In its latest policy change on paid parental leave, the Coalition Government has proposed to remove parents' ability to "double dip" paid parental leave entitlements from 1 July 2016 in a bid to save almost $1 billion dollars over four years.

Under the Paid Parental Leave Act 2010, eligible employees can currently access up to 18 weeks of Government funded parental leave pay at the National minimum wage, totaling around $11,500, in addition to paid parental leave provided by their employers.   

Many employers have designed their own paid parental leave schemes to complement the government scheme by topping up Commonwealth funded payments to employees' normal salary levels, or providing additional paid leave entitlements either during or after the 18 weeks of Government support.

The 2015-2016 Budget papers released in May include a proposal to "remove the ability for individuals to double dip, by taking payments from both their employer and the Government" while ensuring that all primary carers would have access to parental leave payments that are at least equal to the maximum 18 week paid parental leave benefit.  

If legislated, this proposal would mean that only those employees receiving less than 18 weeks of paid parental leave at the national minimum wage from their employers would receive any government support after 1 July 2016.   Depending on the structure of individual workplace parental leave arrangements; this could result in well-intentioned employers finding themselves footing larger parental leave bills in order to maintain current entitlements for their employees.

The proposal has been bogged down in the Senate, following substantial public criticism of the proposal and of Treasurer Joe Hockey's comments about the current scheme.  Although these particular proposed changes to Commonwealth funded parental leave pay may never see the light of day, employers should keep track of any upcoming changes in this area and make sure that workplace paid parental leave arrangements remain appropriate in light of any changes to the Government funded scheme.  

For more information contact:

Jim Rutherford
Harwood Andrews
T: 03 5226 8579

Sonia McCabe
Senior Associate
Harwood Andrews
T: 03 5226 8558