Parental Leave: Sorting out the Fact from Fiction

Understanding exactly what is meant by parental leave and what obligations and entitlements come with it can be a difficult process.

Combined with the fact that the issue often receives significant media attention and is regularly debated in the political sphere, it is not surprising that many businesses are unsure about what to do when an employee or their partner becomes pregnant and what their obligations are in relation to parental leave.

National Employment Standards
There are a number of obligations and entitlements relating to parental leave set out in the National Employment Standards (NES). These obligations are non-negotiable and cannot be contracted out of for any reason.

Despite many misconceptions, parental leave does not just apply to women who have given or will give birth to a child, but can also extend to fathers or same sex de facto partners. To be eligible for parental leave, an employee must have the responsibility for the care of a newborn or recently adopted child and have worked for their employer for a continuous 12 month period. If an employee satisfies these criteria, they are entitled to take 12 months unpaid parental leave. This includes full time, part time and casual employees.

Employee couples who both intend to take unpaid parental leave do however, face a number of limitations as to when that leave can be taken, whether that is concurrently or consecutively. An employer may be entitled to request information from an employee’s partner or employer if this is the case.

Whilst an employee is away from work on parental leave, an employer still has a number of obligations to the employee, including the requirement to consult with them regarding any significant changes occurring in the workplace. This might include an organisational restructure which changes the employee’s title or reporting line. In addition, an employee is permitted to undertake up to ten ‘keeping in touch days’ which does not impact on their period of parental leave. These days are used to enable the employee to keep in touch with their job in order to facilitate their return to work once their parental leave ends and cannot be used by the employee to undertake normal work.

One of the most difficult obligations for an employer to comply with is the requirement that the employee is to be returned to the same position they held prior to taking parental leave. If that position is no longer available, the employee must be given a position that they are suitably qualified for and is equal or substantially similar in status and pay. Employees returning to work can also request flexible work arrangements which can only be refused by the employer on reasonable business grounds.

This can have a significant impact on a businesses, especially those with a small workforce, as they are required to find a replacement whilst the employee has been on parental leave and then upon their return, ensure they are returned to the same position and/or allow them to have flexible work arrangements.

However, despite the significant burden, both financially and logistically, that these obligations can pose to a business, the NES requires full compliance by employers, regardless of their size. Failure to provide employees with their full entitlements can result in serious financial consequences for businesses and protracted court proceedings.

Parental leave workplace policies

It is increasingly common for employers to have workplace policies relating to parental leave. These policies are often a summary of the entitlements and obligations set out in the NES and the paid parental leave scheme, which can be quickly and easily referred to by managers and employees when an issue relating to parental leave arises.

Whilst drafting such a policy might seem like a relatively simple and straight forward task, it is vital that a workplace policy correctly reflects the NES, as it is inevitable that any time a parental leave issue arises, managers will consult the policy and then accordingly advise employees of their entitlements. This can have disastrous effects if the policy doesn’t comply with the NES and a manager blindly follows the policy, potentially denying an employee their statutory rights.

In Scullin v Coffey Projects (Australia) Pty Ltd [2015] FCC 1514, a company’s parental leave policy was found to have breached the NES. The policy stated that employees were only entitled to unpaid parental leave if they were the primary care giver of the child. This differed from the NES as an employee need not be the primary care giver of a child and only need to have a responsibility for the care of the child to be entitled to take parental leave. The employee, who took a mix of paid and unpaid leave for 12 months, returned to work and was only offered part time work. He was subsequently made redundant. The Court awarded the employee $170,000 for his loss, which stemmed from the employer’s breach of its parental leave obligations under the NES.

Some employers also have workplace policies with terms exceeding the minimum entitlements set out in the NES. This can be in the form of a payment before and/or after the employee has taken parental leave. This is often used to encourage good workers to return to work after their period of parental leave finishes and to assist them financially with the costs of raising a child.

Paid Parental Leave Scheme

Something which often receives significant media attention is the federal government’s paid parental leave scheme which provides eligible employees with payments whilst they are on parental leave. The current maximum amount an employee can receive is $657 per week, paid for 18 weeks. Casual, part time and full time employees are all eligible to receive the full amount.

The scheme is fully funded and run by the federal government and as such, does not place heavy compliance obligations on employers. However, the paid parental leave scheme is often a source of great concern for many employees and so therefore, businesses are often required to understand what the scheme is and when an employee will be entitled to receive paid parental leave. Further, an employer is responsible for making parental leave payments to an employee on behalf of the government so it is important that employers understand the scheme.

Changes to the paid parental leave scheme

The federal government has recently announced its intention to make changes to the paid parental leave scheme. Whilst these changes are surrounded by a level of uncertainty as to whether they will be implemented, it is important that employers understand them and the impact that it could have on their workplace policies.

If these changes are implemented, employees who receive equal to or more than $11,826 (the maximum amount under the government’s paid parental leave scheme) from their employer, will not be eligible to receive any payment from the government, whilst employees who receive less than this amount will be eligible to receive a ‘top-up’.

What should employers do to ensure compliance with parental leave obligations?

  • On each occasion a query relating to parental leave arises, an employer should thoroughly check each source of authority to ensure that they do not provide advice or information that is incorrect or misleading.
  • Internal policies relating to parental leave should be regularly checked and amended in order to ensure that they correctly reflect the entitlements set out in the NES and the paid parental leave scheme. There are many policies that are still used in businesses which differentiate between maternity and paternity leave (the differentiation no longer exists) which are unlikely to comply with the NES and should be immediately amended.
  • Keep updated as to whether changes to the paid parental leave scheme are passed by the government. If changes are made which affect an employee’s ability to receive paid parental leave from both their employer and the government, the business may wish to consider amending their workplace policy in response.