Do you need to amend your parental leave policies to avoid “double dipping”?

The 2015 Budget proposed changes to Paid Parental Leave Act that would stop parents claiming paid parental leave (PPL) from both their employer and from the Federal Government.  Described in an interview on 10 May 2015 by The Honourable Joe Hockey MP as designed to avoid “double dipping”, the changes are intended to represent $1 billion in Budget savings and will affect both private and public sector employees.

The former Labour Government introduced the government-funded PPL scheme in January 2011.  Subject to meeting a range of eligibility tests, the Government-funded PPL scheme pays up to 18 weeks of PPL at the national minimum wage, currently $640 per week or $11,500 in total immediately after the birth or adoption of a child.  Contrary to the claims of “double dipping”, the PPL scheme was actually designed to act as a basic safety net while still allowing employers to top up PPL entitlements to attract employees.  This was outlined in the explanatory memorandum to the Paid Parental Leave Bill 2010 as: “Parental leave pay will complement parents’ entitlements to unpaid leave such as unpaid parental leave” and “can be received before, after, or at the same time as existing entitlements such as employer-provided paid leave such as recreation, annual and employer-provided maternity leave“.

The change to the scheme, would mean that effective from 1 July 2016 access to the whole $11,500 Government-funded PPL amount will be limited to employees whose employers do not provide PPL entitlements.  In circumstances where employees receive less generous PPL entitlements from their employer, the Government will provide a top up payment to equal the full amount available under the Government-funded PPL scheme.  It is expected that the change will affect approximately 80,000 parents who currently receive employer PPL, the majority of whom work in the public sector.  Employees whose employers do not provide PPL are unaffected by the changes.

It remains to be seen whether the Government’s proposed changes will pass through the Senate.

The proposed changes do not require employers to amend the terms of their PPL policies including any payments provided under the policy.