July 2015
Practice Group:
Labour, Employment
and Workplace Safety
Tightening the Belt on Paid Parental Leave – New
Bill Proposed
Australia Labour, Employment and Workplace Safety Alert
By Christa Lenard and Les Maroun
Employers may no longer be required to administer government funded parental
leave payments to their employees with the introduction of the Federal Government's
Fairer Paid Parental Leave Bill 2015 (Bill). The Bill also limits the ability for parents to
receive both government funded and employer funded parental leave payments.
Paymaster Requirement
Under the current government Paid Parental Leave scheme, employers are required
to act as paymasters, having to process government funded parental leave payments
after receiving their eligible employees' entitlements from Centrelink.
It is proposed that from 1 July 2016, employers will no longer be required to process
these government funded payments and employees will be paid directly by the
Department of Human Services. Employers will be able to 'opt in' to make these
payments if an employee agrees.
The Federal Government has attributed this proposed change to its commitment to
reduce 'red tape burden and compliance costs on business'. 1
Access to Government and Employer Funded Payments
The Bill also seeks to stop employees from receiving government funded parental
leave payments if they are entitled to employer funded parental leave payments of
equal or greater value.
Parents who receive employer funded payments at a value lower than that of the
government scheme will receive a 'top-up' to ensure they are receiving the maximum
rate available under the government scheme.
The change reflects the view that government funded parental leave payments are a
'safety net' for employees who do not have access to employer funded payments.
Where the Bill Currently Stands
The Bill currently faces opposition from the Australian Labor Party and the Greens,
who claim the Paid Parental Leave scheme was introduced to function in addition to
employer funded schemes.
The Senate Community Affairs Standing Committee (Committee) is currently
accepting submissions for its inquiry into the Bill.
The Committee is due to report on its findings by 15 September 2015.
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Commonwealth, Parliamentary Debates, House of Representatives, 25 June 2015, 12 (Scott Morrison, Minister for
Social Services)
Tightening the Belt on Paid Parental Leave – New Bill Proposed
Significance for Employers
If the Bill is passed, an employer will be relieved of the requirement to process
government funded parental leave payments, unless the employer elects to pay the
entitlement and it has been consented to by the employee.
Employers that currently have discretionary paid parental leave policies which
contemplate an employee's entitlement to government funded payments will need to
review their policies before the Bill becomes law.
The proposed changes are likely to encourage unions to pursue increased parental
leave benefits during enterprise agreement negotiations to make up for employees'
inability to access both employer funded payments and the full amount of
government funded payments.
Authors:
Christa Lenard
christa.lenard@klgates.com
+61.2.9513.2445
Les Maroun
les.maroun@klgates.com
+61.2.9513.2371
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