How COVID-19 got in the way of parental leave

On 1 July 2020, the government announced changes to the paid parental leave scheme. But with an economic crisis looming and Victoria struggling, these changes have gone largely unnoticed and unreported. In this article, we look at what they are and how they affect both employees and businesses.

The new flexible parental leave scheme

Most employers are already familiar with the Government’s paid parental leave scheme. It provides new parents with a payment equal to the minimum wage on the birth/adoption of their child. However, on 1 July 2020, the scheme changed. Parents can now access two flexible periods of leave. The first, 12 weeks, which can be taken within the first year of birth/adoption. The second is 30 days, which can be taken at any time within the first two years.

Why is this so significant? Employers may need to be more flexible about their own parental leave policies. In fact, Fair Work is encouraging employers to be as flexible as possible when it comes to the entitlement, including allowing an employee to take their second period of leave while working part-time. For example, an employee who previously worked four days a week could return to work for two days a week for 15 weeks –equating to the second entitlement of 30 days at their normal rate of pay (or close to it).

Which employees are covered?

To qualify for the paid parental leave scheme, an employee must be the birth mother of a child, an adoptive parent of a child or another person caring under ‘exceptional circumstances’. An employee needs to have an adjusted taxable income of less than $150,000. Furthermore, they must work at least 330 hours over 10 of the 13 months preceding becoming a parent.

Interestingly, the father isn’t usually the person considered for the payment –  if the father earns more than $150,000 a family would be eligible but if the mother earns more than $150,000 they wouldn’t be.

What it means for you as an employer

As an employer, you’re responsible for administering payments on behalf of your employees, receiving the money to forward on. It’s important to note that the scheme is just a minimum. If employees are covered by an award/agreement that provides a higher parental leave entitlement, you need to pay this too. However, you can use the money paid to you under the scheme to partially fund that entitlement.

And, it’s also important to remember where an employee’s contractual or award entitlement falls short of the government’s scheme – whether that’s on the length of parental leave or the flexibility – it is the terms of the government’s scheme that prevails.

What about employees who don’t qualify for the scheme?

If an employee has a parental leave entitlement under an award, contract or agreement but doesn’t meet the income or work thresholds, you’ll have to meet costs out of your own pocket.

How does JobKeeper and COVID-19 impact the paid parental leave scheme?

If an employee is receiving JobKeeper, their payments count as work when it comes to paid parental leave eligibility. According to Services Australia, if a pregnant worker stops working due to COVID-19, they are still classified as working under the ‘dangerous job’ provisions. Keep in mind, an employee only needs to be working 10 of the past 13 months. They may still qualify for the payment even if they’ve been stood down or made redundant by your organisation.

Still have questions?

The new parental leave provisions are intended to bring in greater flexibility but they may also introduce greater confusion. If you need help understanding your obligations, get in touch with the Catalina Consultants team today.