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. 

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.