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This article is aimed at giving some background into the new Paid Parental Leave (PPL) scheme, being introduced on 1/1/2011 in Australia. More information can be found at the following website:
Whilst this scheme comes into effect from 1 Jan 2011, employers are not required to make payments until 1 July 2011.
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Mothers of babies born on or after 1 January 2011 may be eligible for Paid Parental Leave. The initial primary carer of a child who is adopted on or after this date may also be eligible.
Employees may be eligible for Paid Parental Leave if they:
- are the mother of a newborn child or the initial primary carer of a recently adopted child under 16 years of age
- have met the Paid Parental Leave work test before the birth or adoption occurs
- have an individual income of $150,000 a year or less (as the primary care giver; not a household income), and
- are living in Australia and meet the residence requirements.
The PPL Work test
Employees meet the Paid Parental Leave work test if they have:
- worked continuously for at least 10 of the 13 months prior to the birth or adoption of your child, and
- worked for at least 330 hours in that 10 month period (around one day a week).
Employees may be regarded as working continuously even if they have changed jobs or hours per week, as long as they did not have more than an eight week break between working days. A working day is a day on which they worked for at least one hour.
Payments
The PPL is an 18 week payment equal to the current National Minimum Wage value. The payment is be made to the primary care giver of the child; hence if the ‘mother’ returns to work, the other partner can continue to receive the payment.
The PPL can also be received whilst receiving leave payments, as shown below:
In the case of a stillborn birth, the family is still eligible for the PPL on submission of medical proof. The PPL is fully taxable, and appears on the payment summary (in total taxable amount, not separately listed) and the payslip. Employers will pay the PPL to employees who have been employed for 12 months or greater; for periods less then that employees should claim the allowance from the Family Assistance Office (FAO). Where employers are paying the allowance, they claim the amounts back from the FAO.
The scheme comes into effect from 1st January 2011. However, employers are not required to make payments until 1st July 2011 (they can make payments before this date; however they are not required to do so). The PPL will be a payment of 7.6 hours per day, Monday to Friday, at the National Minimum Wage hourly rate, including public holidays, regardless of their usual working arrangements (i.e. no shift penalties). Employers will not be required to make superannuation contributions on PPL, nor be included in any workers compensation premium calculations. PPL will not result in the accrual of any additional leave entitlements for employees. It is expected that PPL will not attract payroll tax (this is still being finalised with the relevant state governments).
Employers can “keep in touch” with their employees during the PPL period. This means the employee can participate in workplace activities (up to 10 days) such as training or planning sessions. Whilst the employee is “keeping in touch” they are to be remunerated as per their normal award conditions; this can include minimum hours requirements and access to penalty rates. “Keeping in touch” doesn’t break the PPL period nor count as a return to work.
Process
The employee needs to lodge a claim with the FAO, preferably before the birth or adoption of the child. It is the FAO who will assess if the employee is eligible for payments or not. The FAO will then contact the employer. This advice will be through Centrelink’s online Business Services or by letter. The notice will include:
- the employee’s name
- that the employee is eligible to receive Paid Parental Leave
- the period for which you will provide Parental Leave pay to your employee
- information on your obligations under the scheme
- your review and appeal rights in case you disagree with the decision that you are to provide Parental Leave pay to the employee.
The employer is not required to pay any PPL until payments have been received from the FAO. Employers will be able to pre-register their company details (i.e. ABN, bank account details, contact details), and re-use this for new applications. Funds will be received in line with the organisations payroll periodicity, before the payday, electronically. Notification will also be sent to the organisation (electronically or written) indicating the payment details.
Employers will not be required to separately identify Paid Parental Leave funds in their annual financial statements. When a funding amount is received, it forms part of the income of the business. It is a taxable amount received by your business, consistent with other income received by your business and from which wages are paid to your employees. You can claim a tax deduction for the amount of Parental Leave pay provided to an employee, as you would with wages.
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