Paid parental leave for all employees – good news for SMEs

It appears highly likely that the federal government will legislate shortly to give the vast majority of employees in Australia access to paid parental leave. The draft legislation is currently before the Senate.

It is important to note that the paid parental leave scheme (the scheme) will be funded by the federal government but administered by employers.

The scheme is good news for small to medium enterprises (“SMEs”) as employees, especially females, often evaluate employers on criteria including whether or not they have paid parental leave schemes in place. Historically larger employers have been more likely to offer paid parental leave thereby making them attractive employers for people who are planning to have children. When all Australian employers, including SMEs, can say they offer paid parental leave, that “point of difference” will to a certain extent disappear.

The scheme is currently before federal parliament in the form of the Paid Parental Leave Bill 2010 and it is possible that details of the scheme may be amended. However, current details of the scheme include:

• An implementation date of 1 January 2011
• Access for primary care giver to 18 weeks of paid leave at the rate of the national minimum wage ($570 per week as and from 1/7/10)
• Employee must not have an adjusted taxable income of $150,000 a year or more in the previous financial year
• Employee must have worked continuously for a period of 10 to 13 months prior to the expected birth or adoption of the child
• Employee must have worked at least 330 hours during the 10-month period (approximately one day per week)
• Employee must be living in Australia and be an Australian citizen or permanent resident

It is likely that employers that already offer more generous paid maternity leave than that proposed by the scheme will continue to offer those more generous terms, but reduce such payments by an amount equivalent to the monies an employee will receive from the government scheme.

We invite you to contact one of our Workplace Relations lawyers to discuss the impact of the scheme on your business.

Author: Herbert Fischbacher