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Offsetting existing paid parental leave obligations

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From 1 January 2011, the government’s paid parental leave scheme will provide an eligible parent with 18 weeks’ paid leave at the federal minimum wage rate (currently $569.90 per week).

An employer must not assume that the scheme will offset its existing contractual obligations in relation to paid parental leave.  It is important for employers to be aware that in most cases, an employer who is obliged to pay parental leave through an enterprise agreement or common law contract will remain tied to that obligation.

Where a parental leave obligation is contained in a workplace policy, and that policy is applied in a “purely discretionary way” that isn’t part of an employment contract or industrial agreement, the employer may be able to amend that policy.

However, if an employer provides paid parental leave through a contractually enforceable policy, it won’t be able to use the government’s payments to offset their own obligations under that policy.  The question as to whether a workplace policy is a contractually enforceable policy will vary from case to case, and will no doubt be the subject of much litigation.

Any employers who are seeking to amend its policies should do so sooner rather than later and seek proper legal advice.

MST has extensive experience in assisting its clients to comply with the most current workplace relations laws, including advising on paid parental leave obligations and benefits.  Please contact one of our workplace relations lawyer for further information.

Author:  Chao Ni

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