Australia’s Paid Parental Leave Scheme
1. Australia’s Paid Parental Leave scheme at a glance
“The more that parental leave arrangements mimic those that exist as part of routine employment contracts, the more they will be seen by employers and employees as standard employment arrangements, with the dual effect of:
- promoting employment continuity and workplace retention (thus helping to preserve job and employer-specific skills that would be reduced if parents were to resign or move to another employer) and reducing training costs for employers, and
- signalling that a genuine capacity to take a reasonable period of leave from employment to look after children is just a normal part of working life.”
Productivity Commission Inquiry Report, Paid Parental Leave: Support for Parents with Newborn Children, February 2009.
The Australian Government will introduce a comprehensive Paid Parental Leave (PPL) scheme for new parents who are the primary carers of a child born or adopted on or after 1 January 2011.
An eligible person will receive taxable PPL payments at the level of the Federal Minimum Wage, currently $543.78 a week, for a maximum period of 18 weeks. In most cases, the person will receive the payment through their employer.
To be eligible for the PPL scheme, the primary carer (usually the mother) must be in paid work and have:
- been engaged in work continuously for at least 10 of the 13 months prior to the expected birth or adoption of the child; and
- undertaken at least 330 hours of paid work in the 10 month period (an average of around one day of paid work a week).
An income test of $150,000 will apply based on the primary carer’s adjusted taxable income in the previous financial year.
PPL will cover employees, including casual workers, as well as contractors and the self-employed. If a primary carer returns to work before they have received all of their PPL entitlement, they may be able to transfer the unused part of their PPL to another caregiver (usually the father) who meets eligibility requirements.
Eligible families can choose whether to participate in the scheme depending on their individual circumstances. Families electing to participate in the scheme will not receive the Baby Bonus (except in multiple birth cases) or Family Tax Benefit Part B during the 18 week PPL period. The dependent spouse, child housekeeper and housekeeper tax offsets also will not be available during this period.
New mothers who are not eligible for PPL will continue to receive, if eligible, the current forms of family assistance (including the Baby Bonus).
The PPL scheme will have a net cost to the Government of $731 million over five years.
Full details of the scheme are to be finalised and the Government will be undertaking consultations in the second half of 2009.
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