Published March 2023

The Australian Government under Services Australia (Centrelink) has announced that from 1 July 2023, Government funded Paid Parental Leave (PPL) will be extended from 18 weeks to 26 weeks over the next four years in an effort to close the gender pay gap, boost women’s workforce participation and allow families greater flexibility during formative periods for their children. Edwards HR have outlined the significant changes and what you need to know in this update.

Please note that these changes are applicable only to paid parental leave payments provided by Services Australia (Centrelink), and not the unpaid parental leave entitlements provided under the National Employment Standards.

WHAT ARE THE CURRENT PPL ENTITLEMENTS?

Currently, eligible employees receive up to 18 weeks’ PPL funded by the Federal Government, which is paid at National Minimum Wage (currently $812.60 per week).

An employee is considered ‘eligible’ if they:

• Are the birth mother of a newborn child; or
• Are the initial primary carer of an adopted child placed in their care by an authorised arty for the purpose of adoption; or
• Are another person caring for a child under exceptional circumstances such as severe illness or serious accident.

In addition, eligible employees must meet the following:

• An income test: the individual must have adjusted taxable income of $156,647 or less (for the 2021-22 financial year);
• A work test: the individual must have worked for both 10 of the 13 months before the birth or adoption of their child, and a minimum of 330 hours (around 1 day per week) in that 10 month period; and
• Residency rules: the individual must be an Australian citizen or hold a permanent, special category or certain temporary visa.

Currently, eligible employees are able to split their period of PPL into:

• A set period of 12 weeks, to be used in one continuous period within 12 months of the birth or adoption of a child; and
• A flexible period of up to 30 days, in period as negotiated by the employee with their employer, to be taken within 24 months of the birth or adoption of a child.

Working fathers and partners (including same-sex partners) may also be eligible for 2 weeks of leave, also paid at the minimum wage.

WHAT ARE THE PROPOSED CHANGES TO PPL?

Under the announced proposed changes, from 1 July 2023, new parents will begin receiving an extra 2 weeks in PPL entitlements, up from 18 weeks currently.

From 1 July 2024, the leave entitlement will increase by 2 weeks every year to a total of 26 weeks in 1 July 2026. The 26 weeks PPL is proposed to be able to be shared among both parents and paid at the rate of the National Minimum Wage at the relevant time, while a single parent will be able to access the full 26 weeks.

The Government has also announced the setting of a new threshold limit of $156,647 for individuals and $350,000 for families and will maintain a “take it or leave it” basis to encourage and facilitate more Dads and partners to access PPL, so that both parents can share in precious early days and the caring responsibilities more equally.

WHAT DOES THIS MEAN FOR EMPLOYERS?

Employers will need to review and update their parental leave policies to reflect the new PPL entitlements. The team at Edwards HR will continue to share any updates as they rollout. If you would like more advice about how these changes will affect your business, Edwards HR are more than happy to help.

You can also keep up to date with the proposed changes on the Services Australia website here.