Paid parental leave

How to get ready for the new paid parental leave scheme

After 30 June, 2011, employers will become ‘paymasters’ responsible for distributing funds under the government’s new paid parental leave scheme, with employers urged to make sure they are ready for this added burden before July 1.

Paid parental leaveWhile the paid parental leave scheme will place an administrative burden on organisations, TressCox partner and workplace law specialist Nick Duggal believes it is more important to ensure current internal paid parental schemes in place are compatible with the new statutory paid parental leave.

“The changes introduced this year will provide relief for employees but they also leave some employers with the tricky obligation of reconciling their current contractual entitlements.  Particularly as parental leave schemes are often a point of difference for employers when attracting candidates, it’s vital to clarify just what your business is offering,” he said.

In some instances, businesses are voluntarily offering more than is legally required, which can in fact provide a windfall for employees.  While employers may offset voluntary payments, changes may need to be made to internal policies to avoid excessive payments and minimise costs for the business.

“Employers are asking, ‘Should our voluntary leave provisions remain, should we adjust our terms and do we meet contractual requirements?’  These are all reasonable questions and it pays to consider the answers as soon as possible.

“There’s a fair bit of grey area around the impacts of this legislation and the reality is that ‘implied contractual terms’ are always open to interpretation, potentially resulting in litigation,” Mr Duggal said.

Mr Duggal suggests businesses take the following steps to ensure they are ready before 1 July:

1.     Make arrangements to register your organisation (information available at http://www.familyassist.gov.au) and ensure the necessary systems are in place internally to process payments from 1 July;
2.     Undertake a review of existing policies and how the new legislation will be integrated with current schemes; if a voluntary scheme is in already in place, establish how this is impacted by the legislation and reconcile where necessary;
3.     Update employment contracts as necessary;
4.     Ensure effective communication with staff to minimise confusion and provide a smooth transition for parental leave schemes.

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