Westpac Group’s announcement that it will pay employees’ superannuation when taking unpaid parental leave is set to force Australian employers to look twice at their own parental benefits offering.
The generous new initiative will see the Westpac Group, which includes St George, BT Wrap and Westpac Bank, pay up to 39 weeks in employee superannuation contributions in addition to its existing parental leave entitlements of 13 weeks superannuation and 13 weeks full pay.
The Labor Government passed paid parental leave (PPL) into law by parliament last month, which will provide 18 weeks' paid parental leave from January 1 2011, but with no super contributions.
Writer Anne Summers, who ran the Office of the Status of Women during the 80s, told HR Leader: “No doubt about it, the Westpac initiative is a game changer.”
Nareen Young, CEO of Diversity Council Australia (DCA), said Westpac's decision to offer over and above the standard requirement should be commended. “Currently, women’s average superannuation payout is half that of men’s, in part as a consequence of having interrupted work patterns due to care-giving responsibilities.
“Loss in superannuation during periods out of the workforce for parenting-related caring has been an unintended consequence since the introduction of compulsory superannuation and Westpac's initiative is a fantastic start.”
A recent report, commissioned by DCA and prepared by KPMG, outlined the huge cost to the economy of the persistent gap between male and female wages in Australia and many view Westpac's move is a small step in assisting the reduction of that gap.
Westpac chief executive Gail Kelly said of the scheme: “This initiative is another step Westpac has taken to create a work environment where we support diversity, in this case particularly for our women employees.
“By proactively paying these additional superannuation contributions, we will help make a difference to our employees’ retirement savings and continue to retain the very best talent in this organisation. Ensuring all Australian women and men are financially prepared for retirement is one of the most important challenges facing our community.”
Of course, employers like Westpac recognise the benefits of paid parental leave schemes to productivity and business. Attracting and retaining talented employees, especially women, is key, but they are also protecting significant investment in training and developing employees. Furthemore improving staff retention and reducing turnover, and supporting family-friendly practices in workplaces are crucial to keeping skilled workers.
Some political figures have said Westpac’s offering serves to highlight the inadequacy of Labor’s scheme, and that employers will be forced into offering far more than the mandatory level of parental leave in order to stay competitive.
Indeed, the news of this generous scheme will be food for thought for other employers battling for female talent. Summers said: “I think other banks and the EOWA Employer of Choice companies will feel compelled to equal or even better Westpac's policy. Payment of super during parental leave is now clearly on the table. Smaller companies who cannot afford to do this will put their staff at a disadvantage so there may be pressure on the government to make these contributions on behalf of smaller employers.”
Young added that employers must make their own decisions as to what they can afford to provide their employees. “We would encourage employers to revisit their schemes to see if they are doing as much as they can to attract and retain female talent,” she said.