Media Release by The Hon Jenny Macklin MP

Australia’s first Paid Parental Leave scheme – fair for families and fair to business

The Australian Government today released the draft legislation of Australia’s first Paid Parental Leave scheme.

This is an important milestone for Australian families who have been waiting decades for a national Paid Parental Leave scheme. The Government’s scheme is fair for families and fair to business.

This major reform will provide up to 18 weeks of government-funded parental leave pay at the National Minimum Wage (currently $543.78 per week) for eligible parents of children born or adopted on or after 1 January 2011.

Our Paid Parental Leave scheme is a major win for families and employers and helps prepare Australia for the challenges of the future.

It’s in the best interests of little babies. When parents are supported to stay home from work in those critical months after the birth of their child, little babies get the best start in life.

Our scheme gives parents more options to balance work and family, helps employers retain skilled staff and boosts workforce participation.

Currently only half of all Australian women have access to paid parental leave, with those on low incomes more likely to miss out.

Australian Bureau of Statistics data from August 2008 shows less than a quarter of women on very low wages (<$400 per week) have access to employer-provided paid parental leave, compared to 70 per cent of women on high wages.

Under the Government’s scheme, casual and part-time workers, contractors and the self-employed will be eligible for paid parental leave, many for the first time.

Further details in the draft legislation will make it easier for employers to implement paid parental leave and provide fair access for employees.

To help employers prepare for the scheme, the role of employers in providing government-funded parental leave pay will be phased in over the first six months of the new scheme, to align with the new financial year.

And to ensure fair access for families, the paid parental leave work test will better suit the circumstances of casual, seasonal and contract workers.

The Government will establish an implementation group to help finalise the details of Australia’s first national Paid Parental Leave scheme.

The implementation group builds on the successful consultations conducted late last year that contributed to the development of a scheme which is fair for families and fair to business.

The following organisations have been invited to join the implementation group:

  • Australian Chamber of Commerce and Industry
  • Business Council of Australia
  • Australian Industry Group
  • Australian Mines and Metals Association
  • Council of Small Business Organisations of Australia
  • National Foundation for Australian Women
  • Australian Council of Trade Unions
  • Unions NSW
  • Shop, Distributive and Allied Employees Association
  • UnitingCare
  • Federal Sex Discrimination Commissioner
  • Woolworths
  • National Australia Bank.

The group will also include representatives from the Department of Families, Housing, Community Services and Indigenous Affairs, the Department of Education, Employment and Workplace Relations and Centrelink.

The draft Paid Parental Leave Bill is now with the Senate Community Affairs Legislation Committee for inquiry to report by 3 June 2010. The bill will be formally introduced into the House of Representatives next week.

The Government’s scheme is based closely on the expert recommendations of the Productivity Commission and is in Australia’s best economic interests.

Under our scheme, leave can be taken in addition to existing employer-funded entitlements either at the same time or consecutively. Our scheme will help employers enhance the family friendly workplace conditions many already offer.

Finally, Australia will catch up with the rest of the world because currently we are one of just two OECD countries without a national paid parental leave scheme.

For 12 years in government, Tony Abbott refused to deliver a paid parental leave scheme. Now he wants to hit business with a great big tax that will hurt Australia’s economy.

The Government’s Paid Parental Leave scheme is fair, balanced, economically responsible and, unlike the Liberals, does not involve a new tax on employers.

Further details from the draft Paid Parental Leave legislation

A range of new implementation details will support employers to successfully provide paid parental leave:

  • From 1 January to 30 June 2011, employers can choose to provide parental leave pay to their eligible employees. This will become a requirement for employers from 1 July 2011 for eligible employees with more than 12 months continuous service. This will align with the beginning of the new financial year when payroll and other computer systems are upgraded and responds to feedback from our consultations. In all other cases parents will be paid by the Family Assistance Office (FAO).
  • Employers can choose to receive advances of funds from the Government in as few as three instalments. Employers will only be required to pay an employee when they have received sufficient funds.
  • The FAO will be responsible for paying eligible employees who take less than eight weeks of paid parental leave: for example, where an eligible father takes the remainder of a mother’s Government-funded leave after more than ten weeks.
  • Employers will provide parental leave pay on a ‘business as usual’ basis – they won’t be required to lodge regular reports with the FAO or establish special bank accounts. Parental leave pay will be paid in accordance with an employer’s normal pay practices and the employee’s usual pay cycle.
  • Employers will only pay employees who intend to return to work. Women who resign, but meet the work test, will be paid by the FAO.

New implementation details will ensure that the Paid Parental Leave scheme is fair for Australian families:

  • Parents who are no longer employed at the birth of their child but have satisfied the work test will still be eligible for paid parental leave. They will be paid directly by the FAO. For example, if a mother who is a contract worker meets the work test but her contract finishes a month before the baby is born, she will still receive parental leave pay (from the FAO).
  • The paid parental leave work test has been modified to better suit the circumstances of casual, seasonal and contract workers. A person can have a break of up to eight weeks between working days and still be regarded as having worked continuously. They will still need to have worked 330 hours for at least 10 of the 13 months prior to the birth or adoption of their child.
  • People receiving parental leave pay can stay connected to their workplace through ‘keeping in touch’ provisions. These provisions allow the parent to participate in activities at their workplace for up to 10 days during the period of paid parental leave while remaining eligible for parental leave pay.

These new implementation details respond to feedback received during the consultations and complement the core elements of the Paid Parental Leave scheme announced by the Australian Government in the 2009-10 Budget.

The draft legislation is available at the FaHCSIA website