Readers will need to seek more detailed information at the time they need to apply the scheme as to their obligations and the specific action they need to take.

 

From 1 January 2011 the new Federal Government scheme took effect. It allows an eligible working parent who is the primary carer of a child born or adopted from 1 January 2011 to take up to 18 weeks parental leave paid at the National Minimum Wage ($15.00 per hour or $570.00 per week for a full-time adult employee).

 

The leave must be taken as a single block and cannot begin before the expected date of birth or adoption. It thus differs from other forms of parental leave, such as that under the NES or Awards, which generally allow such leave to be taken in more than one block and to begin prior to the date of birth or adoption.

 

Although the scheme has already started to operate, employers are not required to register or to make payments under it until 1 July 2011. Employers who wish to do so can opt in and start paying it before that date. After 1 July all employers must participate.

 

Generally, the employer will make payment to the employee, but the Government will provide the funds to the employer before the employee has to be paid.

 

Employers must be aware that the scheme is separate from and operates alongside:

·         unpaid parental leave under the National Employment Standards; or

·         other paid parental leave arrangements (e.g. under an Enterprise Agreement, a contract of employment, or a company policy).  

 

 

The scheme applies to:

Employers who have an ABN (It is unlikely that there will be any employer which does not have an ABN).

 

Employees who:

·                     have a child born or adopted on or after 1 July 2011;

·                     have been employed by the employer for more than 12 months prior to the date of birth or

                      adoption;

·                     will continue to be so employed while receiving the government parental leave payment

                      (i.e. also on some other form of paid 

                      or unpaid leave during the absence);

·                     are based in Australia;

·                     are taking at least 8 weeks Paid Parental Leave under the scheme.

 

Note: Employees:

·                     of a child born or adopted before between 1 January and 1 July 2011; or

·                     who have less than 12 months service; or

·                     who are taking less than 8 weeks paid leave under the government scheme

                      are entitled to the payment but will be paid directly by the Federal Government’s Family

                      Assistance Office unless both the

                      employer and employee agree that the payment will be made through the employer.

 

The process is as follows:

                (up to 3 months before the expected date of birth or adoption). 

                The claim includes details of the employee’s employment status and of the employer.

(2)           the Family Assistance Office decides if the employee is eligible for the payment and whether

                the employer is required to make

                the payment.

(3)           the Family Assistance Office notifies the employer of the decision. The notification will include

                details of:

a.      the employee’s name;

b.      employee’s payroll, staff number or the like (if applicable);

c.      the period for which parental leave under the scheme must be paid;

d.      the employer’s obligations under the scheme;

e.      the employer’s right to seek a review of the decision.

(4)           the employer may seek a review of the decision.

(5)           if the employer accepts the decision (or a review confirms that the employer must make the

                payment), the employer provides necessary details to the Family Assistance Office

                (if not already provided). These details are:

a.      written acceptance that the employer will pay the leave under the scheme;

b.      confirmation of business name, ABN, contact details, employee’s pay cycle and bank account

         for payment of the funds to be paid to the employee.

(6)           the Family Assistance Office pays the funds to the employer’s nominated bank account

               before the employee is required to be paid and forwards a payment advice. The funds will

               be paid in either fortnightly or 6 weekly instalments, at the employer’s choice. If the employer

               has a number of employees under the scheme, there will be a single payment and the

               payment advice will show the amount for each employee.

               gives the employee a pay slip as usual. The employer will deduct PAYG tax from the payment. 

               The payments do not count for superannuation, so no superannuation contributions will be

               made on these payments (the payments also do not count for workers compensation premium

               or payroll tax).

               Payment Summary (formerly known as a Group Certificate).

(9)           The employer notifies the Family Assistance Office if:

a.      the employee returns to work before or during the period of leave under the scheme;

b.      the employee ceases to be employed by the employer (e.g. due to the employee’s resignation,

         or the employer being sold or their being a transfer of business)

c.      the bank account details or employee’s pay cycle changes;

d.      if an incorrect payment is received from the Family Assistance Office or the employer cannot make

         the payments to the employee for any reason.

 

As stated above, the new scheme works alongside existing entitlements. It does not replace them. The main sources of existing entitlements to parental leave, whether paid or unpaid, are as follows:

 

Under the National Employment Standards in the Fair Work Act 2009 [“NES”], eligible birth or adoptive parents are entitled to up to 12 months unpaid parental leave. This may be extended for up to a further 12 months. It is to be taken in a single blocks and may begin at any time between the date of birth or adoption placement (or, where taken by a pregnant employee, up to 6 weeks before the date of birth) and 12 months after that date. An employee has a right of return to the position held prior to going on parental leave. The NES set out the eligibility requirements, the notice that must be given and the evidence that the employee must provide and the processes applying to return to work. 

 

Further Information, including a Fact Sheet, is available from the Fair Work Ombudsman’s website- www.fwo.gov.au. (go to the box headed Leave).

 

An employee may apply for and be paid under the new scheme at the same time as taking leave under the NES. The employee must still comply with the requirements of the NES.

 

The period of leave taken under the paid leave scheme does not affect the period of leave under the NES. In particular, it does not extend the period available under the NES. Nor will taking leave under the paid leave scheme reduce the period available under the NES.

 

Modern Awards generally do not include provisions dealing with Parental Leave, referring instead to the NES. As from 1 January 2011, pre-Modern Awards do not apply (being used to calculate transitional rates of pay and loadings). However, the applicable Award must be checked to make sure that it does not have any additional provisions that deal with Parental Leave which supplement or modify the NES.

 

Note that the NES will override and apply instead of provisions in an Agreement which are less generous than the NES.

 

Enterprise Agreements (including Workplace Agreements, AWAs and ITEAs, or former State Agreements) which deal with Parental Leave will also operate alongside the new Paid Parental Leave scheme. 

 

If employees are entitled to paid leave under such instruments, the entitlements must be applied in full and the benefits under the new Paid Parental Leave scheme cannot be used to offset or reduce them. This applies even if it leads to an employee receiving payment under both the Agreement and the new scheme.

 

Employers will be able to take the benefits under the new scheme into account when negotiating a new Agreement to replace an existing one. This will be a matter for negotiation and for judgement as to whether such an approach is in the interests of good workplace relations and the long-term good of the business. 

 

Some employers may “top-up” payments under the scheme to match the employee’s normal rate of pay, particularly where they do not already provide paid parental leave. Some employers who already give paid parental leave will consider whether to require that paid parental leave under an Agreement not overlap with payments under the new government scheme. There are many options available and it will be for each employer to decide what will work best in its specific circumstances.

 

Many employees are not covered by either Awards or Enterprise Agreements but instead have a formal common-law contract of employment. Employers may also have formal policies which allow for paid Parental Leave.

 

If contracts or policies deal with Parental Leave, these arrangements will also operate alongside the new scheme.

 

Contract provisions will remain legally binding unless modified by further agreement between employer and employee. An employer who does not comply with these contractual obligations or varies them unilaterally will be exposed to action for breach of contract. Employers who are contemplating changing contractual arrangements must seek professional advice before acting.

 

Where employers have Parental Leave policies separate from employment contracts they may change the policies to take the new government scheme into account. However before doing so they should seek professional advice to check that the policies do not also have contractual effect, and should also give careful consideration to the effect that such changes might have on workplace.

 

There is no limitation on Parental Leave under the scheme being taken in conjunction with other types of leave (e.g. Annual or Long Service Leave, Leave Without Pay). 

 

Leave under the scheme will not have any effect on accrual of other forms of leave. These will continue to accrue as normal. For example, if an employee is on paid parental leave and takes annual leave or Long Service Leave at the same time, they will not accrue any additional leave in respect of the leave under the scheme. Similarly if an employee takes Parental Leave without pay and the leave does not count as service, the fact that the employee is on paid leave under the scheme at the same time will not make that period count as service.

 

Employers need to prepare well ahead of time so they will be ready for 1 July 2011.

 

Ø      Employers need to review all Awards, Agreements, employment contracts and Parental Leave policies that apply to them and their employees and ascertain how they will work with the new scheme. Seek early advice from a qualified professional if you are uncertain how you will be affected.

Ø      Revise contracts and policies if necessary to reflect the new scheme. Be careful to ensure you comply with your obligations under Awards, Agreements and contracts.

Ø      Make sure that your payroll system will cope with the new scheme. This will probably require the setting up of a new payroll code or payment heading and configuring it appropriately (e.g. so that payment under the code will be included for PAYG tax but not superannuation). Seek advice from your accountant or your payroll system provider if you need help.

Ø      Ensure that payroll and HR staff are fully aware of the new scheme, how it will operate in your organisation, and any systems changes. If you are the HR team- make sure you know!

Ø      Advise employees that if they intend taking parental leave after 1 January 2011 that they should talk to you well in advance about their intentions and plan how their entitlements will be used. Encourage employees to submit their claim with the Family Assistance Office well in advance to avoid any delays in approval or payment (as the employer does not have to make payment until it receives the funds from the government, any delay will affect the employee not the employer.

Ø      Employers who wish to “opt in” to the new scheme before 1 July 2011 should obtain information on what they need to do from Centrelink.

 

The Centrelink website (www.centrelink.gov.au) has comprehensive information about the scheme. Click on the “businesses” tab and follow the links to the Paid parental Leave scheme Employer Toolkit.

 

 

If you need further information or help, please contact us.

 

 

Telephone:    61-2-4920 8880          Fax:        61-2-49208881       Mobile:      (0400)407 224

Email: gkerr@effectiveworkplace.com.au

 

 

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