Removing employer responsibility for Paid Parental Leave

Image: Wikimedia Commons

New Abbott Government legislation will remove the requirement for employers to make payments to employees under the national Paid Parental Leave (PPL) scheme from 1 March 2014. Instead, employees would be paid directly by the Department of Human Services, unless the employer chooses to make the payments.

The Government's reason for making the change is to 'ease administrative burdens on business'. 

Currently, in most cases, the Commonwealth Government funds employers to provide instalments of PPL to their eligible long-term employees for up to 18 weeks at the National Minimum Wage (currently $606.50 per week).

Paid Parental Leave: Robin Hood or piggy bank?

Image source: fahcsia.gov.au

While there are numerous differences between the Labor and Coalition policies on parental leave pay, the most controversial is the rate of payment. While the current Government scheme is paid at the National Minimum Wage ($606.50 per week), the Coalition proposal is for parents to be paid at their full salary capped at an income level of $150,000.

The difference between the two approaches highlights the complicated relationship present in both schemes between the idea of Parental Leave Pay as a workplace entitlement and a payment made through the social security system.

Sibling rivalry: Baby Bonus and Paid Parental Leave

Image Source: wikimedia images

The Government has announced as part of the Mid Year Economic and Fiscal Outlook (MYEFO) that it will reduce the Baby Bonus to $5000 and freeze indexation of the payment for three years. Currently, the Baby Bonus is $5437 and indexed in line with changes to the Consumer Price Index (CPI) on 1 July each year.

The decision has been criticised by some as discriminating against 'stay at home' mothers because the Government did not also take savings from the Paid Parental Leave scheme. This post attempts to clarify the issues involved by briefly looking at the relationship between Baby Bonus and Paid Parental Leave.