Australia: Proposed extension of government-paid parental leave

Employer Action Code: Monitor

The Paid Parental Leave Amendment (More Support for Working Families) Bill 2023 would, if approved, gradually increase the duration of pay-replacement benefits for parental leave (i.e., Parental Leave Pay – PLP), from 20 weeks today to 26 weeks by July 1, 2026. The bill would also increase concurrent PLP benefits. Note: Maternity, paternity and parental leave are combined as a general family leave entitlement of 12 months for the birth or adoption of a child, supported by 20 weeks of PLP benefits from social security. The amendments would take effect by March 2024.

Key details

Proposed changes include the following:

• The maximum period of PLP benefits would increase by two weeks each year, from the current 20 weeks (100 workdays) to 22 weeks on July 1, 2024, to 24 weeks on July 1, 2025, and to 26 weeks on July 1, 2026, with respect to children born or adopted on or after those dates. Parents would continue to be able to split the PLP period between them as they see fit, subject to the reserved periods noted below. Single parents would remain eligible for the full PLP period.
• The PLP period reserved for the primary caregiver would increase, from the current 18 weeks (90 workdays) to 20 weeks on July 1, 2024, to 21 weeks on July 1, 2025, and to 22 weeks on July 1, 2026. The PLP period reserved for a secondary caregiver would increase from two weeks (10 workdays) to three weeks on July 1, 2025, and to four weeks on July 1, 2026.
• The maximum period of concurrent payment of PLP benefits to both parents would increase, from the current two weeks to four weeks on July 1, 2025.

Employer implications

The proposed changes are part of the government’s plan announced in the 2022 – 2023 federal budget to make government-paid parental leave benefits more accessible, flexible and gender-equitable; however, the PLP benefit amount is quite modest (roughly equal to the weekly minimum monthly wage) and is subject to income testing (claimants with annual taxable income exceeding AU $168,865 or household income exceeding AU $350,000 are ineligible). Accordingly, 56% of employers surveyed provide more leave than the law requires, typically providing 100% of salary (in addition to PLP), for up to 12 weeks for the primary caregiver and up to two weeks for the secondary caregiver, at the median. Employers may wish to review the potential impact of the proposed legislation on their family leave policies and practices, taking into consideration their local and global objectives as well as diversity, equity and inclusion principles to ensure benefits remain compliant and competitive.

Contacts

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Rebecca Matthews

Senior Client Consultant, Health & Benefits

email Email phone +61 2 9285 4041

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Paul Dervan

Head of Client Development

email Email phone +61 3 8681 9711

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