How does parental leave work in Australia? - EmployeeConnect
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How does parental leave work in Australia

How does parental leave work in Australia?

Being an employer in Australia has many responsibilities. There are various employee entitlements that you should familiarise yourself with to provide your employees the benefits they deserve whilst also remaining compliant. Parental leave has been offered for many years however it has increasingly become more popular as it has been extended to a variety of situations. As an employer if any of your employees are planning to become a parent it is important to be aware and familiarise yourself on the various parental leave entitlements that employees are eligible to apply for. Employers should want to provide employees with all the appropriate assurances that they can easily access the benefits they are entitles to in the lead up to their child’s arrival. Becoming a parent is time consuming and a large responsibility for the parent. Employees and Employers should therefor look what they are entitled to and what must be provided to the employee to ensure a smooth adjustment. There are few aspects to consider as Federal Australian law will ultimately determine maternity leave and parental leave entitlements. On top of this employers will also have their own policies which may offer further benefits. State legislation should also be considered. Let’s explore what parental leave entitlements are and all the intricacies involved in eligibility and the process of acquiring parental leave.

Who is eligible for paid parental leave in Australia?

There is a certain criteria which must be met to be eligible for parental leave in Australia. Although it may seem obvious below are the different scenarios in which someone has to meet to be eligible for parental leave.

  • The person applying for parental leave must be the primary carer of a newborn or newly adopted child.
  • Applying for Paid parental leave means you cannot be working during this period, there has been instances in which exceptions have been made.
  • Your child’s birth must be in the process or registered with your state or territories birth registry if they’re a newborn.
  • Meet the requirements for ‘The Income test
  • Meet the requirements for ‘The Work test

What are the entitlements of the paid parental leave scheme? 

The Paid Parental leave scheme is a government funded support scheme for parents in the workforce.  It is facilitated by Services Australia and is an assistance scheme which provides financial support to individuals caring for a newborn or an individual who has adopted a child. Employees who are eligible for the paid parental leave scheme can claim up to 18 weeks of paid leave, which is paid at the national minimum wage rate. The Australian government pays the employer and then the employer will pass on the payment to their employee. This is paid in the employee’s regular pay cycle and is part of their taxable income. Employees must use the first 12 weeks in a continuous block. They have flexibility about the remaining 4 weeks as to when and how they choose to utilise them. However, from the commencement of the first payment all 18 weeks must be used in 24 months.

Myths around the parental leave scheme

  • Employers fund parental leave pay: The Australian government actually funds this program. Employers may choose to offer extra entitlements which we will cover in this article.
  • Employers need to identify eligible employees: It is up to the employee to lodge a claim directly with Services Australia. Services Australia will then confirm whether the employee is eligible for paternal leave pay. If eligible Services Australia will notify the employer.
  • Organisations with a small number of staff are exempt: No one is exempt. The paid parental leave scheme applies to all employers in Australia.
  • Only Full-time employees are eligible: Employees of all working types are eligible for paid parental leave.
  • Employees who take part will affect their leave entitlements: The parental leave pay does not affect your employees’ leave accrual.

Employer Funded Entitlements

Employers may be in a position where they would like to provide their employees with further parental leave entitlements on top of the paid parental leave scheme. Many employers are recognising that it is important to do what they can to retain high performing staff and from a humility standpoint as well and one of the areas of focus is parental leave. Provided the employer can afford to do so it is increasingly common to offer further parental leave entitlements. Employers may include these benefits as part of someone’s employment contract or have workplace policies in place which state the benefits offered to employees. It is also important to note that receiving the paid parental leave payment will not affect employer funded parental leave benefits, they are completely separate from each other. A few simple ways employers can provide additional support to employees include:

  • Add-on to the Paid Parental Leave Payments from the Australian Government
  • Allow employees to access employer funded paid parental leave at any point in time without specific eligibility periods.
  • Promote flexible working arrangements for parents 

Becoming a new parent is a huge responsibility especially combined with the stresses of work and everyday life. It is important both as an employer for you to do everything you can to assist your employees. As a new parent or if you are thinking of becoming a parent it is important to keep up to date with the latest information on parental leave as this will assist you in taking time off work and transitioning back into the workforce. This article’s aim was to provide you with a succinct overview and to answer any questions you may have been thinking about. If you require further information, please visit Services Australia or ask your employer what support they can provide.

Carol Lin
carol@employeeconnect.com