Paid Parental Leave - Effects on Employment
The Government scheme of Paid Parental Leave (PPL) impacts all those involved: the employees who are parents, and their employers. It is a balancing act of benefits and disadvantages. Take a closer look at the scheme to be introduced in 2011.
Different perspectives
Employers
PPL aims to encourage workforce participation by maintaining a connection with the industry and their careers, hoping to promote employment continuity and loyalty.
It also aims to increase employment retention, by preserving job and employer specific skills that would be reduced if parents resigned or moved to another employer after caring for the baby in its stages.
It is predicted to reduce training and hiring costs associated with finding an alternative employee. It is designed to be an affordable scheme with minimised impact on employers.
Parent employees
PPL will provide greater financial support to families, as well as developmental support during a baby's childhood.
The Baby Bonus and Family Tax benefits will still be available for families not eligible for PPL, and for those who choose not to participate in the scheme.
The PPL scheme
Australia, along with the United States of America, is one of the two OECD countries who do not provide a comprehensive parental leave system. The OECD stands for Organisation for Economic Cooperation and Development - an international organisation helping governments tackle economic, social and governance challenges of a globalised economy.
The scheme aims to have paid parental leave as part of standard employment arrangements and societal views.
Four fast facts
- The Australian Government will introduce the PPL scheme for new parents who are the primary carers of a child born or adopted on or after 1 January 2011.
- An eligible parent will receive taxable PPL payments at minimum wage (approximately $543.78 a week) for a maximum period of 18 weeks. In most cases, the person will receive payments through their employer.
- To be eligible for the PPL scheme, the primary carer must be in paid work and have been engaged in work continuously for at least 10 of the 13 months prior to the expected birth or adoption of the child, and undertaken at least 330 hours of paid work in the 10 month period (an average of around one day of paid work a week).
- The PPL entitlement will be able to be taken in conjunction with, or in addition to, employer‑provided paid maternity and parental leave, and other employer‑provided leave entitlements.
PPL payments and employer eligibility
Parents who claim PPL must receive their PPL payments through their employer where they are eligible to do so. Employers will make payments only to employees who have 12 months continuous service prior to the date of birth or adoption.
Other parents who claim PPL will receive their payments directly from the Family Assistance Office. Eligible parents will be able to nominate the period they are paid PPL, which may involve consideration of existing employer‑funded leave. PPL must be taken after the birth or adoption of the child, and within 12 months after that event.
The Family Assistance Office will be responsible for administering the PPL scheme. It will ensure that Government funds are transferred to employers in advance of their usual payroll cycle so that they can make payments to employees, and will ensure employers and employees both know when payments to parents are to be made.
The PPL scheme is said to be designed to impose minimal new costs on employers. Employers will be responsible for making PPL payments only where the employee has completed 12 months continuous service prior to the date of birth or adoption of the child.
As is the case now, parents will generally notify and agree leave arrangements with their employer before they commence leave prior to the birth or adoption of their new child. This will include parents notifying their employer when they wish to receive their PPL payments.
Employers' say
The Government will consult with business organisations and employers to help make the new PPL arrangements as simple as possible for employers. The consultations will take place during the second half of 2009 in the early stages of the scheme's implementation.
Industry instruments
Employers who provide PPL through an industrial instrument cannot withdraw that entitlement for the life of that instrument. During bargaining for a new agreement, employers and employees will be able to agree to modify existing employer PPL provisions in the light of the introduction of the new Government PPL scheme.
