While scheme is government funded, it could have financial implications for employers, says expert
The Australian government recently greenlit the biggest boost to its paid parental leave (PPL) by gradually increasing it to 26 weeks by 2026.
From the current 20 weeks, Australia's paid parental leave will expand starting July by two weeks annually until it reaches 26 weeks.
While the scheme will be government funded, Robert Half director Nicole Gorton said this major change will still have a financial implication for organisations.
"It is government-funded, [but] if they're offering anything above and beyond, bear in mind that one of the biggest costs to any organisation is the replacement of that person covering the workload in their absence," Gorton told HRD.
"I anticipate that [businesses will] be calculating the cost of additional paid leave, including salary superannuation and also the backfilling of the role."
While preparing for paid parental leave has always been an issue for organisations, Gorton underscored the "obvious uplift" due to the government expansion.
"So, they'll be calculating the direct cost," she said. "They'll also be calculating the indirect cost, assessing the impact on productivity, workload distribution within the teams, and they'll also be ensuring that they have sufficient funds allocated to cover the extended leave programme without jeopardising their essential operations."
Return to workforce plan
But preparation should also extend to an organisation's return-to-work policy, according to Gorton, given that longer paid parental leave entitlements will likely mean longer time that employees will be out of the loop.
"[Organisations] would definitely want to consider how they set up a return-to-workforce policy," she said. "They should first and foremost think about the long-term plan around when the person is ready to come back into the workforce and how they can accommodate that person."
According to the director, a successful return-to-work policy will be a "win-win" for the employee on parental leave and the employer.
"Because they already know the company, they know the business, they know the systems," she said.
"Maybe they've been out of it for a year, but beyond that year… they will still come back with knowledge that a company will see the benefit of retaining, on the assumption that that person is a good performer."
Retention, attraction impact
Social Services Minister Amanda Rishworth previously said expanding paid parental leave will "better address the needs of working Australian families" as they embark on a new chapter.
This is in alignment with Robert Half's findings, where 45% of 1,000 Australians said they want to have extended parental leave offered by their employer.
Gorton said the government's paid parental leave expansion will complement what employers offer to their workforce.
“From what we are seeing, all companies will need to plan and prepare," she said. "Companies will have the opportunity now to attract and retain talent and talk about not only the government leave that is coming into play, but also their own parental leave policies that complement that offer."
