Friday, 9 October 2020

Proposed Changes to Parental Leave under the Fair Work Act

On 3 September 2020, the Federal Government introduced the Fair Work Amendment (Improving Unpaid Parental Leave for Parents of Stillborn Babies and Other Measures) Bill 2020 (Bill) which amends the National Employment Standards (NES) within the Fair Work Act 2009 (Cth) to:

  1. extend the minimum 12 month’s unpaid parental leave entitlements to parents of stillborn babies and babies who die during the first 24 months of life;
  2. allow employees to return to work if their baby remains in hospital or hospitalised immediately following birth and then recommence their unpaid parental leave when the baby is discharged from hospital (or at an earlier time) with the agreement of their employer; and
  3. align the NES with the new flexible government-funded Paid Parental Leave scheme administered by Services Australia under the Paid Parental Leave Act 2010 (PPL Act) providing corresponding flexibility in relation to unpaid parental leave entitlements.

We discuss these important changes in detail below.

At this stage it is important to note, there is no published timeframe for when the Bill is expected to become law, and the changes will need to pass through the usual parliamentary processes before coming into effect.

(1) Extension of unpaid parental leave entitlements for parents of stillborn babies and babies who die during the first 24 months of life

Currently, the NES provides that if an employee has started unpaid parental leave when their child is stillborn or dies, the employer can direct them to return to work with six weeks’ notice.

The Bill proposes to change the NES to provide:

  1. Parents of stillborn babies will have the same entitlements to unpaid parental leave as parents of living babies (i.e. 12 months of unpaid parental leave, even if their child has passed away);
  2. Employers will no longer be able to direct an employee on unpaid parental leave to return to work or cancel any upcoming planned period of unpaid parental leave following a stillbirth or death of a child or infant;
  3. Parents who have had a still birth or death of a child or infant who wish to return to work earlier than planned can do so by providing their employer with at least four weeks’ written notice; and
  4. Employees on unpaid parental leave will be able to take two days’ compassionate leave following the stillbirth or death of a child in relation to whom the employee is taking unpaid parental leave, which will not break the continuity of the period of unpaid parental leave. Compassionate leave will be paid for permanent employees and unpaid for casual employees on parental leave.

(2) Agreement to return to work where an employee’s baby remains in hospital immediately following birth

Currently under the NES, parental leave needs to be taken in one single continuous block, and once the employee returns to work (other than for a keeping in touch day), they will no longer be entitled to unpaid parental leave under the NES.

In practice this can mean that once an employee commences parental leave, they are unable to return to work if they are a parent of a premature baby or baby that requires hospitalisation after commencing unpaid parental leave, even for a short period, and then recommence unpaid parental leave once their baby is discharged.   This may result in parents having less time at home with their child than they had initially expected when premature babies and other babies with birth-related complications remain in hospital for some time following their birth.

The Bill will instead allow parents of premature babies and newborns that require hospitalisation immediately following their birth the ability to agree with their employer to return to work while their baby is hospitalised, effectively putting unpaid parental leave ‘on hold’ while they may be able to continue receiving government funded parental leave payments.  Alternatively, parents can nominate that paid parental leave start at a date after a baby’s birth (ensuring that any delay in nominating a start date does not prevent parents from receiving their full paid parental leave entitlement in the first 12 months of the birth).   Unpaid parental leave will resume when the baby is discharged from hospital, or at a date agreed to by the employee and employer, or if unfortunately, the baby dies, whichever occurs first.

(3) Flexible Parental Leave

On 1 July 2020, changes to the PPL Act came into effect implementing a new flexible paid parental leave scheme which allows parents to take the first 12 weeks of paid parental leave in a continuous block within 12 months of the birth or adoption, and the remaining 30 days of their payment (the equivalent of six weeks) at any time after the initial period and within 24 months of the birth or adoption, including after the employee returns to work. However, the flexible paid parental leave beyond the 12 months’ is subject to employer agreement or can otherwise only be claimed on days where the employee is not working. Presently this flexibility applies to paid parental leave only.

Conversely, the NES provides that once an employee returns to work, they will forego any remaining untaken unpaid parental leave.  What this means is that employees wishing to access flexible paid parental leave as a result of changes to the PPL Act may need negotiate additional time off work or a part-time return to work with their employer.

The Bill proposes to allow parents, to take up to 30 days of their 12 months unpaid parental leave flexibly, including on a single day basis within two years of their child’s birth of placement, provided that if the leave is to be flexible unpaid parental leave, the employee gives notice of the flexible unpaid parental leave to the employer at the same time the employee gives their employer written notice of the taking of unpaid parental leave (unless the employer agrees to receive the notice at a later date).

These provisions of the Bill better align the unpaid parental leave provisions in the NES with the changes to the PPL Act which came into effect on 1 July 2020.

(4) What should employers do?

While the Bill is not yet law, it is important that employers are aware that changes to the NES as outlined in the Bill will likely be implemented in the near future.  Therefore, employers should start to prepare for and consider the implementation of the amendments discussed above.

Employers should also be aware of the changes to the paid parental leave scheme which came into effect on 1 July 2020 as employees may seek their employer’s agreement for flexibility in respect to paid parental leave.

We will provide further updates as to the status of this Bill, including once the Bill comes into effect.

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This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.

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