Parental leave is a type of employee benefit that is adopted within most countries, including Australia. This allows a parent to take a certain period of time off work to nurture and welcome a new child into their lives. This Legal Kitz blog will tell you all you need to know about the recent changes to parental leave in Australia.
How does parental leave operate in Australia?
In Australia, the amount of parental leave pay “is based on the weekly rate of the national minimum wage”. This payment scheme lasts for up to 18 weeks (90 payable days), to allow parents to provide for and take care of their new child. The law also allows for 12 months (52 weeks) of unpaid parental leave, to allow the new parents to create a healthy work-life balance.
What is the paid parental leave scheme in Australia?
Who is eligible?
According to Services Australia, to qualify for parental leave pay you must meet the following criteria:
- be the primary carer of a newborn or newly adopted child
- have met the income test
- Will not be working during your Paid Parental Leave period except for allowable reasons
- have met the work test
- have registered or applied to register your child’s birth with your state or territory birth registry, if they’re a newborn.
Upcoming changes to the scheme
As of 1 July 2023, Parental Leave Pay and Dad and Partner Pay will be combined into one payment. This will see an increase from 90 days (18 weeks) to 100 days (20 weeks) of leave allowance, with the overall parental leave pay available to employees will continuously increase by 2 weeks every July until 2026, where the total available leave will be 130 days (26 weeks).
The introductory changes of this scheme will also introduce a combined family income limit, being a combined adjusted taxable income of $350,000 or less per financial year. The current individual income limit of $156,647 will not be affected.
If the individual income limit is not met, the combined family income limit will be applied instead, whether or not you’re partnered or a single parent.
Parental Leave Pay can be applicable until a child turns 2. Parents can coordinate their Parental Leave Pay with each other to take the same or alternate days off. This can also be taken at the same time as paid leave, and between periods of paid work. Any unused time of parental leave will be completely lost if not used before the child turns 2.
What is your timeframe to claim?
Depending on your situation, there are certain time periods that may be given to claim your paid parental leave. It is strongly suggested that you make a claim prior to your child’s birth or adoption. The following categories will indicate how to claim your leave according to your personal circumstances:
Claiming before child’s birth or adoption
You are eligible to claim up to 3 months prior to the expected birth or adoption date. By claiming early you are creating extra allowances for yourself such as being able to:
- choose when your paid parental leave period begins following the birth or adoption
- have your claim assessed faster
Claiming after child’s birth or adoption
If you were unable to claim prior to the birth or the adoption, you are still eligible to make an application however this means that:
- it might take longer for the claim to be assessed
- less choice about when your Paid Parental Leave Period can start
- might not be paid the full Paid Parental Leave period if the claim is made too late.
If you want to receive the full 18 weeks of payment you must claim within 40 weeks of the child birth or adoption. If you submit a claim after the 40 week period:
- You must choose a start date on or after the date you clam
- You will get paid from your nominated paid parental leave period start date
- You cannot nominate the date of birth or adoption as your start date
- You will not receive the full 12 week paid parental leave period
- You will get 30 flexible paid parental leave days, accessible for up to 2 years after the birth or adoption date.
For more information about the criteria and eligibility of parental leave, we recommend you visit the Services Australia website.
What is employer-funded parental leave?
Employer-funded parental leave allows employers to provide their own paid parental leave policy in addition to government-funded parental leave schemes. This is typically provided through employment contracts, enterprise agreements and workplace policies. The eligible employee will receive these leave and pay entitlements in accordance to the relevant agreement, contract or policy.
What is the difference between paid and unpaid parental leave?
Paid leave
You are entitled to paid parental leave from the Australian Government when you are:
- The birth mother of a newborn child
- The adoptive parent of a child
- Another person caring for a child under exceptional circumstances
and you meet the necessary eligibility criteria, that was previously mentioned.
The Government typically will send payments to the employer, who will pay the employee, and if you are self-employed, you are also entitled to parental leave pay, as long as you meet the work test.
Unpaid leave
Unlike paid leave, unpaid leave does not require a certain limit of earnings and lasts for 52 weeks, however to receive unpaid leave you must have worked a minimum of 12 months for your employer. You can take this leave if you are:
- An employee who gives birth
- An employee whose spouse or de facto gives birth
- An employee who adopts a child under the age of 16 years
According to the law, you are entitled to up to 12 months of unpaid parental leave, with the additional request of an extra 12 months.
Casual employees are also entitled to unpaid parental leave if they have been working for their employer regularly for a minimum of 12 months.
It is also important to note that if you are having another child, you are eligible to receive leave without having to work for an extra 12 months for your employer. This is a requirement however if you join a new employer.
Partner pay
You are eligible to receive 2 weeks of leave paid at minimum wage from the government if you are:
- The biological father of the child
- Partner of the birth mother
- Adoptive parent
- Partner of an adoptive parent
- Person caring for a child born of a surrogacy arrangement
If you fall within this category, you can qualify for partner pay if you:
- Care for the child every day over the time you receive partner pay
- Have worked a certain number of hours in the past 13 months
- Meet residency requirements
- Not work within this period of time
- Receive an adjusted taxable income of $150,000 or less in the financial year prior to the date of claim or date of partner period.
How should I apply for parental leave?
Prior to taking parental leave, an employee is required to give their employer a certain amount of written notice, and may need to provide evidence to their employer following the birth or adoption. This may include:
- your child’s details, such as their full name and date of birth
- proof of the birth or adoption.
Continuous parental leave
If an employee wants to take unpaid parental leave they must inform your employer to confirm the dates. If an employee cannot give appropriate notice, they are still entitled to the leave as long as they provide notice as soon as possible.
An employee needs to give their employer at least 10 weeks notice, in writing, prior to starting their leave. These dates then need to be confirmed at least 4 weeks before the leave commences.
Flexible parental leave
Flexible parental leave allows employees to take their leave in separate periods rather than one continuous block. If you want to apply for flexible parental leave you must notify your employer:
- At the same time they give notice of their continuous parental leave, or
- At least 10 weeks before the start of their flexible parental leave, and confirm 4 weeks prior to leaving.
If you are applying for paid parental leave, you must also apply to Services Australia who will assess your application upon submission.
Information for employers
No matter the size of the company, whether it be a small business or a large corporation, employees are eligible to apply for the paid parental leave scheme. Employers are not involved in the eligibility of any government-funded parental payments. This scheme benefits both employers and employees as it helps to retain talent whilst providing a necessary environment for new parents.
As an employer, it is however important to have a leave policy in place within your workplace to set standards and expectations regarding different types of leave periods. Our sister company, Business Kitz, offers a full leave policy template that provides you with all the useful tools to action your own leave policy.
Legal advice
If you are applying, or have applied, for parental leave and this has been refused by your employer or by Services Australia, feel free to contact our company, Legal Kitz, who can assist you. To arrange a FREE consultation with one of our highly experienced solicitors, click here today, or contact us at [email protected] or 1300 988 954.