parental Leave Scheme was altered to allow for parents of children born or adopted on or after 01 July 2020 to take a one continuous paid parental leave period of up to 12 weeks (60 payable days). This leave needs to be taken in one block.

The Employee is then eligible for an additional 30 days of Flexible Paid Parental Leave which must be used within 2 years of the child’s birth or adoption. These flexible days can be accessed one day at a time or in blocks.

What About Dad And Partner Pay?

Dad and Partner Pay is for working dads or partners, including parents who are adopting a child. Dads and Partners can get up to 2 weeks’ pay at the national minimum weekly wage of $753.80 (from 01 July 2020) if they are on unpaid leave and not working during this time. To get the 2 weeks of payment, it must start within 50 weeks of their child’s birth or adoption. Centrelink pays it straight to the employee.

How Does My Employee Get Paid Parental Leave?

The employee needs to apply for Parental Leave Pay directly to Centrelink within 34 weeks of the birth or adoption of the child. Although the employee can apply before the birth or adoption of the child they won’t get paid until afterwards.

What Does This Mean For My Business?

Employers may need to provide information about the business and the employee’s employment so the employee can meet the work and income tests and qualify for Parental Leave Pay. Also, employees need to take leave from work in order to access Parental Leave Pay or Dad and Partner Pay. Although sometimes Centrelink makes the payment directly to the employee, at other times Centrelink gives the funds to the employer to pay to the employee, which requires the employer to meet certain conditions.

In addition, in order to access flexible Parental Leave Pay days the employee must either take them before they return to work, or if they want to take them after they return to work they can only take them on days that they are on leave or not working.

Employees who want to use their Flexible Paid Parental Leave days when they return to work need to come to an agreement with their employer about how and when these flexible days will be taken. The employer and employee can agree for example:

  • To reducing the hours or days of work
  • To changing the pattern of work
  • To the employee taking additional unpaid leave.

Please call Employsure for free initial advice on how to negotiate flexible working arrangements with employees who have been on parental leave.

Frequently Asked Questions

  • Is Paid Parental Leave Income?

    Parental Leave Pay is part of an employee’s taxable income.

  • How Much Is the Centrelink Paid Parental Leave?

    The Centrelink Parental Leave Pay Rate is the same as the national minimum weekly wage and is currently (from 01 July 2020) $753.80 per week.

  • How Long Is Paid Parental Leave Pay from Centrelink For?

    Employees can get Parental Leave Pay for a maximum of 18 weeks, but the start date cannot be more than 34 weeks after the child’s birth or adoption.

  • Can you Claim Paid or Unpaid Maternity Leave from Work and Centrelink Paid Parental Leave?

    Yes, employees can take Parental Leave Pay before, after or at the same time as they’re getting paid or unpaid leave from their employer.

  • Can You Claim Paid Parental Leave If You Are Self-Employed?

    Yes, Self-employed parents can meet the work test provided you are working to earn money and be better off financially, even if the business is not making a profit.

  • Who Pays For Paid Parental Leave In Australia?

    The Australian Government. Parental Leave Pay is administered through Services Australia (Centrelink) who may deposit funds in the employers account for the employer to pay the employee as part of their normal pay cycle.

  • What Is The Threshold For Paid Parental Leave?

    In order to currently meet the income test to get Parental Leave Pay, an employee must have an annual income of less than $150,000 before tax.  The employee would need to provide information regarding their financial circumstances to Centrelink who will decide whether they meet the income test.

  • Can I Get The JobKeeper Payment At The Same Time As The Parental Leave Pay?

    No, parents can’t get JobKeeper Payments at the same time as Parental Leave Pay. They can get Parental Leave Pay after the payments they get from the JobKeeper Wage subsidy end, but only if they didn’t work since their child’s birth or adoption.

  • What Is Flexible Paid Parental Leave?

    Parents with children that are born or adopted on or after 1 July 2020 will get up to 30 Flexible Paid Parental Leave days in addition their 12 week Paid Parental Leave period. The Paid Parental Leave Period must be taken in one block, but the employer and employee can agree when the employee will take the Flexible Paid Parental Leave days, as long as they are taken within 24 months of the birth or adoption of a child.

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