Paid Parental Leave Circular

Paid Parental Leave Circular

Paid Parental Leave Scheme 2011

The paid parental leave scheme comes into effect from 1 January 2011. We have provided the following summary of the key aspects.

Further to our previous support pertaining to the new parental leave scheme we provide the

following summary of key aspects of the scheme for your information.

Parental Leave Pay – Basic Entitlement

From 1 January 2011, an eligible person shall be entitled to access up to 18 weeks of government

funded Parental Leave Pay, paid at the National Minimum Wage.

Parental Leave Pay must be taken in one continuous block of up to 18 weeks.

Parental Leave Pay can be taken before, after or at the same time as other paid leave that an

employer may provide, such as annual leave.

Parental Leave Pay must be paid to the employee within 12 months of the birth or adoption of their

child. To receive the full 18 weeks of Parental Leave Pay the employee must make their claim before

the end of 33 weeks after the birth or adoption of their child. A claim made after this point will

reduce the amount of Parental Leave Pay, ie: if the claim is made in the 34th week the employee will

only be eligible for 17 weeks of Parental Leave Pay.

When is the employer obligated to commence paying eligible employees?

From 1 July 2011 you will be responsible for providing Parental Leave Pay to your eligible employees

who have a baby or adopt a child from 1 July 2011. The employer is only responsible for the

payment where the eligible employee has worked for the employer for 12 months or more and the

employee shall be receiving eight weeks or more of Parental Leave Pay.

You will not need to determine whether your is employee is eligible for Parental Leave Pay as the

Family Assistance Office will contact you and inform you if you are required to provide Parental

Leave Pay to one of your employees. However we have provided relevant details below for your

information.

Providing Parental Leave Pay to an employee

The Family Assistance Office will contact you and request information such as your business bank

account details, your pay cycle, your business name, your ABN and your contact details. This

information may be provided on line.

Paid Parental Leave funds will be transferred into the business bank account you nominate prior to

your pay cycle cut-off date. These funds will be paid to you either fortnightly over 18 weeks OR in

three 6 weekly installments

Processing the Parental Leave Pay

Parental Leave Pay is a Taxable payment paid at the National Minimum Wage, which is currently

$570 per week before tax.

You will be required to withhold tax from the Parental Leave Pay under the usual PAYG withholding

arrangements. You must also include any Parental Leave Pay in the total amounts on the

employee’s annual or part year payment summary.

You will not be required to make superannuation contributions for Parental Leave Pay.

It is important to also note that Parental Leave Pay will not be subject to payroll tax or Return to Work premium liabilities.

You employee will also not accrue additional leave entitlements while they receive Parental Leave

Pay (provided they are not also receiving other employer provided paid leave entitlements).

Payment notification to be provided to the employee

You are required to provide the employee with written notification of their Parental Leave Pay

within one working day of the payment being made and this can be provided to the employee

electronically. The written notification may be in the form of a pay slip or on a separate record and

must include the following particulars:

  • your business name and ABN;
  • the employees name;
  • the period to which the payment of Parental Leave Pay relates;
  • the date the payment was made;
  • the gross amount of the payment; and
  • the amount deducted from the gross amount of the payment (for example, salary sacrifice)

and the name and/or number of the fund or account into which the deduction was paid.

You will also need to keep financial records of the Parental Leave funds you receive from the

Family Assistance Office and of the Parental Leave payments made to the employee.

What happens if the employee returns to work prior to taking the full 18 weeks of Parental

Leave Pay?

If your employee returns to work before they have received all of their Parental Leave Pay, their

payment will stop and they will not be entitled to any further Parental Leave Pay.

You will be required to notify the Family Assistance Office when the employee returns to work

prior to their Parental Leave Pay finishing. The employee will also be required to notify the

Family Assistance Office.

Where you have unused Parental Leave Pay you must ensure that you return such funds to the

Family Assistance Office. The Family Assistance Office will contact you directly should this

circumstance arise.

Will the Parental Leave Pay reduce any paid maternity leave obligations I may have under an

enterprise agreement?

In many circumstances you will not be able to offset paid parental leave benefits provided to

employees under an enterprise agreement. Please contact CEA for support on your specific

circumstances.

Definitions

Eligibility

Your employee may be eligible for Parental Leave Pay if:

  • the employee is an Australian resident
  • the employee is the mother of a newborn child or the initial primary carer of a recently adopted child
  • the employee has satisfied the Paid Parental Leave work test before the birth or adoption occurs
  • the employee has received an individual adjusted taxable income of $150,000 or less in the previous financial year.

What is the Paid Parental Leave work test?

A person will meet the requirements of the Paid Parental Leave work test if they have been in

paid work continuously for at least 10 of the 13 months prior to the birth or adoption of their

child and worked for at least 330 hours in that 10 month period with no more than an eight

week gap between two consecutive working days. The person must have worked for at least

one hour in a day for their employment to be counted as a working day.

If you have any questions pertaining to this information please contact one of our consultants

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