'We've seen a lot of employees look at benefits and entitlements as a real draw point to whether or not they want to work somewhere'
Changes to parental leave schemes in Australia kicked off on July 1. And in a competitive labour market, this can be an appealing benefit to attract potential employees.
“It's a real distinguishing point now and I think after COVID, we've seen a lot of employees look at benefits and entitlements as a real draw point to whether or not they want to work somewhere,” Tamsin Lawrence, Senior Associate at Australian Business Lawyers & Advisors said.
“So I think that this change will… just draw a really clear distinction between perks or benefits that certain employers are offering to both parents under their parental leave scheme.”
However, this benefit also depends on the capability of a business, she said.
“A lot of small businesses, they’re not offering anything above the unpaid government's scheme and that's completely understandable given their economic position.”
The new parental leave changes
Under the new paid parental leave scheme, both parents will be able to claim up to 20 weeks of paid leave to use between them. And single parents can access the full amount of parental leave pay.
This new change will provide greater flexibility for parents, Lawrence said.
“If you're a dad, previously you got two weeks that you could take concurrently with your partner,” she told HRD Australia. “Now, you could both take – there’s a full entitlement of 20 weeks – you could take 10 weeks together or you could take 10 weeks separately. It's just far more flexibility in the system.”
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Complementing the paid scheme are the recent changes to the unpaid leave scheme, where both parents can now take up to 12 months of unpaid parental leave at any time within 24 months of their child’s birth or placement. In addition, employees can take up to 100 flexible parental leave days over a 24-month period, and pregnant employees can access their flexible unpaid parental leave up to six weeks before their child is born.
“For most people who are the birthing parent, you would commence your leave first, after you gave birth,” Lawrence said. “That now doesn't necessarily have to happen that way. We probably expect a lot of people who go through birth not to turn up to work the next day. But it would be very possible to maybe take a month off and then go back to work and then let a partner kick in and do a couple of months, for example… there wasn't that same level of flexibility that there now is.”
3 types of parental leaves
Parental leave involves three different areas, Lawrence said.
“There's the unpaid entitlement which is the one in the Fair Work Act which has just been changed. And that's the one to physically be away from work,” she said.
“Then you have the government-paid parental leave scheme, which is really just a social services payment [for] people who qualify. And then you have anything extra that an employer pays but they also refer to as parental leave pay. That is at their full, almost discretion as to what they want to provide and what they want to offer as extra perks for working for their workplace. And unfortunately, we use the same term to describe all of those things.”
As a result, employers might need to clearly distinguish between an employee’s entitlement as an unpaid entitlement under the Fair Work Act and the actual entitlement an employee is being given as a perk or benefit for working in this workplace.
What the new parental leave means for HR
But at the very least, human resources teams need to ensure they comply with government entitlements.
“Make sure, at a very bare minimum, that your policy does not breach someone's entitlements under the National Employment Standards (NES) – the changes to the unpaid component,” she said.
“Particularly, given the greater flexibility in terms of commencing the leave and in terms of how many days can be taken flexibly — at a minimum, those changes should be made to align with the NES because you don't want to breach the NES for obvious reasons, [there are] significant penalties associated with that.”
And for those businesses who provide paid leave schemes, they might have to consider whether or not they want to directly line up an employee’s entitlements under their paid scheme with their unpaid scheme, Lawrence said.
“You may not, for example, want to allow somebody under your far more generous paid scheme to take it as flexibly as they might have the right to take unpaid [leave],” she said. “You might say, ‘You've got to take it in one big block, for example, the entire thing’. That's just going to have to be something that people think about, particularly when it comes to the additional considerations of getting a parental leave replacement employee and how that might affect that.”
Another element for HR teams to consider is whether they are going to continue making the distinction between primary or secondary carers – something that no longer exists in both the paid and unpaid leave schemes.
“Are they going to give bigger entitlements to the person who is so-called the birthing parent?” she said. “Or are they – like the changes that have just been made to unpaid and the paid parental leave – going to give the entitlement to both parents, no matter whether they're the birthing parent or not?”