Paid Parental Leave - equal pay for dads & partners too

Since 2010, the Paid Parental Leave Act 2010 (Cth) (the Act) has afforded eligible “primary carer” employees of a newborn or adopted child 18 weeks pay at the national minimum wage during the guaranteed parental leave under the Fair Work Act 2009 (Cth). This government funded Parental Leave Pay (PLP) was beneficial for employees without access to paid leave through their employer.

In March this year, the Federal Government passed the Paid Parental Leave Amendment (Improvements for Families and Gender Equality) Act 2023 (Amendment).  

The Amendment:

• extends paid parental leave from 18 weeks to 20 weeks;

• removes the idea of ‘primary’; ‘secondary’ or even ‘tertiary’ claimants;

• removes the requirement that the ‘primary’ claimant has to be the birth parent;

• allows access to and payment of paid parental leave days to be more flexible;

• introduces a family income limit; and

• expands eligibility to allow an eligible father or partner to receive pay.

What is changing?

The most significant changes are to the amount of paid parental leave, and that fathers or non-birth parents now have access to it equally.

For a child born or adopted after 1 July 2023, eligible[1] parents are entitled to a payment for up to 100 days or 20 weeks for a child in their care. 

The Amendment combines the previous “Dad and Partner Pay” (2 weeks’ pay) with the existing 18-week entitlement, bringing the total entitlement to 20 weeks’ pay for eligible parents to share.

Two weeks of the 20 is reserved on a “use it or lose it” basis for each parent – which means that a parent must take at least two weeks of leave to be able to be able to claim the full 20 weeks.

Fathers, or partners of a birth parent, are now also eligible to receive PLP regardless of whether the birth parent meets the income test or Australian residency requirements provided the new “family income limit” test ($350,000) is met.

The Government’s intention behind these changes is to increase gender equality and signal that taking time away from work to care for children is the responsibility of both parents. Parents can only take PLP days at the same time for up to two weeks, to encourage parents to return to work – but also ideally to prompt fathers or partners to take a greater share of caring responsibilities for the child.

As previously, employer funded paid parental leave does not affect an employee’s eligibility for PLP. Eligible employees can receive both.

And more to come!

The Government also announced further changes in October this year in the Paid Parental Leave Amendment (More Support for Working Families) Bill 2023. If passed, it will mean that from 1 July 2024 an additional 2 weeks paid will be added to the PLP each year until 1 July 2026.

Effectively, this means that by 1 July 2026, paid parental leave will be a total of 26 weeks.

In addition, the number of PLP days that parents can take together will be increased to four weeks, and four weeks instead of two will be reserved on a “use it or lose it” basis.

What should employers do now?

Employers have an important role in administering and delivering paid parental leave pay. 

The scheme relies on accurate record keeping by employers and systems for the delivery of payments where a determination is made that the employer deliver the PLP. As such, it is timely for employers to consider their policies, procedures and systems and ensure:

• their HR and management personnel are aware of the scheme, including the new and proposed changes;

• they provide for the accurate recording of employment details including leave entitlements;

• they enable the delivery of PLP including providing for accurate record keeping;

• they enable requests for information and records to be met as may be required; and

• they provide for the making of required ongoing disclosures where circumstances change.

Employers may be unsure of how the scheme affects their business or whether their systems and procedures are appropriate for the delivery of the scheme. In certain circumstances they may also need assistance with the delivery of a determination for PLP or to seek a review of a determination or to resolve a dispute about a determination.  

The contravention of obligations under the Act (such as to make the correct instalment of pay, and at the specified time) may result in civil penalties, so in these circumstances, it may be appropriate to seek legal advice to effectively resolve concerns or disputes.  

Authors: Sylvia Moses & Hannah Lawson