Australia’s recently announced 2022 – 2023 federal budget includes a proposal to combine Parental Leave Pay (PLP) for new mothers and primary caregivers with Dad and Partner Pay for new fathers/domestic partners as a single, sharable benefit that would gradually increase in duration from 20 weeks to 26 weeks by July 1, 2026. The changes are intended to support and incentivize both parents to take parental leave during the first two years after the birth or adoption of their child. Parliament still needs to approve enabling legislation in order for the changes to take effect. Separately, employees will be entitled to 10 days of employer-paid family and domestic violence leave from February 2023 as a result of recent amendments to the National Employment Standards (NES).
The proposed changes to parental benefits are:
Separately, effective February 1, 2023, the current entitlement to five days of unpaid family and domestic violence leave, under the NES of the Fair Work Act, will increase to 10 days and will be employer-paid. For small businesses (i.e., companies with fewer than 15 employees), the new entitlement will apply as from August 1, 2023.
Although PLP benefits are provided for up to 20 weeks in total, the benefit is modest (812.45 Australian dollars per week effective July 1, 2022; roughly equal to the weekly national minimum wage) and is subject to income tax. It is not payable to individuals earning more than the income limit. Accordingly, half of companies surveyed provide supplemental paid parental benefits, offering 12 weeks of leave at full pay (in addition to PLP benefits) for the primary caregiver at the median. The median benefit for secondary caregivers is two weeks at full pay. Such distinctions between the primary and secondary caregivers would disappear under the proposed consolidated leave approach. Employers should monitor development of the legislation while reviewing the potential impact of the amendments on their policies and practices.
