The Australian Government has announced that Government funded Paid Parental Leave (PPL) will be extended from 18 weeks to 26 weeks over the next four years in an effort to close the gender pay gap, boost women’s workforce participation and allow families greater flexibility during formative periods for their children.
What are the Current PPL Entitlements?
Currently, eligible employees receive up to 18 weeks’ PPL funded by the Federal Government, which is paid at the National Minimum Wage (currently $812.60 per week).
An employee is considered ‘eligible’ if they:
- are the birth mother of a newborn child; or
- are the initial primary carer of an adopted child placed in their care by an authorised party for the purpose of adoption; or
- are another person caring for a child under exceptional circumstances such as severe illness or serious accident.
In addition, they must meet all of the following:
- an income test: the individual must have an adjusted taxable income of $156,647 or less (for the 2021-22 financial year);
- a work test: the individual must have worked for both 10 of the 13 months before the birth or adoption of their child, and a minimum of 330 hours (around 1 day per week) in that 10 month period; and
- residency rules: the individual must be an Australian citizen or hold a permanent, special category or certain temporary visa.
Eligible employees are currently able to split their period of PPL into:
- a set period of 12 weeks, to be used in one continuous period within 12 months of the birth or adoption of a child; and
- a flexible period of up to 30 days, in periods as negotiated by the employee with their employer, to be taken within 24 months of the birth or adoption of a child.
Working fathers and partners (including same-sex partners) may also be eligible or 2 weeks of leave, also paid at the minimum wage.
What are the Proposed Changes to PPL?
Under the recently announced proposed changes, new parents will begin receiving an extra two weeks in PPL from 1 July 2024, increasing to 26 weeks in July 2026.
The 26 weeks PPL is proposed to be able to be shared among both parents and paid at the rate of the National Minimum Wage at the relevant time, while a single parent will be able to access the full 26 weeks.
Families will also have more flexibility as to when they claim PPL, including taking blocks in between periods of paid work. Central to the Government’s reasoning for the change is to reflect ‘modern’ families and provide them with greater choice, flexibility and support.
The Government will maintain “use it or lose it” weeks to encourage and facilitate more Dads and partners to access PPL, so that both parents can share in precious early days and the caring responsibilities more equally.
The Government is expected to announce further details on the proposed changes to the PPL Scheme when it delivers the Federal Budget at the end of October.
What Does it Mean for Employers?
While these changes have not yet been formally legislated, assuming they come into effect, employers will need to review and update their parental leave policies to reflect the new PPL entitlements. We will keep you updated as to developments as the legislation is passed through parliament.
For more information regarding the changes to the PPL Scheme and what they mean for the operation of your workplace, or on how to develop your own paid parental leave policy, please contact HR Legal.
