The federal government this week released its long-awaited exposure draft of the Paid Parental Leave Bill (Draft Bill). Under the Draft Bill, from 1 January 2011, an eligible parent will be able to apply for up to 18 weeks paid parental leave at the national minimum wage, currently $543.78 per week.

Administration of the scheme

The scheme will be funded by the federal government but, in most cases, administered by employers. Employers will be required to pay parental leave to their long-term employees, being those who have been employees for at least 12 months prior to the expected date of birth or placement for adoption.

Employers will be prepaid by the government to ensure the necessary cash flow. However, in order to provide employers with a transitional period in which to prepare for the scheme, the Family Assistance Office will administer the payments until 1 July 2011. The Family Assistance Office will continue to administer payments beyond this date, to eligible employees who are not long-term employees.

From 1 October 2010, claims for the payment can be lodged with the Family Assistance Office up to three months before the birth or placement for adoption. Consequently, payments will only be made with respect to children born or placed for adoption from 1 January 2011.

Parental leave payments are to complement minimum entitlements under the National Employment Standards and any other employer-provided paid leave. However, recipients under the scheme will be excluded from other government funded benefits such as the baby bonus (except in multiple birth cases), family tax benefit Part B and dependent spouse, dependent child-housekeeper and housekeeper tax offsets.

Recipients of the payment can nominate the period over which they want to receive it, provided it is taken in one continuous 18 week period within 12 months of birth or placement of the child. The payment will be taxed in the same manner as salary or wages but superannuation will not initially be payable on parental leave payments.

Eligibility

Individuals who are not the child's parents may also be eligible where they are the primary care giver. The primary care giver will be eligible to receive the payment if:

  • they have been engaged in work for at least 10 of the 13 months prior to the expected birth or adoption and any break between two consecutive days of work does not exceed eight weeks;
  • during the 10 months prior to the expected birth or adoption, they have completed a minimum of 330 hours of paid work (an average of one day of paid work per week);
  • they received a maximum adjusted taxable income of $150,000 in the full financial year before the claim or the birth, whichever is the earlier; and
  • they are an Australian citizen or resident living in Australia for the parental leave period.

Employees who have resigned or otherwise completed a contract will still be entitled to receive the payment provided they satisfy the eligibility criteria. Payments in these situations will be administered by the Family Assistance Office.

If a recipient of the payment returns to work prior to end of the parental leave period, the person's partner (or other eligible caregiver) may continue to receive the remainder of the payment. Secondary care givers will not otherwise be provided for but will be considered in a review planned for 2013.

The Family Assistance Office will determine whether an employer is required to make parental leave payments. However, an employer may initiate a review of this decision where they dispute their obligations.

The Draft Bill proposes that the Fair Work Ombudsman will have jurisdiction to investigate employers in breach of their obligations to pay parental leave.