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