Becoming a parent can be overwhelming and demanding, so it’s no surprise that the last things on the mind of many new parents is their job. As an employer, however, it should be on the top of yours. Specifically, how does the paid parental leave system work? How much is allowed, and who pays what?
This article will help you better understand paid parental leave as an employer.
Paid parental leave scheme for employers
The Parental Paid Leave scheme offers government support through Centrelink payments and is not funded by you, the employer. It is designed to financially assist eligible parents to care for their newborn or recently adopted child. The scheme also helps you, as an employer, to retain your skilled staff by enabling mothers to remain connected to work and their careers even as they take time out to give birth (or adopt a child).
Who is eligible?
As an employer, the government will provide Parental Leave Pay to an eligible employee who:
- has worked with you for at least 12 months prior to the expected date of birth or adoption date of a child
- has a newborn or recently adopted child
- will be an employee for the Paid Parental Leave period
- is an Australian-based employee, and
- is expected to receive at least eight weeks of Parental Leave Pay.
Importantly you, as the employer, do not have a role in deciding if an employee is eligible to make a claim for Parental Leave Pay. Centrelink will determine that, based on the relevant information. If the decision is that the employee is eligible to receive Parental Paid Leave, then Centrelink will transfer the payable funding amounts to you to provide the pay to your employee.
What’s more, you won’t have to make any additional superannuation contributions or pay additional payroll tax for the employee receiving Parental Paid Leave.
When to pay your employee – and how much?
It’s pretty simple. The Parental Leave Pay is paid to your employee on their normal pay cycle. For example, if you usually pay fortnightly in arrears, then the Parental Leave Pay will also be paid fortnightly in arrears.
The Parental Paid Leave cannot be provided in one lump payment, and nor can your employee take it at half pay.
The current payment for Parental Leave Pay is $183.16 a day before tax, or $915.80 per 5 day week. This is based on the weekly rate of the national minimum wage.
Everyone receives Parental Leave Pay at this rate, regardless of their regular earnings or hours worked per week.
How is paid parental leave calculated?
Parental Leave Pay is based on the weekly rate of the national minimum wage and is payable for up to 18 weeks to the primary carer. As noted, Parental Paid Leave is a set payment from Centrelink, regardless of how many hours the employee worked per week, or what their salary/wage was.
Does paid parental leave go on payment summary?
You must include Parental Leave Pay in the total amount on your employee’s annual or part year payment summary. It doesn’t need to be separately identified from other amounts. However, you should also keep records of the payment advice that Centrelink provides whenever Parental Leave funds are transferred to you.