Changes to Paid Parental Leave Effective from 1 January 2011
Changes to Paid Parental Leave Effective from 1 January 2011
Monday 31 January 2011 / by Robin Young posted in Business, Corporate & Commercial

The Paid Parental Leave Scheme ('PPL') commenced on 1 January 2011 in accordance with the provisions of the Paid Parental Leave Act 2010.

New parents who are primary carers of children born or adopted after this date are eligible to apply for the PPL payments. Such entitlements are available to all categories of employees, including casuals and may apply to contractors in certain circumstances.

The PPL operates in conjunction with any current entitlement that an employer provides to its employees under its employment contracts or policies.

Eligibility for PPL payments

To be eligible for Paid Parental Leave, an employee must: 

  • Be the primary carer of a child born or adopted on or after 1 January 2011;
  • Be an Australian resident;
  • Be in paid work and have:
  1. Been engaged in work continuously for at least 10 of the 13 months prior to the birth or adoption of the child;
  2. Worked at least 330 hours in the 10 month period (an average of around one day of paid work per week);
  3. Not have worked between the date of birth or adoption of the child and the nominated start date for Paid Parental Leave; and
  4. Have an adjusted taxable income of $150,000 or less in the financial year prior to the date of birth or adoption of the child or the date of their claim, whichever is earlier.

As noted above, eligibility is determined solely by the Family Assistance Office* ('FAO'), upon application by an employee. This application must nominate a date on which PPL payments are to commence. Prior to this date, the employee must inform the FAO of the date of the actual birth or adoption.  An employee is able to make an application up to three months prior to the expected date of birth. Such application must include:

  • Employment status;
  • Employer details, including identifying a contact person and contact details;
  • Confirmation of work history, including hours of work; and
  • Proposed date of payments to be commenced.
     
PPL Payments

The current entitlement to PPL payments is 18 weeks pay at the federal minimum wage, which is $740.80. This figure is reviewed annually by Fair Work Australia. 

Between 1 January 2011 and 1 July 2011, it is optional for employers to administer the scheme.  If an employer refuses to do so, any payments that an employee is entitled to will be paid by the Federal Family Assistance Office. This is to allow the employer time to update payroll and other systems to facilitate such payments being made. From 1 July 2011 onwards, it is compulsory for an employer to make such payments to eligible employees.

As stated above, the employee is able to nominate when such payments are to be made. The PPL payments can also be split between primary carer givers, should the initial recipient return to work or cease to be the primary carer. However, such payments must be paid within 12 months of the birth/adoption and whilst receiving such payments, the employee cannot work.
 

Administration of PPL Payments  

If an employee is eligible to receive PPL payments and has applied to the FAO to receive such payments, the FAO will be in contact with the employer to request the following information:

  • The employer’s bank account details;
  • Confirmation of the employer’s pay cycles, including the cut-off period;
  • Confirmation of the business name;
  • The employer’s ABN; and
  • Contact details and a nominated employer contact person.  

Once this information is provided, PPL payments will then be transferred into the business bank account nominated by the employer, to then be passed on to the employee. Such monies will be electronically transferred on a fortnightly basis over an 18 week period.

Taxation must be withheld from the PPL amounts paid to employees. 

Such payments do not attract superannuation nor impact upon the employer’s payroll tax or workers compensation liability.

The employer is required to provide an employee with written notification of when payments have been made and the amounts. A standard pay slip advice is sufficient. There is no obligation to inform the FAO, however, financial records must be maintained.

The employer must also inform FAO when an employee receiving such payments returns to work or ceases to be an employee of the employer.

If you have a query relating to any of the information in this piece, or you would like to speak with somebody in Holman Webb's Workplace Relations team with respect to your own leave-related matter, please don't hesitate to get in touch today.


*On 1 July 2011, FAO became part of the Australian Government Department of Human Services



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