Paid parental leave changes: what you need to know

The 2014-15 Budget will bring  a number of challenges and changes for HR, but the one election promise that seems to have been left hanging is Prime Minister Tony Abbott’s paid parental leave scheme.

The $5billion policy was listed in the Budget’s contingency reserve and as yet, there’s no sign of the legislation to introduce the scheme.

The government said it would come into effect on 1 July, 2015, with a proposed income cap of $100,000.

It is expected to continue to provide 26 weeks of paid parental leave based on the recipient’s full-time salary, but the maximum payouts will be capped at $50,000.

However, the details are all speculation thus far, according to Marie Coleman, the chair of the social policy committee for the National Foundation for Australian Women.

“Nobody knows the precise detail until a bill is tabled. In order to start his scheme on July 1, 2015, Mr Abbott has to get the legislation through both houses of Parliament with royal assent by midnight on June 30 and there are three sitting weeks of Parliament left.”

Folding private sector schemes into the one policy could also prove difficult, as they vary enormously, she said.

“Currently, something like 96-98% of working women are covered by paid parental leave schemes. Of these, about 49% have only the government scheme. They tend to be people who work in small to medium enterprises, people who work on a casual basis, the lower-paid women. About 51% of that 96% have an employer scheme. The existing arrangements were designed so that the government provided the safety net, which would be complemented by whatever employees were able to negotiate with their employer.”

Coleman said the current proposed scheme would instead be a “one size fits all scheme” with people entitled to either payments based on the adult minimum wage or their take-home pay, whichever was the greater amount.
That could lead to issues around determining a person’s income, she said.

“Not everybody has a nice regular pay packet. There are many people who are on a modest wage, but are paid on a commission basis. If the government is going to work out what is income replacement for that person, it has to come up with some solutions for how it’s going to determine that person’s actual income.”

Until the new scheme is passed, the current paid parental leave system will continue to operate, said Coleman.

“No one is going to lose that current entitlement. The big question marks are around how it’s going to work to fold in all the private sector schemes without anybody being a loser and how it’s going to work to fold in the statutory schemes.”